California raises wage replacement for new parents, sick workers

Gov. Gavin Newsom signed legislation on Friday that will increase the amount of money workers receive under the state’s paid family and medical leave program, offering a boost that supporters say will ensure workers earn lower wages not be excluded from a service for which they are already paying.

From 2025, the state will pay up to 90% wage replacement for new parents and those who have to take time off to care for a seriously ill family member or themselves. Senate Bill 951 by Sen. María Elena Durazo (D-Los Angeles) also ensures that the wage replacement will remain between 60% and 70% for the next two years after the rate should return to 55% starting Jan. 1.

“California families and our state as a whole are stronger when workers have the support they need to provide for themselves and their loved ones,” Newsom said in a statement. “California launched the nation’s first paid family vacation program 20 years ago, and today we are taking an important step to ensure more low-wage workers, including many women and people of color, have access to their time off, while also being able to work for provide for their family.”

California workers automatically contribute to the employee-sponsored state disability insurance program, which includes paid family leave. However, many employees are either unaware of the benefits or say they can’t afford a pay cut to take some time off. According to the California Budget and Policy Center, higher earners were four times more likely to use the paid family leave program than workers in the lowest wage bracket in 2020.

The law provides 90% wage replacement for lower-paid workers, while everyone else gets 70% of their wages.

Newsom vetoed a similar measure by former MP Lorena Gonzalez (D-San Diego) last year, saying the bill would “create significant new costs” and “result in higher disability contributions paid by workers.”

The State Disability Insurance Scheme was created in 1946 to provide partial earnings replacement benefits to workers who were unable to work due to pregnancy or non-work-related illnesses and injuries. California expanded the program and in 2004 became the first state in the nation to introduce a paid family leave program, offering workers partial pay to care for a new baby or care for a critically ill family member.

In 2020, the state increased the length of time a person can be entitled to paid family leave from six weeks to eight weeks. Before that, lawmakers increased the wage replacement from 55% to 60% to 70% depending on a person’s average weekly wage, although that increase was scheduled by Jan. 1 if Newsom AB 951 didn’t sign.

The programs are funded entirely through an employee payroll deduction. Under the new law, the state will no longer have a cap on payroll taxes, meaning higher earners will pay more into the system. However, a legislative analysis of the bill found that those additional contributions will not fully offset the roughly $3 billion to $4 billion in new benefits. California raises wage replacement for new parents, sick workers

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