California Assembly Bill AB 908, which was signed into law on April 11, 2016, is set to take effect on January 1, 2018.  The bill increases the benefits available under California State Disability Insurance (SDI), as well as the California Paid Family Leave Program (PFL).

In 2017, the two California programs paid a 55% wage replacement weekly benefit ranging from a minimum of $50 per week to a maximum of $1,173 per week in 2017.  There was also a seven day waiting period to receive benefits under both programs.


Law Changes

AB 908 makes two major changes to the current law:

The wage replacement rates for both SDI and PFL will increase in 2018 to the following:

  • 70% wage replacement for individuals who earned less than 1/3 of the state’s average quarterly wage during the prior four quarters; or
  • 60% for individuals who earned 1/3 or more of the state’s average quarterly wage during the prior four quarters (up to a maximum of $1,216 per week for 2018)

AB 908 also eliminates the waiting period for PFL claims, but does not change the waiting period for SDI claims, which remains set at seven days.


Funding the Increase

The California Employment Development Department (EDD) estimates a 0.1% increase to the employee contribution rate from 2019 to 2021 to fund the increased benefits.


Sunset Provision

The SDI and PFL benefit increases are scheduled to expire at the end of 2021.  At this time, the EDD will report to the Legislature on the effects of the increase and the Legislature will determine whether the changes will remain in effect beyond 2021.


Interaction with the San Francisco Paid Parental Leave Ordinance

The San Francisco Paid Parental Leave Ordinance (PPLO) is another law (different than CA PFL) that requires employers to provide supplemental compensation to employees working in San Francisco who are already receiving California Paid Family Leave for purposes of bonding with a new child.

During the PFL leave period, Covered Employers are required to provide Supplemental Compensation during the 6 week leave period in an amount such that the California Paid Family Leave wage replacement plus the Supplemental Compensation equals 100% of the employee’s gross weekly wage (up to a cap).

The PPLO cap is proportional to the CA PFL maximum weekly benefit amount.  An employee’s maximum weekly total benefit for claim effective dates in 2018 would be $2,027 (for both the PFL and the PPLO benefit). 


Covered Employers

The PPLO will go into effect for employers with 20+ employees (regardless of location) beginning on January 1, 2018.  Employers with 35+ employees are already subject to this ordinance (since January 2017).


Covered employees are those who:

  • began employment at least 180 calendar days prior to the start of leave;
  • perform at last 8 hours of work per week in San Francisco;
  • at least 40% of whose total weekly hours worked are in San Francisco; and
  • are eligible to receive paid family leave compensation under the California Paid Family Leave law for purposes of bonding with a new child.


Important information on PPLO for 2018


Action Items for Employers 



  • Employers are required to withhold and remit State Disability Insurance (SDI) contributions and to inform their employees of SDI benefits.
  • Employers are responsible for providing information on SDI to their employees by posting and providing the following:
    • Notice to Employees: Unemployment Insurance/Disability Insurance/Paid Family Leave (DE 1857A) – Poster advising employees of their right to claim Unemployment Insurance (UI), Disability Insurance (DI), and Paid Family Leave (PFL) benefits.
    • Disability Insurance Provisions (DE 2515) – Brochure for new hires and when an employee notifies the employer they need to take time off from work due to a non-work-related illness, injury, pregnancy or childbirth.
    • Paid Family Leave Benefits (DE 2511) – Brochure for new hires and when an employee notifies the employer they need to take time off from work to care for a seriously ill family member or to bond with a new child.
    • Forms and publications can be ordered through the Online Forms and Publications page, including download, and print Disability Insurance Forms and Publications, and Paid Family Leave Forms and Publications.
    • You may also order pamphlets and posters by calling the California EDD toll-free number.



  • If you have 20+ employees, any of whom may be covered by the San Francisco PPLO ordinance – you will need to comply with the ordinance beginning January 1, 2018.
  • If PPLO will be new for you, you should include a description of the right to Supplemental Compensation under PPLO in your employee handbook, or other written employee materials.
  • Ensure you provide a copy of the Paid Parental Leave Form to your employees who ask about parental leave, or if they tell you they are expecting a new child.  It is also recommended that this be provided to all new employees.


The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Joanna Castillo– Joanna is the Client Compliance Manager for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Joanna enjoys live music, college football, travel, and walking her dog in Golden Gate Park.