A right-wing law firm in Denver has filed a lawsuit against the state challenging the voter-approved family and health insurance program last year as unconstitutional.
The lawsuit, which was filed in Denver District Court, was conducted on behalf of Chronos Builders LLC, a Grand Junction company owned in part by Mesa County Commissioner Cody Davis.
The company that submitted it, the Public Trust Institute, claims that Proposition 118 evaluates an unconstitutional surcharge, inconsistently applied and contrary to the Colorado Constitution.
“This is just an income tax by a different name,” said Dan Burrows, legal director of the not-for-profit institution that describes itself as a freedom-focused public interest law firm that defends individual freedoms and personal responsibilities.
“It is clear to the constitution that if the government is to fund a new program by taxing wages, it must treat everyone equally, no matter how attractive the goals of that program,” added Burrows. “PTI advocates the rule of law and the small businesses that are harmed by this unconstitutional taxation.”
According to the proposal, which was approved by nearly 58% of Colorado voters in November, the state should create a special insurance program into which all employers and employees should pay through a payroll premium.
From January 2023, this premium is to vary depending on the weekly wage of an employee, which his employer must prove.
This money – estimated to raise about $ 1.3 billion per year – would be used to pay qualified employees a portion of their wages for up to 12 weeks when they need to take time off for family emergencies or medical needs .
Federal law already allows workers to take up to 12 weeks of vacation, but employers are not required to pay wages for that time.
However, Burrows said the proposal treats employers differently based on size, does not apply to government employees, and limits wages above $ 143,000.
He said the Colorado Constitution requires that “all net taxable income be taxed at one rate … with no additional taxes or surcharges.”
The lawsuit is being filed on behalf of Chronos Builders, a Grand Junction boutique construction company owned by Davis and his brother Garrett.
“We have always worked with individual employees to meet their family or medical vacation needs, and we don’t charge them vacation time when they are sick or have a family emergency,” said Garrett Davis.
“This program is bad law and even worse economics because it hits us with an illegal tax to pay for something we are already giving our employees for free,” he added. “And as we grow, our cost for this program automatically doubles. There is a direct negative incentive for us to create jobs. “
The proposal allows companies with 10 or fewer employees to pay half the premium. Davis’ company currently employs eight people.
The lawsuit names the Colorado Treasurer’s Office and the newly created Family and Medical Leave Insurance division of the Colorado Department of Labor and Employment.
The Public Trust Institute was the group that filed a successful ethics complaint against former Governor, now US Senator John Hickenlooper, and an unsuccessful ethics complaint against former State Representative Joe Salazar last year. Both are democrats.
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