Why is a new employee, who is out on a medical leave, receiving less than 60% of their entitled state disability insurance?

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

The most likely scenario in this case, since the employee is relatively new, is that the Employment Development Department (EDD) is basing their benefit on whatever their earnings were long before they started their job with you.

SDI benefits are not based on what your employee is earning at the time they file their claim, but rather on wages earned in a one-year base period that is five 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.

The EDD calculates weekly benefit amounts using a base period which covers 12 months and is divided into four consecutive quarters of three months each. So, for example, if your employee filed a claim beginning February 21, 2024, EDD would use a base period of October 1, 2022, through September 30, 2023, to calculate their weekly benefit.

If your new employee’s base period ended before they started their job at your company, and their wages at their previous job was lower than what they earn now, the benefit will be based on those lower wages that fall within the base period rather than on their 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 they 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.

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 them to ask EDD to recalculate using a special base period that might provide higher benefits.

Read more about State Disability Insurance Benefit Payments, including SDI Benefits Base Period, in the HR Library.