A guide to paid family leave and state disability insurance in California
California provides state disability insurance (SDI) and paid family leave (PFL) to eligible employees. In this article, we explore how these wage replacement programs work.
California SDI
SDI provides short-term wage replacement benefits to California workers. Employees may use SDI when they lose wages due to illness or injury (not work related) or pregnancy.
Employees do not need to work at their job for any particular amount of time to be eligible for SDI payments. An employee must have earned at least $300 in the base period (the earliest four out of the previous five full quarters) that were subject to SDI tax deduction.
Disability Insurance and Pregnancy
Typically, a birth parent can benefit from 10-12 weeks of SDI depending on whether they have a natural birth or cesarean section. This is how it breaks down:
Before the birth. Pregnant employees can generally qualify for California SDI four weeks before the baby’s estimated due date, but employees can file a claim earlier if a doctor certifies that a pregnancy-related condition will require the employee to stop working sooner.
After a natural birth. Employees receive up to six weeks of SDI after a natural birth.
After a cesarean section. Employees receive up to eight weeks of SDI after a cesarean section.
Longer periods of SDI may be available if the employee’s health professional certifies that she is unable to perform normal job duties. If the employee does not use the four weeks of available SDI before the birth, that time cannot be added to the duration of pay the employee will receive after the birth. Once the baby is born, the employee’s benefits is limited to the period she is unable to work.
SDI claims have a seven-day waiting period, so employees will not receive any benefits in the first calendar week of their disability.
Some employers will have a private short-term disability insurance plan (STD). Those plans typically provide pay for the same amounts of time as SDI (i.e., 4 weeks before the birth; 6-8 weeks after). Most employer-sponsored STD policies are entitled to offset the amount of SDI an employee receives against the benefits an employee receives from a state disability insurance plan like California’s SDI program. In other words, the employee will receive 100% of their SDI entitlement, and those STD will be deducted from STD.
California PFL
California’s PFL law provides paid leave benefits to individuals who need to take time away from work to bond with a new child, to care for a seriously ill family member, or to participate in a qualifying event because of a family member’s military deployment.
Once a pregnant employee has recovered from a pregnancy-related disability and can return to work, the employee can file for PFL. Non-birth parents can also receive PFL to bond with a child. To be eligible, the employee must have earned at least $300 from SDI deductions withheld during the base period.
Eligible employees can receive PFL benefit payments for 8 weeks. The amount paid is the lesser of (1) about 60-70% of their weekly wages earned in the four earliest of the five prior complete quarters; or (2) a maximum amount set by the state.
Employees can receive PFL benefits while working intermittently.
Supplementation of benefits
California allows employers to supplement SDI or PFL payments to ensure employees are paid 100% of their normal weekly wages during a period of disability or family leave. California refers to these employer payments as “integration” benefits. Integration benefits plus benefits from the state cannot exceed the employee’s normal weekly pay (excluding overtime) before the start of the SDI or PFL period.
One complication employers face is determining how much money a California employee is earning from SDI and PFL so that the employer can calculate the proper amount of integration benefits. California’s Employment Development Department (EDD) that administers SDI / PFL payments will only provide an employer with the amount an employee receives in benefits if the employee authorizes that information to be shared.
How weekly benefits are calculated
Here are the steps to calculating the SDI and PFL benefits an employee can receive from EDD:
Determine the base period. The weekly benefit amount (WBA) is calculated based on the wages paid to the employee during the employee’s base period. The base period is the first four out of the last five completed calendar quarters before the leave start date. For example, if the leave start date is in November (Q4), then the base period includes Q1 and Q2 of the current year and Q3 and Q4 of the prior year.
Determine the wages paid during each quarter of the base period. Next, determine the total wages paid to the employee in each of the four quarters in the base period.
Determine the highest quarterly earnings. Then, identify the quarter in which the employee earned the most money and calculate the weekly benefit amount using the following parameters:
If the highest quarterly earnings are less than $929, then the employee’s weekly benefit amount is $50.
If the highest quarterly earnings are between $929 and $7,154.32, then the weekly benefit amount is 70% of the employee’s earnings.
If the highest quarterly earnings are greater than $7,154.33, the weekly benefit amount is approximately 60% of the employee’s earnings.
For 2023, the maximum weekly benefit amount an employee can be paid is $1,620. So, if the calculations above yield a number greater than $1,620, the maximum amount that will be paid to the employee will be $1,620.
Again, an employer can supplement the amount an employee receives through SDI or PFL to ensure the employee is paid 100% of their regular wages. Once the employer calculates the employee’s weekly benefit amount from SDI, it can subtract those amounts from the employee’s regular wages to provide an appropriate supplement during the employee’s time off.
Intermittent leave payments
An employee who works part-time or intermittently can be eligible for SDI or PFL benefits if the employee experiences a wage-loss due to the disability or PFL-qualifying circumstances. Under these circumstances, to determine SDI/PFL earnings, take what the employee was earning on a weekly basis before the claim began and subtract the employee’s earnings from working part-time or intermittently. If the wage loss is more than the weekly benefit amount, the employee will receive full SDI or PFL benefits. If the wage loss is less than the weekly benefit amount the employee will receive only the amount of the wage loss.
For example, imagine an employee regularly earns $3,500 per week and is entitled to a weekly benefit amount of $1,620. The employee decides to work intermittently 3 days per week, for which the employer pays the employer pays the employee $2,100. To calculate how much the employee will receive in SDI or PFL benefits, take the employee’s regular earnings ($3,500) and subtract the employee’s earnings for intermittent time off ($2,100). The difference ($1,400) is the employee’s wage loss due to the intermittent leave of absence. Because the wage loss ($1,400) is less than the weekly benefit amount ($1,620), the employee will receive from EDD the amount of the wage loss ($1,400). EDD’s calculation ensures the employee does not receive more than his or her regular weekly wages.
EquiLeave helps employers calculate supplemental leave payments so employees can enjoy fair and equitable family leave. Click the link below for more information.
