The California Employment Development Department (EDD) which previously forecasted in May that the 2020 contribution rate would increase to 1.1%, has announced that the 2020 employee contribution rate for State Disability will remain at 1.0%. The taxable wage base from which the contributions will be taken will increase from $118,371 to $122,909 and the maximum cost to an employee will be $1,229.09.
SDI provides disability and Paid Family Leave (PFL) benefits equal to 60 to 70%* of the employee’s base period earnings. For 2020, the maximum weekly benefit will increase from $1,252 to $1,300.
California permits employers to opt out of SDI and establish a private plan for Voluntary Disability Insurance (knows as a “Voluntary Plan”), provided certain requirements are met. Among these requirements are that the Voluntary Plan’s cost to employees 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 2020.
*SDI will provide disability and PFL benefits equal to 70% for employees with an annual income less than ~$22,967 (1/3 of the State Average Weekly Wage).
The Larkin Company is an administrator of self-insured disability plans and leave of absence programs for employers. Please email us at contact@thelarkincompany.com or visit www.thelarkincompany.com for more information about our services.
