California raises wage replacement for new parents, sick workers

Gov. Gavin Newsom signed a bill Friday that will increase the amount of money workers receive under the state’s paid family and medical leave program, providing a boost that supporters say will ensure lower wage workers are not locked out of a benefit they are already paying for.

Beginning in 2025, the state will pay up to 90% in wage replacement for new parents and those who need 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% during the next two years after the rate was scheduled to return to 55% beginning Jan. 1.

“California families and our state as a whole are stronger when workers have the support they need to care for themselves and their loved ones,” Newsom said in a statement. “California created the first Paid Family Leave program in the nation 20 years ago, and today we’re taking an important step to ensure more low-wage workers, many of them women and people of color, can access the time off they’ve earned while still providing for their family.”

California workers automatically pay into the employee-funded 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 in order to take time off. Higher-wage earners were four times more likely to use the Paid Family Leave program in 2020 than workers in the lowest wage bracket, according to the California Budget and Policy Center.

The law will provide 90% wage replacements for eight weeks to workers who make less than the state’s average wage, while higher earners will receive 70% of their pay.

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

The state’s disability insurance program was created in 1946 to provide partial wage replacement benefits for employees unable to work due to pregnancy or non-work related illnesses and injuries. In 2002, Gov. Gray Davis signed into law an expansion of the program, making California the first state in the nation to offer comprehensive paid family leave. The law, authored by then state Sen. Sheila Kuehl, provides workers with partial pay in order to bond with a new baby or care for a seriously ill family member.

“Twenty years after California adopted the nation’s first comprehensive paid family leave program, we can now be proud that our state leads when it comes to equity for low-paid workers and families of color,” Durazo said in a statement.

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

The programs are funded entirely by an employee payroll deduction. Under the new law, the state will no longer have a cap on payroll tax contributions, meaning higher-income earners will pay more into the system. However, a legislative analysis of the bill said those added contributions will not entirely offset the approximately $3 billion to $4 billion in new benefits.

“The Governor’s signature on SB 951 means that so many more California workers and their families will be able to take Paid Leave for their own illness, to bond with a new child, or to care for a seriously ill loved one,” said Jenya Cassidy, director of the California Work & Family Coalition, in a statement. “This will make a huge difference in people’s lives.”

On Thursday, Newsom signed a bill that expands the list of people for whom a worker can use paid family leave or sick leave to care for. AB 1041 by Assemblymember Buffy Wicks (D-Oakland) allows employees to add one extended family member or a person they consider to be family to the list of people they are able to take time off to care for.

“This is an incredible victory for workers across the state, especially women, immigrants LGBTQ+ and low-wage workers,” said Jessica Ramey Stender, policy director at Equal Rights Advocates, in a statement.