Colorado’s Family and Medical Leave Insurance program will take on two smaller but still consequential changes in 2026 —one less than was expected as recently as the middle of last week — of which employers should be aware.
First, a law passed during the 2025 legislative session will double the 12 weeks of potential paid leave that a new parent can take if their child is receiving inpatient care in a neonatal intensive care unit.
Second, the fee that Colorado employers must pay to sustain the program — or can spilt with their employees — will dip slightly from 0.9% of each worker’s paycheck to 0.88%.
Up until last week, it looked like many employers also would have to start covering their portion of Social Security and FICA/Medicare taxes on certain FAMLI medical-leave benefits because of an Internal Revenue Service rule change. However, the IRS late last week granted Colorado and other states with similar programs a one-year extension to implement the new federal tax withholding and reporting requirements.
The two changes that are going into effect aren’t expected to have huge impacts on employers. The fee decrease will save businesses paying into the insurance program a cumulative $35 million annually, although the change will barely be noticeable in most employees’ paychecks. And the NICU extended-leave allowance is expected to be used by very few new parents in any given year.
However, it’s still important that employers prepare internally...
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