Compliance and Legal

Navigating Paid Family Leave & Disability Insurance in the U.S.: A State-by-State Guide

In the United States, paid family leave (PFL) and disability insurance (DI) are as diverse as the nation itself. Each state has its own course, running with unique guidelines, requirements, and benefits for workers, and navigating these diverse stipulations can be complex. 

Staying compliant with state requirements regarding PFL and SDI is crucial for both employers and employees. It ensures that employees receive the benefits they are entitled to under state law, promotes a positive work environment, and protects the employer's reputation. Failure to comply with state regulations can result in legal penalties, employee lawsuits, loss of benefits, and damage to your company's reputation.

Hence, in this guide, we will provide information on how to navigate each process of providing time-off benefits for your employees. 

You may use this guide & best practice to review paid family leave and disability insurance requirements for each state when onboarding new team members or setting up employee payroll.

Understanding PFL and SDI

Paid Family Leave (PFL) and State Disability Insurance (SDI) are two separate but related programs in the United States designed to provide income support to workers during periods of family or medical leave.

Paid Family Leave (PFL) is a program that allows eligible employees to take time off from work to care for a new child, tend to a seriously ill family member, or deal with certain military obligations while receiving partial pay. It's like getting paid time off to handle important family matters.

On the other hand, State Disability Insurance (SDI) is a program that provides partial wage replacement to eligible workers who are unable to work due to a non-work-related illness, injury, or pregnancy-related condition. It's like a safety net that helps workers stay financially afloat when they're unable to work because of health reasons. 

Both opportunities have legal backing and are quite different, even though they offer paid time off work. SDI is rooted in the Family and Medical Leave Act, a 1993-enacted law while PFL is a state-level program. 

So, what makes them different?

We could look at how distinct they are in purpose, coverage, duration and compensation, eligibility, and job protection. 

PFL and FMLA Comparison
Purpose PFL primarily provides employees with paid time off to bond with a new child, care for a seriously ill family member, or address certain military exigencies while receiving partial wage replacement. FMLA provides eligible employees with unpaid, job-protected leave for specific family and medical reasons, including the birth or adoption of a child, caring for a seriously ill family member, or dealing with one's own serious health condition.
Coverage PFL is typically administered at the state level, with each state having its own program and eligibility criteria. Not all states have enacted PFL programs, and coverage can vary significantly between states. FMLA is a federal law that applies to employers with 50 or more employees within a 75-mile radius. It covers eligible employees who have worked for the employer for at least 12 months and have worked a minimum of 1,250 hours during the preceding 12-month period.
Duration and Compensation The duration and compensation of PFL benefits vary by state. Generally, PFL provides a limited number of weeks of paid leave at a specified percentage of the employee’s wages, often up to a maximum benefit amount. FMLA provides eligible employees with up to 12 weeks of unpaid, job-protected leave within a 12-month period. However, it does not provide any wage replacement during the leave period.
Job protection While PFL provides wage replacement during leave, it does not guarantee job protection. However, some states may have job protection provisions for employees taking PFL concurrently with FMLA leave. FMLA guarantees eligible employees the right to return to their same or equivalent job upon the conclusion of their leave period. This is a key aspect of FMLA and distinguishes it from other leave programs.
Eligibility Eligibility criteria for PFL vary by state but typically include factors such as length of employment, wage level, and work schedule. Eligible employees under FMLA must meet specific criteria related to their employment history and the reason for the leave.


So, while PFL tends to focus more on providing paid leave with partial wage replacement, FMLA primarily focuses on providing unpaid, job-protected leave at the federal level.

In the table below, we will show you the requirements for each state for PFL and SDI as of January 2023. 

State-Specific Requirements

The table below summarizes the requirements of each state that has implemented PFL and SDI as of January 2023.

