Layoffs and Income Benefits: What Every California Worker Should Know Before Date Of Termination, Part 1

Unemployment Insurance vs. State Disability Insurance

Both Unemployment Insurance (UI) and State Disability Insurance (SDI) are administered by the California Employment Development Department. Human Resources generally tell workers being laid off to apply for Unemployment. However, this advice can hurt workers who should apply for State Disability instead.

First, SDI pays more than UI. State Disability pays about 60% of your wage, while UI pays about 33%.?

Second, SDI’s maximum benefit is $1620/week, UI is $450/week.

Third, SDI is usually not taxable, but UI is.

Fourth, SDI can pay up to 52 weeks, UI only 26 weeks.

When you apply for UI, you affirm that you are ready, willing and able to work. This affirmation will conflict with a State Disability claim (which is you are unable to work). So if you claim UI while you should be on SDI, you are disqualifying yourself from a higher paying, longer lasting income.

State Disability is not for everyone. It is only for workers who cannot perform their customary work due to serious illnesses. But sometimes we don’t know we are disabled; this is especially true with mental illnesses. We think we can beat mental illness with sheer will. And we think we can win. And so we apply for unemployment, thinking we can and should move on to the next job “ASAP”, until we collapse mentally, physically, or both.

If you cannot work due to an illness, take a disability break. State Disability can replace lost wages for up to 52 weeks. And if you have already applied for UI, it is still possible to get SDI. You can either switch to SDI after your last payment of UI, or claim that you should have been on SDI instead of UI (and claim the difference in benefit amount between SDI and UI). The transition process can be complicated. Seek the advice of competent legal counsel.

In the next articles, we will dive into the exciting intricacies of SDI and explore other benefits such as ERISA short term disability income (so please subscribe!)

If you are interested in learning how to take a disability break and get paid, please check out my new book.

(The information in this post is general in nature. Exceptions may exist, as well as exceptions to the exceptions! Not everything in this post will apply to your specific situation.)