California EDD Announces 2018 Changes to State Disability Insurance

The California Employment Development Department (EDD) has announced that the 2018 employee contribution rate for State Disability Insurance (SDI) will increase to 1.0%.  The taxable wage base from which the contributions will be taken will increase from $110,902 to $114,967 and the maximum cost to an employee will be $1,149.67.

The EDD currently provides SDI and Paid Family Leave (PFL) benefits equal to 55% of the employee’s base period earnings.  For 2018, the maximum weekly benefit will increase from $1,173 to $1,216.

Additional EDD changes that take effect January 1, 2018:

The one week waiting period for PFL claims has been eliminated but remains in place for SDI claims

  • The wage replacement rates for SDI and PFL increase to:
    •  70% for individuals who earned less than one-third of the state’s average quarterly wage during the highest quarter of their base period; OR
    • 60% for individuals who earned one-third or more of the state’s average quarterly wage during the highest quarter of their base period.

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 are 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 2018.