A right-wing Denver law firm has filed a lawsuit against the state, challenging as unconstitutional the Medicare and Paid Family Leave program voters approved last year.
The lawsuit, filed in Denver District Court, was brought on behalf of Chronos Builders LLC, a Grand Junction company partially owned by Mesa County Commissioner Cody Davis.
The company that filed it, Public Trust Institute, claims Proposition 118 assesses an unconstitutional surtax, which is not applied consistently and is in violation of the Colorado Constitution.
“It’s just an income tax by another name,” said Dan Burrows, legal director of the nonprofit institute, which describes itself as a public interest law firm concerned with the issue. freedom that defends individual freedoms and personal responsibilities.
“The state constitution clearly states that if the government is to fund a new program by taxing wages, it must treat everyone the same, no matter how attractive the goals of that program may be,” he said. added Burrows. “PTI defends the rule of law and the small businesses that are harmed by this unconstitutional tax regime.”
Under the proposal, which nearly 58% of Colorado voters approved in November, the state must create a special insurance program to which all employers and employees must contribute through a payroll bonus.
As of January 2023, this bonus must vary based on an employee’s weekly salary that their employers must match.
This money – it is expected to raise around $ 1.3 billion per year – would be used to pay eligible employees part of their salary for up to 12 weeks when they have to take time off work for family emergencies or work. medical needs.
Federal law already allows employees to take up to 12 weeks of leave, but employers are not required to pay wages for that period.
Burrows, however, said the proposal treats employers differently based on their size, does not apply to government employees, and caps wages above $ 143,000.
He said the Colorado Constitution requires that “all net taxable income be taxed at a single rate … without additional taxes or surcharges.”
The lawsuit is filed on behalf of Chronos Builders, a Grand Junction boutique builder owned by Davis and his brother, Garrett.
âWe have always worked with individual employees to meet their family or medical leave needs, and we do not charge them vacations when they are sick or have a family emergency,â said Garrett Davis.
“This program is bad law and even worse economically because it hits us with an illegal tax to pay for something we are already giving to our employees for free,” he added. âAnd if we grow, our costs for this program will automatically double. There is a direct deterrent for us to create jobs.
The proposal allows businesses with 10 or fewer employees to pay half the surcharge. Davis’s company currently employs eight people.
The lawsuit names the Colorado treasurer’s office and the Colorado Department of Labor and Employment’s new family and medical leave insurance division.
Public Trust Institute is the group that last year filed an ethics complaint against former governor, now U.S. Senator John Hickenlooper, and an unsuccessful ethics complaint against former state representative Joe Salazar. Both are Democrats.