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California, Hawaii, New Jersey, Rhode Island, New York and Puerto Rico have mandated short-term disability programs which provide wage replacement to eligible employees. Each state funds their disability program differently, whether it be through employee wage deductions and/or employer contributions. New York and Puerto Rico have set their contribution and benefits amounts by statute, while the other states annually increase their rates. The 2020 contribution and benefit rates are outlined below.

 

California

Contributions: California State Disability Insurance is funded through employee wage deductions, which is 1% of employees’ taxable wages. Starting January 1, 2020, the taxable wage increases to $122,909 (from $118,371 in 2019), increasing the maximum deduction to $1,229.09 (from $1,183.71) annually.

Maximum Benefit: The 2020 maximum weekly benefit increases to $1,300 per week (from $1,252 per week in 2019).

  2020 2019
Employee (EE) wage deductions 1% from EE’s wages, up to $122,909 (max $1,229.09 annually) 1% from EE’s wages, up to $118,371 (max $1,183.71 annually)
Maximum Weekly Benefit $1,300 $1,252

California Resources:

 

Hawaii

Contributions: Hawaii Temporary Disability Insurance (TDI) requires employers to maintain private TDI coverage or set up an approved self-insured plan. Employers can take up to 0.5% of employees’ weekly wages, up to a maximum set annually, to help pay for TDI coverage. For 2020, the maximum weekly wage increases to $1,119.44 (from $1,088.08 in 2019), increasing the maximum deduction to $5.60 (from $5.44 in 2019) per week. This means employers can deduct up to $5.60 per week from employees’ wages to pay for TDI coverage.

Maximum Benefit: The 2020 maximum weekly benefit increases to $650 per week (from $632 per week in 2019).

  2020 2019
Employee (EE) wage deductions 0.5% of EE’s wages, up to $1,119.44 weekly (max $5.60 weekly) 0.5% of EE’s wages, up to $1,088.08 weekly (max $5.44 weekly)
Maximum Weekly Benefit $650 $632

Hawaii Resources:

 

New Jersey

Contributions: New Jersey Temporary Disability Benefits (TDB) are funded by both employee and employer contributions. The 2020 contribution rates are as follows:

  • The employee contribution is increasing to 0.26% on the first $134,000 in wages (up to a maximum of $350.74 annually) from 0.17% on the first $34,400 (up to maximum contribution of $58.48 annually) in 2019.
  • The employer contribution varies from 0.1% to 0.75% of taxable wages earned by each employee. In 2020, the taxable wage increases to $35,300 (a maximum of $35.30 to $264.75) from $34,400 (a maximum of $34.40 to $258.00) in 2019.

Maximum Benefit: From January 1, 2020 to June 30, 2020, the weekly benefit will be 66 2/3% of average weekly wage (AWW), up to a maximum of $667 per week. Starting July 1, 2020, the weekly benefit will be 85% of AWW, up to a maximum of $881 per week.

Change for 2020: To qualify for TDB in 2020, employees must have worked at least 20 weeks, earning at least $200 weekly, or a combined total of $10,000 in the last 52 weeks. This is a change from the eligibility requirements in 2019, which required employees to work at least 20 weeks, earning at least $172 weekly, or a combined total of $8,600 in the past 52 weeks.

  Starting July 1, 2020 January 1, 2020 to June 30, 2020 2019
Employee (EE) Wage Deductions 0.26% on the first $134,900, up to $350.74 annually 0.26% on the first $134,900, up to $350.74 annually 0.17% on the first $34,400, up to $58.48 annually
Employer Contribution Varies from 0.1% to 0.75% on the first $35,300 earned by each EE (from $35.30 to $264.75) Varies from 0.1% to 0.75% on the first $35,300 earned by each EE (from $35.30 to $264.75) Varies from 0.1% to 0.75% on the first $34,400 earned by each EE (from $34.40 to $258.00)
Maximum Weekly Benefit 85% of AWW weekly wage, up to a max $881 66 2/3% of AWW weekly wage, up to a max $667 66 2/3% of AWW weekly wage, up to a max $650

New Jersey Resources: Information for Employers: New Jersey Temporary Disability Insurance

 

Rhode Island

Contributions: Rhode Island Temporary Disability Insurance (TDI) is entirely financed through employee payroll deductions. For 2020, employee wage deductions increase to 1.3% of the first $72,300 in wages (from 1.1% of the first $71,000 in 2019).

Maximum Benefit: In 2020, the weekly benefit increases to $867 per week (from $852 per week in 2019).

  2020 2019
Employee Wage Deductions 1.3% of first $72,300 in earnings 1.1% of first $71,000 in earnings
Maximum Weekly Benefit $867 $852

Rhode Island Resources:

 

New York

There is no 2020 change to the New York Disability Benefits Law, which allows up to 0.5% of employee wage deductions, up to $0.60 per week. There is no specific amount that employers must contribute, but they must pay the cost to the extent that employee contributions are insufficient. The maximum benefit allowance is up to $170 per week. New York’s rates have remained unchanged since 1989.

New York Resources: New York State Disability Benefits Law

 

Puerto Rico

There is no 2020 change to the Puerto Rico disability law, which allows up to 0.3% of employee wage deductions, up to $9,000. The maximum benefit allowance is up to $113 per week. Puerto Rico’s rates have remained unchanged since 1972.

 

Employer Action Items

  • Employers who have employees in states that have mandated disability programs should ensure they update employee payroll deductions and/or employer contributions with 2020 rates, as applicable.
  • Employers should work with their payroll vendor to ensure that any employee wage deductions are properly being withheld according to the 2020 rates.
  • Sequoia One Clients ONLY: For clients with employees in states that have mandated disability programs, your Sequoia One systems will be updated with the 2020 rates, as necessary.

 

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.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.