State PFL Requirements
State PFL requirements SDI requirements PFL Effective date Insurance provided by
California Duration: Up to 8-12 weeks; 60-70% of weekly wages Duration: Up to 52 weeks; 60-70% of weekly wages July 1, 2004 State, private option for SDI
New Jersey Duration: Up to 12 weeks; 85% of weekly wages Duration: Up to 26 weeks; Approx. 66.7% of weekly wages July 1, 2009 State, private option for SDI
New York Duration: Up to 12 weeks; 67% weekly wages Duration: Up to 26 weeks; Approx. 50% weekly wages January 1, 2018 Private
Hawaii Duration: Up to 4 weeks; Wage Replacement: Up to 58% Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2024 State & Private option for TDI
Rhodes Island Duration: Up to 4 weeks; Wage Replacement: Up to 58% Duration: Up to 30 weeks; Wage Replacement: 60-70% January 1, 2014 State
Connecticut Up to 12 weeks of paid leave; 95% wage replacement Duration: Up to 26 weeks; 60-70% (increasing to 5 weeks in 2023) January 1, 2022 State
Colorado Up to 12 weeks of paid leave; 90% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2024 Private
Delaware Up to 12 weeks of paid leave; 50% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2026 State
Massachusetts Up to 12 weeks of paid leave; 80% of weekly wage Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2019 State
Maryland Up to 12 weeks of paid leave; 50-67% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2025 State
Oregon Up to 12 weeks of paid leave; 100% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% September 3, 2023 State
Washington State Up to 12 weeks of paid leave; 90% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2020 State
Washington DC Up to 8 weeks of paid leave; 90% wage replacement Duration: Up to 26 weeks; Wage Replacement: Approx. 58% January 1, 2020 State

Note: Thirteen (13) states have implemented Paid Family Leave (PFL) programs, namely California, Colorado, Connecticut, Delaware, Hawaii, Massachusetts, Maryland, New Jersey, New York, Oregon, Rhode Island, Washington State, and Washington D.C. 

Among these states, California, New Jersey, New York, Hawaii, and Rhode Island additionally provide State Disability Insurance (SDI) and integrate PFL as an extension of these benefits.

Employer Obligations by State

Employer obligations in states with mandatory Paid Family Leave (PFL) and State Disability Insurance (SDI) programs vary depending on the specific requirements of each state.

As of January 2024, the following jurisdictions mandated paid leave for an employee's own serious health condition or disability: California, Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Puerto Rico, Rhode Island, Washington, and Washington, DC. They also required paid family leave, excluding Hawaii and Puerto Rico. 

States with Mandatory PFL and SDI Programs:

  • Registration: Employers in states with mandatory PFL and SDI programs are typically required to register with the appropriate state agency responsible for administering these programs. This registration process may involve providing basic company information, such as the employer's legal name, address, and employer identification number (EIN).
  • Premium Deduction: Employers are generally required to deduct PFL and SDI premiums from employees' wages. These premiums are typically calculated based on a specified percentage of employees' wages, up to a certain cap. Employers must accurately calculate and deduct these premiums from employees' paychecks and remit them to the state agency responsible for administering the PFL and SDI programs.
  • Employee Notifications: Employers are often required to provide employees with written notifications about their rights and benefits under the PFL and SDI programs. This may include information about how to file a claim, the duration and amount of benefits available, and any applicable waiting periods.
  • Job Protection: In addition to premium deductions and employee notifications, employers in states with mandatory PFL and SDI programs may be required to provide job protection to employees who take leave under these programs. This means that employers must ensure that employees are reinstated to their previous position or an equivalent position upon their return from leave.

On the other hand, New Hampshire and Vermont have adopted voluntary paid family and medical leave (PFML) insurance programs. If you are in any of these jurisdictions, you would be obliged to:

  • Opt-In/Opt-Out: In states with voluntary PFL programs, employers may have the option to opt in or opt out of providing PFL benefits to their employees. If an employer opts in, they must comply with the registration, premium deduction, and employee notification requirements outlined above for mandatory programs.
  • Make Premium Contribution: In voluntary PFL states, employers who choose to offer PFL benefits may have the option to contribute to the cost of premiums alongside employees. The specifics of employer contribution amounts and requirements may vary depending on state regulations and employer policies.
  • Make Employee Enrollment: Employers offering voluntary PFL benefits may need to establish procedures for enrolling employees in the program and collecting any required premiums. This may involve distributing enrollment forms, explaining the program to employees, and facilitating the deduction of premiums from employees' wages.
  • Make Compliance Reporting: Employers in states with voluntary PFL programs may still be required to report certain compliance information to the state agency responsible for overseeing these programs. This may include providing documentation of employee enrollment, premium contributions, and other relevant data.

The Setup Process

  1. For States with Automatic Deductions: Confirming compliance with payroll providers for states with automatic deductions for programs like Paid Family Leave (PFL) and State Disability Insurance (SDI) involves several steps:

  1. Review State Requirements: Begin by thoroughly reviewing the specific requirements of the PFL and SDI programs in your state. (Follow the links provided in the table above for this). Pay attention to details such as the applicable wage thresholds, percentage rates for premium deductions, and any reporting obligations.

