Understanding SDI on Your Paycheck: What It Is & How It Works

For most workers, a paycheck is an alphabet soup of deductions. Federal and state income taxes are withheld from most paychecks, as are the various Social Security and unemployment taxes. Other deductions may include optional deductions selected by the employee. Health insurance premiums and 401k deductions are common optional deductions. Finally, there are also deductions that are required for certain employees. SDI is one of these.

What Is SDI?

SDI, or state disability insurance, is a short-term disability coverage established by the state of California. SDI pays benefits to qualified workers who cannot work because of injury or illness. Unlike workers' compensation, the injury does not have to be work-related in order to qualify.

Who Pays SDI?

SDI is paid for by deductions from non-public employee paychecks. State employees are covered under a different short-term disability plan called Non-Industrial Disability Insurance, or NDI. Employers may offer their own SDI program in lieu of the state-sponsored program. The benefits offered under such a program must be equal to or greater than the benefits offered by SDI.

What Does SDI Pay?

SDI pays up to 55 percent of the employee's earnings. SDI may make payments to disabled workers for up to 52 weeks. However, the first seven days of any disability is a nonpaying waiting period. Typically, injured employees can use sick time benefits to cover this period if they are available. Benefits may be reduced for employees who return to work part time.

Who Qualifies for SDI?

In order to qualify for SDI, you must be unable to do regular work for at least eight consecutive days. You must be employed or actively looking for work when you become disabled. You must have earned at least $300 from which SDI deductions were taken, and you may not receive unemployment insurance and SDI at the same time.