Colorado FAMLI audits happen when the state questions whether you reported your income correctly or met the program rules

Colorado's Family and Medical Leave Insurance (FAMLI) program pays you a portion of your wages while you take leave for a new child, a serious health condition, or a family member's serious health condition. An audit is the state's way of checking whether the income you reported on your claim matches what your employer has on file, and whether your reason for leave actually qualifies under the program. It is not an accusation—it is a verification step that happens to a portion of claims, though not all.

The audit process typically starts with a letter from the Colorado Department of Labor and Employment (CDLE). The letter will ask you to provide documents that prove your income during a specific period, usually the 12 months before your leave started. You will have a important date to respond, usually 10 to 14 days from the date on the letter. If you do not respond by that date, CDLE can deny your claim or reduce your benefit amount based on the information they already have.

The reason audits matter for unemployment readers is that FAMLI and unemployment insurance (UI) are separate programs that sometimes overlap in timing. If you took FAMLI leave and then filed for unemployment after your leave ended, or if you received both benefits during the same period, an audit of one program can affect how the other calculates your benefit. Understanding what CDLE is asking for and responding on time protects both claims.

Key Takeaways

  • A FAMLI audit letter asks you to prove your income and the reason for your leave within 10 to 14 days; missing the important date can result in a reduced or denied benefit.
  • You will need pay stubs, tax returns, or a letter from your employer showing your wages during the 12 months before your leave started.
  • If you received both FAMLI and unemployment benefits during overlapping periods, the audit may affect how each program calculates what you owe back or what you are owed.
  • CDLE can request documents by mail, email, or through your online account; check the letter for the exact method and important date.
  • If you disagree with the audit result, you can request a hearing within 20 days of receiving the decision letter.

What documents CDLE will ask for in a FAMLI audit

The state will ask for proof of your income during the 12-month period before your leave started. This is called the base period. The documents that satisfy this requirement include recent pay stubs (usually the last four to six weeks before your leave), W-2 forms from the previous year, federal tax returns (Form 1040), or a letter from your employer on company letterhead stating your wages and dates of employment.

If you were self-employed or had multiple jobs, bring documentation for all of them. This might include Schedule C from your tax return, bank statements showing deposits from clients, or invoices and receipts. If your income changed during the base period—for example, you got a raise or changed jobs—bring documents that show the income for each period separately. CDLE uses this to calculate your average weekly wage, which determines how much FAMLI will pay you each week.

The audit letter will also ask you to confirm the reason for your leave. Bring any documents that support this: a doctor's note for your own serious health condition, a birth certificate or hospital discharge papers for a new child, or medical records for a family member's condition. If your employer required you to use FAMLI leave for a specific reason, bring that paperwork too.

How to respond to a FAMLI audit letter

Read the letter carefully and note the exact important date. CDLE will tell you how to submit documents—by mail to an address on the letter, by email to a specific inbox, or by uploading them to your online account at cdle.colorado.gov. Do not send documents to a general email address or your caseworker's personal email; use only the method the letter specifies.

Make copies of everything you send. If you mail documents, use certified mail with a return receipt so you have proof of delivery. If you email or upload, take a screenshot showing the submission was successful. Keep the confirmation number or email receipt. CDLE's systems sometimes lose documents, and having proof protects you if the state later says they never received your response.

If you cannot gather all the documents by the important date, contact CDLE before the important date expires. Call the FAMLI line at 303-318-8000 and explain what you are missing and why. Ask for a written extension. If you wait until after the important date to ask, CDLE is less likely to grant one. An extension is not may provide, but requesting it in writing before the important date gives you a better chance.

What happens if your income on the audit does not match what you reported

If the documents you submit show different income than what you put on your FAMLI claim, CDLE will recalculate your benefit. If your actual income was lower than you reported, your weekly benefit amount will go down, and you may owe back some of the money you already received. If your actual income was higher, your benefit may increase, though this is less common in audits.

CDLE will send you a new information letter explaining the change. This letter will show the corrected average weekly wage and the new benefit amount. If you owe money back, the letter will explain your options: you can repay in a lump sum, set up a payment plan, or request a hearing to dispute the finding. If you disagree with how CDLE calculated your income, you have the right to a hearing.

The timing of this recalculation matters if you also received unemployment benefits. If CDLE determines you were overpaid FAMLI, and you filed for unemployment after your FAMLI leave ended, the state may try to recover the overpayment from your unemployment benefits. This is called offset. Understanding this connection helps you prepare for what might happen to your UI claim.

