If you have employees in Colorado, you're paying into FAMLI whether you've thought about it or not. Your payroll provider is withholding it, sending it in, and it's showing up as a line on your payroll report that half the business owners I work with have never looked at. This post is what FAMLI actually is, what it costs you in 2026, and how it needs to be recorded in QuickBooks so your books and your quarterly filings agree.
What FAMLI is in one paragraph
FAMLI is Colorado's paid family and medical leave insurance program. It's run by the state, funded by a premium on wages, and it pays employees a portion of their wages when they take leave for a new baby, a serious health condition, caring for a family member, military deployment, and a few other situations. Benefits started in January 2024. You, the employer, don't pay the employee while they're out. The state does. Your job is to collect and remit the premium and to hold their job while they're on leave.
What it costs in 2026
The premium rate for 2026 is 0.88 percent of each employee's wages, down from 0.9 percent the first three years. That's split in half: 0.44 percent is withheld from the employee's paycheck and 0.44 percent is paid by the employer. The premium applies to wages up to the Social Security wage base, so for most small businesses it applies to every dollar.
Here's the part that matters for most of my clients: if you have fewer than 10 employees, you don't owe the employer half. You still have to withhold the employee's 0.44 percent and send it in, but your side is zero. The headcount is based on your total employees nationwide, counted the way the program specifies, so if you're hovering around nine or ten, that's worth a conversation. Once you cross ten, the employer share kicks in for the whole year.
On a $4,000 gross paycheck, the employee's share is $17.60. If you have 10 or more employees, your matching share is another $17.60. Small per check, but on a crew of 12 running $600,000 in annual payroll, the employer side is about $2,640 a year that needs to be on your books.
When and how it gets paid
Premiums are reported and paid quarterly through the state's My FAMLI+ Employer portal, due by the last day of the month after the quarter ends. So Q4 is due January 31. If you use Gusto, ADP, Paychex, QuickBooks Payroll, or a local provider like Payroll Vault, they're almost certainly filing and paying this for you as part of your tax package. Check your payroll tax summary and you'll see it listed as CO FAMLI or CO PFML. If you run payroll yourself, you're filing it yourself, and I'd check right now that you haven't missed a quarter.
How it has to show up in QuickBooks
This is where I see mistakes. FAMLI has two pieces and they go to two different places.
The employee's withholding is not an expense. It's money you took out of their check that belongs to the state, so it's a liability until you remit it. It should land in a liability account, something like Payroll Liabilities: CO FAMLI, when payroll runs, and that account should go to zero when the quarterly payment clears.
The employer's share is an expense, the same as your share of Social Security and Medicare. It belongs in payroll tax expense, and if you want clean job costing it should be allocated to jobs along with the rest of your labor burden.
The most common error is a payroll provider's auto-sync dumping the whole FAMLI payment into one expense account, so your P&L shows an expense that's half liability relief. The second most common is the opposite, where everything hits the liability and the employer's share never gets expensed, so your labor cost is understated. Either way the numbers are small, but they compound every quarter and they're the kind of thing that makes a CPA ask what happened.
When I record payroll for a client, every pay period gets a journal entry with gross wages, each withholding to its own liability account, the net pay, and then a second entry for the employer taxes and fees. CO FAMLI gets its own line on both. When the quarterly payment comes out of the bank, it clears the liability and the employer expense is already there from the payroll entries. The account balances tie to the state portal to the penny, which is what you want if there's ever a question.
The other things employers forget
You have to post the FAMLI notice where employees can see it, and give it to new hires. You can't fire or retaliate against someone for taking FAMLI leave, and if they've worked for you at least 180 days you have to restore them to the same or an equivalent job. If an employee asks for leave, send them to the state portal to apply. You don't approve or deny it, the state does.
If you offer a private plan instead of the state plan, that's a separate approval process and your bookkeeping changes. Most of my clients stay on the state plan because it's simpler.
What I'd check this week
Open your most recent payroll report and find the FAMLI line. Confirm the employee rate is 0.44 percent of gross. If you have fewer than 10 employees, confirm your employer share is zero and not being charged. Then open QuickBooks and look at where that money is going. If it's all in one account, or you can't find it at all, that's worth fixing before year end.
If you'd rather I look at it, book a free 30 minute call. Payroll entries are part of what I do every month for my clients, and FAMLI is one of the first things I check on a new file.