California is expanding state benefits available to workers who lose wages while taking time off to care for a seriously ill family member or to bond with a new child. On June 27, 2019, Governor Gavin Newsom signed California’s 2019-20 state budget, which included an expansion of the state’s family temporary disability insurance program administered through the Employment Development Department (EDD). The benefit program is commonly referred to as “paid family leave” or PFL. Senate Bill (SB) 83 provides certain workers with up to eight weeks—up from six weeks—of PFL benefits. The extended maximum leave duration will go into effect on July 1, 2020.
Currently, California’s PFL program provides employees “who take time off from work to care for a seriously ill family member (child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner) or to bond with a new child entering the family through birth, adoption, or foster care placement” with partial pay. This family temporary disability insurance program (which is part of the state’s disability insurance program), provides covered workers wage replacement benefits for up to six weeks.
The new law, once effective, will “instead provide for wage replacement benefits for up to eight weeks to workers who take time off work to care for a seriously ill family member or to bond with a minor child within one year of birth or placement, as specified.”
California was the first U.S. state to implement a PFL program. Since then, five states—New Jersey, New York, Massachusetts, Rhode Island, and Washington—as well as the District of Columbia have enacted programs. In recent years, California has expanded its program to include a wider range of family members, eliminate a waiting period, and increase benefit amounts.
According to the governor’s press release, the new budget includes a “Parents Agenda that addresses specific cost-of-living issues faced by young parents and parents of small children.”
The extended family leave “potentially allow[s] a child to benefit from as much as four months of paid family leave,” stated the press release. Presumably, this figure contemplates two working parents, each of whom take off eight weeks. The governor has plans to expand the program even further. “This will bring California closer to the goal of six months of paid family leave, helping more workers, especially lower-wage workers, who pay into the system take the benefits.”
Although the EDD’s PFL plan is currently well funded, that could change as the state continues to expand other benefits. Currently, the payroll tax rate is 1.0 percent of an employee’s first $118,371 in wages earned in a calendar year. The law as currently written authorizes a tax rate as high as 1.5 percent. Analysts expect that the rate could rise to 1.1 percent in 2020, and additional increases could come in future years.
Some employers coordinate a company benefit plan with the state’s PFL benefit. For example, an employer may pay the difference between the state’s benefit and the employee’s regular wages during leave to bond with a new child. Employers with such plans may want to reevaluate their plans in light of the state’s 2020 expanded benefits.