In an effort to offer assistance to low wage workers and to shrink the growing income gap, Governor Jerry Brown signed AB 908 in early 2017; a bill that will increase State Disability Insurance (SDI) and Paid Family Leave (PFL) in the State of California.
AB 908 will go into effect on January 1st, 2018.
This new legislation raises SDI and PFL from 55% to 60% for employees earning more than one-third the average quarterly wage, and to 70% for workers who earned less than one-third. It will also remove the one week waiting period for PFL claims.
For businesses, this means more employees may now decide to use the full six weeks of PFL, seeing as though prior to the increase, many employees could not survive off of only 55% of their income. While the new bill goes into effect on Jan. 1 2018, it is also set to expire at the end of 2021. On March 1, 2021, the Employment Development Department (EDD) will report to the California Legislature the effects of AB 908 they will review whether to extend or modify the law.