When an employee goes out on medical or parental leave that is covered by either State Disability Insurance (SDI) or Paid Family Leave (PFL) benefits through the State, how are these benefits affected by employer- paid sick leave, vacation or other PTO benefits? This can be a tricky area because employees are only eligible for SDI or PFL benefits to the extent that they lose income due to the covered leave. Therefore, the employee’s receipt of paid time off benefits from the employer during the leave could reduce the employee’s eligibility for SDI/PFL benefits. Moreover, concurrent payment of SDI/PFL benefits plus paid time off through the employer could result in overpayment where the employee receives more than 100% of their normal wages. The Employment Development Department (EDD), which administers SDI and PFL benefits, places the responsibility on the employer and employee to ensure that during the leave the employee is not receiving total wages/benefits that exceed the employee’s normal wages. However, EDD can assist with compliance by offering the option of integration/coordination of SDI and PFL benefits.
What is integration/coordination of SDI and PFL benefits?
Integration or coordination of these benefits is a process by which the employee is paid the full SDI or PFL benefit amount and is also paid wages from the employer through available paid leave (such as paid sick leave, paid vacation, or PTO) to cover the difference up to the employee’s normal wages. Through this process the employee could potentially receive up to 100% of normal gross weekly wages for the benefit period, but not more.
For example: The employee’s current gross weekly wage is $500. The weekly benefit amount from PFL is $275. The $500 minus $275 equals a $225 per week wage loss. The employer can integrate/coordinate a maximum amount of $225 per week in gross wages to the employee, allowing the employee to receive the equivalent of 100 percent of normal weekly gross pay.
How does an employer implement the integration/coordination process?
EDD paperwork requesting wage information about an employee who has initiated a SDI/PFL claim also seeks information about the employer’s intent to coordinate/integrate benefits with EDD benefits. The employer should advise employees in advance for permission for EDD to disclose to the employer the SDI/PFL payments made to the employee so the employer knows exactly how much in available leave benefits to pay the employee without exceeding normal wages. The SDI/PFL benefits claim form asks the employee to consent to EDD’s releasing benefits payment info to the employer. Otherwise, the employer can ask the employee directly for proof of benefits payments from the EDD. The employer can then pay the employee the difference between the payments from EDD and the employee’s normal wages.
EDD has a toll-free number for employers to call with any questions about this program, or to verify the employee’s benefits payments: 1-855-342-3645.
Note that the first seven days of a SDI claim (but not PFL) is a non-payable waiting period, therefore wages paid by an employer through sick leave, vacation pay, etc. during that timeframe are not in conflict with SDI payments.
Employers who choose to integrate/coordinate SDI and/or PFL benefits with paid time off benefits should so indicate in their leave policies.