Understanding State Disability Insurance (SDI) and Workers’ Compensation in California

In California, two critical systems provide wage replacement and financial support to employees facing temporary disabilities or injuries: State Disability Insurance (SDI) and Workers’ Compensation. While both programs aim to support workers, they differ in eligibility criteria, benefits, and processes. In this article, an attorney for employers from the law firm California Business Lawyer & Corporate Lawyer helps businesses by ensuring compliance with labor laws, minimizing legal risks, handling employee disputes, and representing the company in court lawsuit or administrative proceedings.

State Disability Insurance (SDI): Eligibility and Benefits

What is SDI?

State Disability Insurance (SDI) is a California state program managed by the Employment Development Department (EDD). It offers partial wage replacement to workers who cannot perform their regular or customary work due to physical or mental health conditions. This includes illnesses, injuries, pregnancy, childbirth, or recovery from surgeries.

Who is Eligible for SDI?

Almost all California employees are covered under SDI, with a few exceptions:

• Certain domestic workers
• Independent contractors
• Election campaign workers
• Student workers employed by their school

Workers employed by private employers that offer comparable short-term disability insurance (STD) plans may also be excluded from SDI. Employees unsure of their eligibility should consult their HR department, said California employer defense attorney at the Nakase Law Firm.

What Constitutes a Disability for SDI?

A disability under SDI is any mental or physical condition preventing you from performing your usual work for more than one week. This includes:

• Physical illnesses or injuries
• Mental health issues
• Pregnancy and childbirth
• Treatment for drug or alcohol abuse

A licensed healthcare provider must certify your disability to qualify for benefits.

Applying for SDI

The fastest way to apply for SDI is through the EDD’s website. Alternatively, applications can be filed by mail after requesting forms via the EDD’s contact center.

Key application requirements include:

• Filing within 49 days of the disability’s start date
• Demonstrating sufficient earnings in the “base period”
• Actively working or looking for work at the time the disability began

Understanding the Base Period

The base period determines your eligibility and benefit amount. It refers to the 12-month period ending 15 to 17 months before your application. It is divided into quarters, and you must have earned at least $300 in one quarter to qualify.

If you were unemployed before becoming disabled, two additional rules might apply:

1. If you have an unexpired unemployment insurance claim, the same base period can be used.
2. Periods of unemployment lasting 60 or more days may allow adjustments to the base period.

How Much Does SDI Pay?

SDI benefits replace approximately 60-70% of your average wages, depending on income. As of recent updates, the maximum weekly benefit is $1,216. Payments are processed every two weeks, and benefits cannot exceed the total wages earned during the base period.

Workers’ Compensation: Coverage and Temporary Disability Benefits

What is Workers’ Compensation?

Workers’ Compensation is a system designed to compensate employees for work-related injuries or illnesses. Unlike SDI, it applies only to workplace incidents and requires a healthcare professional to confirm that the injury prevents or restricts work.

Temporary Disability Benefits (TTD)

Temporary disability benefits are paid when an employee’s work injury prevents them from performing their job. The benefits replace lost earnings but are limited to two-thirds of the average weekly wage.

For example:

• A receptionist diagnosed with repetitive wrist trauma may qualify for TTD benefits if their employer cannot provide suitable alternative work.
• A warehouse worker with a back injury, however, may not receive TTD if the employer accommodates restrictions, such as avoiding heavy lifting.

Duration of Temporary Disability Benefits

In most cases, temporary disability benefits last for a maximum of 104 weeks within a five-year period from the date of injury. Certain severe medical conditions, such as amputations, severe burns, or chronic lung disease, allow for up to 240 weeks of benefits.

Benefits may end earlier if:

• The employee fully returns to work
• A doctor clears the employee to work with restrictions that the employer can accommodate
• The employee’s condition stabilizes, making them eligible for permanent disability benefits

Labor Code 4661.5 and Adjusted Payments

Under Labor Code Section 4661.5, temporary disability payments may increase if the employee’s wages rise during their disability period. For example:

• If a union negotiates a pay raise during the disability period, employees are entitled to higher TTD benefits based on the updated earnings rate.
• This rule also applies if an employee’s earnings naturally increase after returning to modified work and undergoing subsequent surgeries.

Supplementing TTD Benefits

Since TTD benefits cover only two-thirds of lost wages, employees can use accrued leave credits such as vacation, sick leave, or holiday pay to supplement their income. This ensures a wage closer to their full salary.

Comparing SDI and Workers’ Compensation

Key Differences

When Can SDI and Workers’ Compensation Overlap?

While SDI and Workers’ Compensation are typically distinct, they can overlap in specific situations:

• If a Workers’ Compensation claim is delayed or disputed, employees may apply for SDI benefits temporarily.
• If Workers’ Compensation benefits are approved later, the insurer must reimburse the SDI program.
• In rare cases where SDI benefits exceed Workers’ Compensation payments, employees may receive stipends from both sources simultaneously.

Special Considerations for Public and Education Sector Employees

School District Employees

Under the Education Code, school employees (teachers, aides, custodians, etc.) receive additional benefits, including:

• 60 days of industrial accident leave (full pay)
• Sick leave, vacation leave, and paid holidays
• “Differential leave,” which allows partial wage replacement for up to five months

These benefits supplement Workers’ Compensation payments, ensuring school employees face minimal financial disruption during recovery.

Public Safety Employees

Public safety officers, including police and firefighters, benefit from Labor Code Section 4850, which provides:

• One year of full salary replacement for industrial injuries
• Temporary disability benefits thereafter at the standard two-thirds rate

These additional protections recognize the hazardous nature of public safety roles.

Late Payments and Penalties: Labor Code Section 4650

Labor Code Section 4650 protects employees against late disability payments. If an insurer fails to pay benefits within 14 days of the due date, they must add a 10% penalty to the payment. This ensures timely financial support for injured or disabled employees.

Long-Term Disability Options

If a disability extends beyond the benefit periods for SDI or Workers’ Compensation, workers may explore federal programs such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). These programs offer continued support for long-term disabilities, subject to specific eligibility criteria.

Conclusion

California’s State Disability Insurance (SDI) and Workers’ Compensation systems provide critical financial support to workers facing temporary disabilities. While SDI covers non-work-related conditions, Workers’ Compensation specifically addresses workplace injuries. Understanding the eligibility requirements, benefits, and processes for each program ensures that employees receive the compensation they deserve. Special provisions for public safety officers and school district employees further highlight the importance of tailored protections for specific worker groups. By supplementing benefits with accrued leave and staying informed about legal protections, workers can minimize financial hardships during recovery.