FAMLI audits and unemployment benefits overlap

FAMLI and unemployment are separate programs with separate rules, but they can affect each other. If you took FAMLI leave and then filed for unemployment when your leave ended, CDLE will look at both claims together. The reason is that FAMLI is a wage-replacement program—it assumes you are not working and not earning wages. If you were actually working during your FAMLI leave, or if you earned more than you reported, you may have been overpaid.

When you file for unemployment, you are asked whether you received FAMLI benefits in the past 12 months. You must answer honestly. If you did, CDLE will cross-check your FAMLI claim against your UI claim. If the dates overlap or if your reported income differs between the two claims, CDLE may audit one or both. An overpayment in FAMLI can be recovered from your unemployment benefits through offset, meaning the state deducts what you owe from your weekly UI check.

If you are currently receiving unemployment and you receive a FAMLI audit letter, respond to it when ready. Do not assume the two programs are separate enough that one will not affect the other. Contact CDLE's unemployment line at 303-318-8000 and tell them you are in the middle of a FAMLI audit. Ask whether this will affect your current UI claim. Having both programs aware of the situation protects you from surprises later.

Requesting a hearing if you disagree with the audit result

If CDLE's audit decision is wrong, or if you believe they miscalculated your income, you can request a hearing. You have 20 days from the date on the decision letter to file. To request a hearing, call 303-318-8000 or submit a written request to the address on the letter. Include your claim number, a brief explanation of why you disagree, and any new documents that support your position.

A hearing is conducted by an administrative law judge (ALJ) who works for the state but is independent of the CDLE office that made the original decision. You can attend by phone or video. Bring all your documents—pay stubs, tax returns, employer letters, medical records, anything that proves your income or the reason for your leave. You can bring a representative (a lawyer, advocate, or family member) to speak on your behalf, though this is not required.

The hearing is not a formal court proceeding. The judge will ask you questions about your claim and your documents. You will have a chance to explain your side. The judge will then issue a written decision, usually within 30 days. If you lose the hearing, you can appeal to the Colorado Court of Appeals, but this requires a lawyer and is expensive. Most people do not pursue appeals, so the hearing is usually the final step.

Common reasons FAMLI audits are triggered

CDLE audits FAMLI claims for several reasons. The most common is a mismatch between the income you reported on your claim and the income your employer reported to the state. This can happen if you made a mistake on the form, if you forgot to include a second job, or if your employer reported your income differently than you expected. Another common trigger is a gap in your employment history—for example, if you reported working for an employer but that employer has no record of you in their system.

Audits also happen when the reason for leave is unclear or when the dates do not match what your employer reported. For example, if you said you took leave for a new child but the birth certificate shows a different date, or if you said you took leave for a serious health condition but your employer says you were on a different type of leave (like vacation or unpaid leave), CDLE will audit to clarify. These are not accusations of fraud; they are routine verification steps.

A smaller number of audits are triggered by fraud investigations. If CDLE suspects you intentionally misrepresented your income or your reason for leave, they will conduct a more thorough audit and may involve law enforcement. If you are unsure whether your audit is routine or part of a fraud investigation, the letter will usually say so. If you are concerned, you can consult a lawyer before responding.

Frequently Asked Questions

What if I lost my pay stubs and cannot find them?

Contact your employer and ask for a wage statement or letter showing your income during the period CDLE asked about. Most employers keep payroll records for at least three years and can provide this quickly. If your employer is no longer in business, bring your W-2 or tax return for that year. CDLE will accept tax documents as proof of income if pay stubs are not available.

Can I request an extension if I need more time to gather documents?

Yes, but you must request it before the important date on the letter. Call 303-318-8000 and explain what documents you are missing and why. Ask for a written extension and get a confirmation number. Extensions are not automatic, but CDLE is more likely to grant one if you ask before the important date than if you ask after.

If I owe money back from a FAMLI overpayment, will it come out of my unemployment check?

It may. If CDLE determines you were overpaid FAMLI and you are receiving unemployment benefits, the state can offset the overpayment from your UI check. The amount taken depends on how much you owe and your state's offset rules. Contact CDLE to ask about a payment plan if you want to avoid having your unemployment reduced.

What happens if I do not respond to the audit letter?

CDLE will make a decision based on the information they already have. This usually results in a reduced benefit or a denial of your claim. You will receive a decision letter explaining what happened. You can still request a hearing within 20 days of that letter, but it is much harder to win a hearing if you did not respond to the original audit request.

Do I need a lawyer for a FAMLI audit hearing?

No, but you can bring one if you want. Many people represent themselves successfully at FAMLI hearings. A lawyer is helpful if the amount of money involved is large, if you believe CDLE committed a serious error, or if you are worried about fraud allegations. Legal aid organizations in Colorado may provide free representation if you cannot afford a lawyer.