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California Revises Formula for Paid Family Leave and State Disability Insurance Benefits to Assist Lower Wage Earners

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After vetoing a similar bill last year, on September 30, 2022, California Governor Newsom signed Senate Bill (SB) 951, which increases wage replacement rates for lower wage earners under the state Paid Family Leave program (PFL) and State Disability Insurance (SDI) programs.

Starting in 2025, workers who earn 70 percent or less than the state’s average wage would be eligible for 90 percent of their regular wages under the PFL and SDI programs. Currently, low-wage earners may be eligible for 70 percent of their regular wages under the programs.

Though PFL and SDI are state benefits, employees can apply for the benefits while on unpaid leaves, such as under the California Family Rights Act (CFRA) and Family Medical Leave Act (FMLA). As such, this increase in the state benefits formula may make unpaid leaves for lower wage earners more palatable as it will mean a less significant loss of income.

Earlier this year, California also started a grant program to assist small businesses with the costs associated with employees on leave under the Paid Family Leave program, e.g., expenses incurred in training existing staff or hiring temporary employees during employee leaves.

If you have questions about SB 951, Paid Family Leave, or related issues, contact a Jackson Lewis attorney to discuss.

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