In December, Human Resources notified all employees of a new leave program called FAMLI, which stands for the Family and Medical Leave Insurance Program. As mentioned in the notification, Colorado State University is required to implement a payroll deduction on each employee’s wages to fund the new leave, as well as to fund half of the cost of the program for employees.
State employers, including CSU, are required to implement a payroll tax of 0.45% on each employee’s wages in January to fund the new paid leave for employees. The university is also required to pay half of the cost of the leave program (an additional 0.45% of each employee’s wages, as defined by FAMLI). CSU is paying both the employee’s portion and the university’s portion of the premium deduction through June 30.
Because the university is paying the employee’s share, this must be shown as income for each employee and is subject to income tax. Salaried employees will see the deduction starting with January paychecks and hourly employees will see the deduction on their Jan. 27 paycheck.
The tax for the university’s contribution is generally a small amount and equates to significantly less cost to the employee than if the employee’s 0.45% contribution to FAMLI was deducted from their pay.
Examples of the university’s contribution to FAMLI on behalf of an employee and that employee’s tax deductions include:
- The university will pay about $13.50 per month for the employee’s share of the deduction toward FAMLI for an employee who makes $3,000 a month (absorbing that cost of the employee’s contribution to FAMLI through June). The university’s contribution of $13.50 a month then becomes additional taxable income for the employee. This employee would have a tax deduction of about $2 a month, depending upon their withholding taxes.
- The university will pay about $20.25 a month for the employee’s share of the premium deduction toward FAMLI for an employee who makes $4,500 a month. The university’s $20.25 a month contribution then becomes additional taxable income for the employee, who would have a tax deduction of about $2.85 a month, depending upon their withholding taxes.
For more information about FAMLI, see this SOURCE article and these FAMLI leave FAQs. The state’s FAMLI website includes a calculator to help you determine how much you would pay for FAMLI if the university did not contribute your portion.
Human Resources is available to answer questions.