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New State Disability Rules Impact CA Business Owners

August 15th, 2017

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Effective January 1, 2018, California’s State Disability Insurance program (SDI) and Paid Family Leave (PFL) is changing dramatically.

What you need to know

  • The current income replacement of 55% will increase to 60% and up as high as 70%, if your salary is under a certain threshold (one-third of the state’s average quarterly wage).
  • The one week waiting period for PFL leave payments will be eliminated (but will remain for SDI).
  • There will be an increase in the tax to pay for these benefits. Currently, employee contributions range from 0.1% – 1.5% but according to the Employment Development Department (EDD), the estimate is a 0.1% increase to the worker contribution rate from 2019 to 2021 to fund the increased benefit levels.

Do You Offer Short Term Disability?

If you offer a Supplemental Short Term Disability policy to your employees and this has not been addressed, it is imperative for you to talk with us. With the impending changes, many Employers will find their current SDI plans obsolete without the proper changes to the Plan Documents.  Without addressing the updates to your plan, employers could be left paying thousands of dollars a year for an SDI plan that will not pay any benefit to employees.

Let’s Discuss

These changes impact nearly every company offering Short Term Disability for their employees.  At Brown & Brown, we work to ensure your business is informed on all legal and compliance changes so that your company is prepared and your benefits protect employees as they are intended to. Our Benefit Consultants offer complimentary policy reviews to determine how this new change will impact your company and the employees. Let us know a good time for us to discuss this crucial information with you.