California EDD Announces 2014 Changes to SDI

California EDD Announces Changes to State Disability Insurance

The California Employment Development Department (EDD) has announced that the 2014 employee contribution rate for State Disability Insurance (SDI) will remain at 1.0%, lower than the 1.2% shown in the EDD’s May forecast. The lower rate is a function of a higher SDI Fund balance. The taxable wage base from which the contributions will be taken will increase to $101,636, and the maximum annual cost to an employee will be $1,016.36.

SDI provides disability and Paid Family Leave (PFL) benefits equal to 55% of the employee’s base period earnings. For 2014, the maximum weekly benefit will increase from $1,067 to $1,075.

California permits employers to opt out of SDI and establish a private plan for Voluntary Disability Insurance (known as a “voluntary plan”), provided certain requirements are met. Among these requirements are that the voluntary plan’s employee cost be no more than the cost for SDI and that benefits paid by the plan be at least equal to what SDI would pay.

The Larkin Company will reach out to clients for whom we administer a voluntary plan to assist them in planning for 2014.

Prior Year Announcements

The Larkin Company is an administrator of self-insured disability plans (including self- insured California SDI) and leave of absence programs for employers. Please contact us for information about our services.