Why it matters

In the latest changes to California employment law, Governor Jerry Brown signed an amendment increasing the payment to employees for family and disability leave in the state. For periods of disability or leave beginning on or after January 1, 2018, workers will be entitled to an increase from the current amount of 55 percent of their benefits under the state's Paid Family Leave or State Disability Insurance programs to either 60 or 70 percent, depending on the worker's income. Assembly Bill 908 also eliminated the seven-day waiting period that currently exists before an individual is eligible for family temporary disability benefits. "Families should be able to afford time off to take care of a new child or a member of their family who becomes ill," Gov. Brown said in a press release. "This expansion makes sense for employers and employees." The change comes on the heels of a new law bumping the state's minimum wage up to $15 per hour.

Detailed discussion

In 2002, California became the first state in the country to establish a paid family leave program. Under the current version of the law, employees are entitled to wage replacement for periods of leave due to disability or to care for a family member pursuant to the Paid Family Leave (PFL) and State Disability Insurance (SDI) programs.

For an individual who has quarterly base wages greater than $1,749.20, the weekly benefit was calculated by multiplying base wages by 55 percent and dividing the result by 13. The resulting number could not be higher than the maximum workers' compensation temporary disability indemnity weekly benefit amount.

To make it easier for workers to take up to six weeks off "to bond with a new child or care for an ill family member"—and eliminate the seven-day waiting period for receiving temporary disability benefits—lawmakers enacted Assembly Bill 908, signed into law by Governor Jerry Brown in April. The new law amended the formula for PFL and SDI payments to increase the rate to 60 or 70 percent, depending on an employee's income.

The new law provides that beginning January 1, 2018, individuals with wages above the highest-income quarter during a one-year base period less than $929 will receive a minimum of $50. Those with wages $929 or greater but less than one-third of the state average quarterly wage will be entitled to 70 percent of the amount of wages paid during the highest-income quarter during the base period, divided by 13.

Employees whose wages were at least one-third of the state average quarterly wage during their highest quarter will receive the greater of 23.3 percent of the state average weekly wage or 60 percent of the wages during the highest quarter, divided by 13.

However the math comes out, the wage replacement rate must not exceed the maximum workers' compensation temporary disability indemnity weekly benefit amount established by the Department of Industrial Relations. The revised formula only applies to periods of disability beginning January 1, 2018, but before January 1, 2022.

To read AB 908, click here.