Lower Base Period Wages Can Affect Expected Disability Benefits

A fairly new employee is out on a medical leave and receiving state disability insurance, but the weekly benefit she’s getting is far less than the 60% I thought an employee was entitled to. Why is that?

While the general rule is that state disability insurance (SDI) payments are usually about 60% of an employee’s wages, there are a number of reasons that the payments may be less than that.

The most likely scenario in this case, since you mention that your employee hasn’t worked for you very long, is that the Employment Development Department (EDD) is basing her benefit on whatever her earnings were long before she started her job with you.

It’s important to understand that SDI benefits are not based on what your employee is earning at the time she files her claim, but rather on wages earned in a one-year base period that is 5 to 18 months before the claim start date. The benefit amount is then calculated based on the quarter in that base period with the highest wages.

Calculating Base Period

EDD uses the following dates to determine the one-year base period on which benefits are calculated:

• For claims filed in January, February or March, the base period is the 12 months ending the previous September 30.

• For claims filed in April, May or June, the base period is the 12 months ending the previous December 31.

• For claims filed in July, August or September, the base period is the 12 months ending the previous March 31.

• For claims filed in October, November or December, the base period is the 12 months ending the previous June 30.

So, for example, if your employee filed a claim beginning February 21, 2022, EDD would use a base period of October 1, 2020 through September 30, 2021 to calculate her weekly benefit.

If your new employee’s base period ended before she started her job at your company, and her wages at her previous job were lower than what she earns now, the benefit will be based on those lower wages that fall within the base period rather than on her current earnings.

Although this is the most likely reason for the lower-than-expected weekly payment, it’s also possible that your employee’s benefits were reduced if EDD determined that she had a benefit overpayment for a previous unemployment insurance, paid family leave or SDI claim, or has late court-ordered child or spousal support payments due.

Request to Recalculate

If your employee’s current base period wages were negatively affected by military service, a workers’ compensation injury, a trade dispute, or long-term unemployment, California law allows her to ask EDD to recalculate using a special base period that might provide higher benefits.

Column based on questions asked by callers on the Labor Law Helpline, a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.