On Tuesday, May 29, the Governor of Colorado signed into law the Living Organ Donor Support Act (“CO LOSA”). CO LOSA does not mandate a leave of absence for employees, but incentivizes employers to provide a paid leave of absence by offering a tax credit. The law applies to tax years beginning 1/1/2020 through 12/31/2024. The law contains the following provisions:
Covered Employers: Employers that deduct and withhold amounts from the wages paid to employees are eligible for the tax credit.
Employee: Employers can receive a tax credit for providing a paid living donor leave of absence for every employee who is a resident or domiciled in the state of Colorado performing services for an employer, either within or without or both within and without the state of Colorado, or any individual performing services within the state of Colorado.
Length of Leave: An employer can receive a tax credit when it provides a paid leave of absence for living organ donors for up to 10 work days, or the hourly equivalent of 10 working days. This does not include any period during which an employee uses any annual leave or sick days that the employee has been given by the employer.
Amount of Tax Credit: An employer is allowed a credit of 35% of the employer’s expenses incurred:
- paying an employee during his or her leave of absence period; and
- for the cost of temporary replacement help, if any, during an employee’s leave of absence period.
Income Limit for Tax Credit: An employer cannot claim a tax credit related to a leave of absence period for an employee with an income of $80,000.00 or more.
Limit of Tax Credit: The tax credit is not refundable, but any unused credit can be carried forward for up to 5 years. Any amount of the tax credit that is not used after this period is not refundable.
Certification/Recordkeeping: Upon request of the Department of Revenue as part of an audit, an employer must provide the Department of Revenue with documentation from the employee’s medical provider, which the employer received from the employee that verifies the employee’s organ donation. If the employer cannot provide the documentation, then the employer is ineligible for the credit.
What Employers Must Do Now
While the new law does not require paid organ donor leave, Colorado employers should review their leave policies to determine whether adding such a policy makes fiscal sense. Employers who already offer paid organ donor leave should review their policy to ensure compliance with the new law so they can take advantage of the tax credit. As appropriate, employers should:
- review and, if necessary, update any policies or handbooks;
- train appropriate personnel (Human Resources, Benefits, etc.) on how to manage organ donation leaves; and
- train supervisors and managers on organ donation leaves so they can help spot covered absences and enlist HR assistance.