STATE DISABILITY INSURANCE AND PAID FAMILY LEAVE
The State Disability Insurance (SDI) program provides benefits to eligible workers experiencing a loss of wages when they are unable to perform their regular or customary work due to a non-work-related illness or injury, pregnancy or childbirth.
Paid Family Leave (PFL) is a component of SDI and provides benefits to individuals unable to work because they need to care for a seriously ill family member or bond with a new child.
TAXES - WHO PAYS FOR SDI AND PFL COVERAGE?
SDI and PFL are funded entirely through employee payroll withholdings. Except for public agency employers disability coverage is mandatory. Employers may choose either the State plan or a Voluntary Plan to cover their employees (refer to “Employer Sponsored Voluntary Disability Insurance Plan” on page 110 for more information). Those employees not choosing a Voluntary Plan are covered under the State plan. For more information, please access EDD’s Web site at www.edd.ca.gov/taxrep/taxrte9x.htm or call EDD’s 24-hour Automated Call System at (916) 653-7795.
NOTE: When a worker has more than one employer during a calendar year, it is possible that excess SDI taxes may be withheld from the worker’s wages. Workers should request a refund of excess SDI withholdings on their California income tax return.
The SDI tax rate may be adjusted annually to not more than 1.5 percent (.015) nor less than 0.1 percent (.001) depending on the balance in the SDI Fund. Employee contributions withheld are paid by the employer to either the SDI Fund or a Disability Insurance Voluntary Plan (see page 110).
Eligible claimants may file for SDI or PFL benefits for each occurrence of disability or period of family care leave.
The State Disability Insurance Provisions (DE 2515) pamphlet contains general information on SDI eligibility. The Paid Family Leave insurance program pamphlet (DE 2511) contains general information on PFL eligibility. The Claim for State Disability Insurance (SDI) Benefits (DE 2501) and Claim for Paid Family Leave Benefits (DE 2501F) are application forms that contain additional information.
All California employers who have employees subject to SDI taxes are required to provide the DE 2515 and the DE 2511 to each new employee. The California Unemployment Insurance Code (CUIC) requires employers to provide general SDI information to each employee leaving work due to nonoccupational illness or injury, pregnancy or childbirth. Employers are also required to provide PFL information to each employee leaving work to care for a seriously ill family member or to bond with a new child. The pamphlets and applications are provided to employers at no cost. Additional copies may be ordered by accessing EDD’s Web site at www.edd.ca.gov/taxrep/taxordn2.htm, or contacting the Taxpayer Assistance Center at (888) 745-3886.
When an SDI claim is filed, the employer(s) shown on the SDI claim form will receive a Notice to Employer of State Disability Claim Filed (DE 2503). For PFL claims, employers receive a Notice to Employer of Paid Family Leave Claim Filed (DE 2503F). Complete and return the DE 2503 or DE 2503F within two working days when you have information affecting the claimant's eligibility.
To deter disability fraud, please respond immediately if you are not the employer shown on the DE 2503 or DE 2503F, or if the claimant:
• Is not your employee.
• Has quit his/her job.
• Is receiving wages.
• Has not stopped working.
• Is known to be working for another employer.
NOTE: Because SDI and PFL are paid for by employees, the filing of an SDI or PFL claim will not affect the employer's Unemployment Insurance reserve account. Therefore, the DE 2503 and DE 2503F are not the basis for a ruling, and the employer will not be notified of any determination as a result of the response on the DE 2503 or DE 2503F.
EMPLOYER SPONSORED VOLUNTARY PLAN
California law allows employers to apply to EDD for approval to establish a Voluntary Plan (VP) (which must include Paid Family Leave benefits) for their employees in lieu of the State coverage. To be approved for a VP, the employer must pay a security deposit to the State Treasurer in an amount determined by EDD. The benefit rights under a VP must be as great as the State plan in all respects and better in at least one provision.
Once a VP is approved, the employer is no longer required to send SDI withholdings to EDD. Instead, the employer holds the contributions in a trust to pay disability or PFL benefit claims and approved expenses. The VP employer pays a quarterly assessment to EDD based on the taxable wages of employees participating in the plan and other factors.
A VP must provide better coverage without additional cost to the employees. Based on claims experience, excess funds may be used to increase benefit levels or lower contributions. Please note that any money collected for VP purposes must be used only for the benefit of employees who contribute to the plan.
An employer considering a VP commitment should be aware that the employer takes ultimate responsibility for the plan benefits and expenses. If the accumulated VP trust fund is insufficient to cover benefits or expenses, the employer must loan or contribute funds as necessary. If a plan terminates and there are insufficient trust funds, the employer must assume the financial obligation until all plan liabilities have been met.
For additional information on the DI/PFL Voluntary Plan option, please access EDD’s Web site at www.edd.ca.gov/direp/diind.htm, call (800) 480-3287 (TTY access is available at 800-563-2441), or write to:
Self-employed individuals may elect to cover themselves for SDI and PFL benefits under provisions of the CUIC.
Self-employed individuals who elect coverage pay at a rate determined by the prior annual combined usage of all participants. For further information on elective coverage, download the Information Sheet: Elective Coverage (DE 231EC) at www.edd.ca.gov/taxrep/de231ec.pdf. The Disability Insurance Elective Coverage Program Fact Sheet (DE 8714CC) can be obtained from EDD’s Web site at www.edd.ca.gov/direp/de8714cc.pdf. All forms can also be obtained by contacting the Disability Insurance Elective Coverage Unit at (916) 654-6288 or our Taxpayer Assistance Center at (888)745-3886.
WORKERS’ COMPENSATION INSURANCE
Workers’ compensation insurance is an employer paid indemnity that provides benefits to eligible workers experiencing a loss of wages when they are unable to perform their regular or customary work due to an occupational illness or injury. Generally, employees are not eligible for SDI or PFL when receiving workers’ compensation benefits unless the SDI or PFL rate is greater than the workers’ compensation rate. For additional information, contact the Department of Industrial Relations by phone (refer to the government listings in your local telephone book) or access their Web site at www.dir.ca.gov.
If you have any employees, you are required by law to have workers’ compensation insurance. Failure to do so is a crime and may result in penalties and closure of your business.
If you have questions about workers’ compensation insurance or how to obtain coverage, contact your insurance agent or the Division of Workers’ Compensation at (800) 736-7401.
For information regarding SDI or PFL, access EDD’s Web site at www.edd.ca.gov/direp/diind.htm or contact our State Disability Insurance Program at (800) 480-3287 or Paid Family Leave Insurance Program at (877) 238-4373.
NOTE: To provide affordable benefits to eligible workers, the SDI program has systems in place to detect and deter fraud. Please report suspected fraudulent activity to EDD's Fraud Hotline at (800) 229-6297.