Update Applicable to:
All employers with employees in the state of California and all employers with 20 or more employees in the city of San Francisco, California
What happened and what are the details?
The California Employment Development Department (EDD) has released the Voluntary Plan Employee Contribution and Benefit Rates for 2023.
Employers with employees located in California are generally required to withhold and send state disability contributions to the EDD.
The 2023 rates are as follows:
|“Employee Contribution Rate”||0.9%|
|“Taxable Wage Ceiling” (per employee per year)||$153,164.00|
|“Maximum Contribution” (per employee per year)||$1,378.48|
|“Maximum Weekly Benefit Amount” (WBA)||$1,620.00|
|“Maximum Benefit Amount” (WBA X 52 weeks)||$84,240.00|
|“Assessment Rate” (this figure is the product obtained by multiplying the worker contribution rate by 14% or 0.9 X 14%)||0.126%|
The Employee Contribution Rate is the percentage withheld from the wages of employees covered by Disability Insurance (DI) and Paid Family Leave (PFL). The Taxable Wage Ceiling is the maximum yearly wage per employee subject to DI and PFL withholding. The Maximum Contribution is the maximum amount withheld from the yearly wages of an employee who is covered by state disability and who annually earns an amount equal to or exceeding the Taxable Wage Ceiling.
The change in contribution rates and the Maximum Weekly Benefit Amount is relevant to employers who comply with San Francisco’s Paid Parental Leave Ordinance (PPLO). The city of San Francisco requires most employers with 20 or more employees worldwide to supplement PFL benefits employees receive to bond with a new child. During the PFL leave period, the PPLO supplemental compensation provided by an employer, added to the PFL wage replacement benefit received from the EDD, must equal 100% of the employee’s gross weekly wage, subject to a cap. For 2023, the PPLO cap will be $2,700 per week.
The Assessment Rate is relevant to employers that maintain a state-approved voluntary plan (VP), a disability insurance plan that an employer can offer to its California employees as a legal alternative to mandatory DI and PFL. The Assessment Rate is the amount an employer pays to the EDD as an administrative expense for maintaining a voluntary plan.
For more information, please see the links below:
Contribution Rates and Benefit Amounts
San Francisco Paid Parental Leave Ordinance
What do employers need to do?
Employers should carefully review the links provided above and make any necessary adjustments to comply with the law(s).