During the course of their lives, many Californians need to take some time off work to bond with a newborn child or take care of an ill family member. The Paid Family Leave Program (PFL) allows them to continue to receive a portion of their pay during these periods.
What Is California’s Paid Family Leave Program?
California’s Paid Family Leave Program was created in 2002 when Senate Bill 1661 was signed into law by Governor Gray Davis. It provides disability compensation to individuals who need to take some time off work to bond with a new child or look after a seriously ill:
- Child
- Grandchild
- Parent
- Grandparent
- Sibling
- Spouse
- Domestic partner, or
- Parent-in-law
The Paid Family Leave Program is entirely funded by worker contributions to the State Disability Insurance Program (SDI).
How Much Compensation Does the Paid Family Leave Program Offer?
The California Paid Family Leave Program offers partial wage replacement to eligible workers for a limited time.
Currently, individuals who need to take time away from work to bond with a child or look after a sick relative can receive between 60 and 70 percent of their average weekly earnings, up to the maximum benefit of $1,357.
The California Paid Family Leave Program does not have a waiting period. Workers can start receiving their benefits on their first day off work. They may continue to claim compensation for up to eight weeks.
Who Is Eligible for Paid Family Leave Benefits in California?
To be eligible to receive Paid Family Leave benefits, workers must have:
- Earned at least $300 in wages during the 12-month base period preceding their claim, and
- Contributed to the State Disability Insurance Program (SDI)
Because these requirements are quite easy to meet, almost all employees in California are eligible to receive Paid Family Leave benefits.
Qualifying for Paid Family Leave is a bit trickier for small business owners, self-employed people, and independent contractors. Because they do not always pay into State Disability Insurance (SDI), they usually need to take an extra step to be eligible to receive PFL benefits.
How Can California Business Owners Qualify for Paid Family Leave?
Business owners who pay themselves as an employee of their business and therefore contribute to State Disability Insurance Program will be eligible for Paid Family Leave benefits. If your business is taxed as an S Corporation, you are likely required to pay yourself as an employee of your business.
How Do You Determine the Amount of Benefits You Will Receive?
The EDD in California has several helpful resources to determine the amount of Paid Family Leave Benefits you will receive.
This Calculator will calculate the benefits you will receive, which are based on the wages that you pay yourself as an employee and will include a look back period of 5-8 months to determine the benefit amount.
Planning ahead is key. As a business owner you have the opportunity to plan ahead to ensure you pay into SDI in advance and in the amounts that will qualify you for the maximum benefit amount. This chart is helpful in determining the wage amounts that correlate with the benefits paid through Paid Family Leave.
Am I Also Eligible for Disability Insurance?
Those individuals who are pregnant and qualify for Paid Family Leave they may also qualify for State Disability Insurance in the same amount as the Paid Family Leave benefits. Typically, this will be paid for up to four weeks before the expected delivery and up to six weeks (for vaginal delivery) or eight weeks (for cesarean section delivery). This could result in additional benefits being paid for 10-12 weeks. It is important to talk to your physician about whether you intend to go on disability before your birth and also about whether you may qualify for additional time after birth due to medical complications resulting from birth or postpartum-related mental health issues.
As a small business owner who is also an employee of your business, you may not have a human resources department to walk you through this process and ensure you get all of the benefits for which you are entitled. At Semanchik Law Group, Inc. we are passionate about paid family leave and the importance of taking time to care for yourself and your new baby after birth. If there is anything we can do to help you through this process, please reach out and schedule a consultation.
Are There Any Other Options for Qualifying for Paid Family Leave?
To qualify for Paid Family Leave benefits, California business owners, self-employed individuals, and independent contractors who do not contribute to the State Disability Insurance Program (SDI) must apply for and obtain Disability Insurance Elective Coverage (DIEC).
This coverage is optional and is available to all contractors, self-employed people, and small business owners who meet certain requirements.
What Are the Eligibility Requirements for DIEC in California?
People who wish to participate in California’s DIEC program must:
- Own their own business, be self-employed, or be working as an independent contractor
- Have an annual net profit of at least $4,600
- Have a valid license, if required by their occupation or industry
- Engage in business throughout the year, not on a seasonal basis
- Receive the majority of their income from their trade, business, or work as an independent contractor
- Be able to perform all of their regular duties on a full-time basis at the time they submit their DIEC application
Individuals who wish to participate in DIEC have to remain in the program for at least two complete calendar years – unless they shut their business or leave the state of California.
People who have questions about these eligibility requirements can speak to a knowledgeable California business lawyer or contact the DIEC Unit at (916) 654-6288.
How Much Does It Cost to Enroll in California’s DIEC Program?
The premiums for California’s DIEC program are based on the net profits a person reports on their annual tax return.
For individuals who apply for DIEC in 2021, the state will review their 2019 tax return and charge the following premiums:
- Net Profit of $4,600 to $128,298: Annual premium of 6.84 percent of net profit, to be paid in four equal quarterly installments.
- Net Profit of $128,299 to $513,191: Annual premium of $8,775.58, to be paid in four quarterly installments. The installments may not be equal.
- Net Profit of $513,192 or more: Annual premium of $8,775.58, to be paid in one installment.
The state might alter these thresholds and premiums in the future. People who want the most up-to-date information should talk to their accountant or business attorney in San Diego.
How Can Eligible Small Business Owners in California Apply for DIEC?
Individuals who wish to enroll in DIEC in California have to complete Form DE 1378DI – Application for Disability Insurance Elective Coverage (DIEC) and mail it to:
Attention: Analysis Resolution and Correspondence Organization
Employment Development Department
PO Box 2068
Rancho Cordova, CA 95741-2068
This form requests information such as:
- Name
- Address
- Social Security Number
- Occupation
- Organization Type
- License Number
- Disability Status
There is no fee to apply for DIEC. Applicants who require assistance with Form DE 1378DI can consult with a skilled California business lawyer.
How Can DIEC Enrollees Apply for Paid Family Leave Benefits?
DIEC enrollees who wish to claim Paid Family Leave benefits in California can file through SDI Online. People who use this portal typically receive a decision in less than one week.
Individuals who would prefer to file a claim by mail can visit an SDI Office, speak to their physician, or call (877) 238-4373 to request a copy of Form DE 2501F – Claim for Paid Family Leave (PFL) Benefits.
Once the claimant completes this form, they should return it to:
State of California
Employment Development Department
P.O. Box 989315
West Sacramento, CA 95798-9315
People who file claims by mail usually receive their decision in around two weeks.
Need Help? Contact a Skilled Business Attorney in San Diego Today!
Do you need help enrolling in the DIEC program or claiming PFL benefits? If so, please don’t hesitate to get in touch with an experienced California at the Semanchik Law Group today. We have been helping clients through these complex processes for years, and we would be more than happy to do the same for you.
To set up an initial consultation with a member of our team, all you need to do is give us a call at (619) 535-1811 or contact us online.