  1. Communicate with Payroll Provider: Reach out to your payroll provider to discuss the requirements of the state's PFL and SDI programs. Ensure that they are aware of the need for automatic deductions and that they understand the specific rules and regulations governing these deductions. 

  1. Verify System Compatibility: Confirm that your payroll provider's systems are compatible with the requirements of the state's PFL and SDI programs. Ensure that their software can accurately calculate and deduct premiums from employees' wages and that it can generate the necessary reports for compliance purposes.

  1. Test Deduction Process: Conduct thorough testing of the automatic deduction process within your payroll provider's system. Test various scenarios to ensure that deductions are being applied correctly based on employees' wages and that the correct amounts are being withheld.

  1. Review Reporting Capabilities: Verify that your payroll provider's system can generate the required reports for compliance with the state's PFL and SDI programs. This may include reports on premium deductions, employee contributions, and other relevant data.

  1. Document Compliance Procedures: Document the procedures for ensuring compliance with the state's PFL and SDI programs, including details on how automatic deductions are processed, how reporting is handled, and any other relevant information.

  1. Monitor Changes: Stay vigilant for any updates or changes to the requirements of the state's PFL and SDI programs. Keep lines of communication open with your payroll provider to ensure that they are aware of any changes and can adjust their systems accordingly.

  1. Regular Audits: Conduct regular audits of your payroll processes to ensure ongoing compliance with the state's PFL and SDI programs. Review deduction records, reports, and other relevant documentation to identify any discrepancies or areas for improvement.

For the Four states Requiring Manual Setup or Registration, employers need to register for an employer account, report employee wages, and set up the appropriate deductions for PFML contributions.

Washington,  through the Washington State Employment Security Department (ESD) website.

Colorado, through the Colorado Department of Labor and Employment (CDLE) website.

Washington DC, with the DC Department of Employment Services (DOES).

New York, through the New York State Insurance Fund (NYSIF) or a private insurance carrier.

Additionally, employers in New York need to obtain a PFL policy through NYSIF or a private carrier, before setting up the appropriate payroll deductions and ensuring compliance with reporting requirements.

For States with Voluntary Programs

  1. Review State Laws: Start by reviewing the laws and regulations regarding voluntary PFL programs in your state. In New Hampshire and Virginia, for instance, employers can voluntarily opt into PFL programs but are not mandated to do so.
  1. Assess Employer Eligibility: Determine if your organization meets the eligibility criteria to participate in the voluntary PFL program. This may include factors such as the number of employees, business type, and other eligibility requirements specified by state law.
  1. Understand Program Details: Familiarize yourself with the specifics of the voluntary PFL program in your state, including the duration of leave, eligible reasons for leave, benefit amounts, and any requirements for employee contributions or employer premiums.
  1. Evaluate Financial Impact: Assess the financial implications of opting into the voluntary PFL program for your organization. Consider factors such as the cost of premiums, potential benefits to employees, and overall budgetary considerations.
  1. Communicate with Employees: Inform your employees about the decision to opt into the voluntary PFL program. Provide them with information about the program's benefits, eligibility criteria, and how it may affect their leave options.
  1. Complete Registration Process: In states like New Hampshire and Virginia, employers may need to register with the relevant state agency to participate in the voluntary PFL program. This registration process may involve submitting forms, providing company information, and agreeing to program terms and conditions.
  1. Implement Payroll Deductions (if applicable): If the voluntary PFL program requires employee contributions or employer premiums, set up payroll deductions accordingly. Ensure that deductions are calculated accurately and comply with state regulations.
  1. Educate HR Personnel: Train your HR personnel on the details of the voluntary PFL program, including how to handle employee inquiries, process leave requests, and ensure compliance with program requirements.
  • Monitor Compliance: Regularly monitor compliance with the voluntary PFL program, including tracking employee leave usage, managing payroll deductions, and maintaining accurate records.

Annual Compliance and Auditing

The need for annual compliance and auditing is vital. There may be changes in tax rules or labor laws that may affect how you need to manage PFL and SDI payments. 

  1. Changes in Regulations: State laws and regulations regarding Paid Family Leave (PFL), State Disability Insurance (SDI), and other employment-related programs can change frequently. 
  2. New Programs or Benefits: States may introduce new PFL or SDI programs, expand existing ones, or implement additional benefits. 
  3. Compliance Updates: State agencies may update compliance requirements, reporting procedures, or documentation standards. 
  4. Adjustment of Policies: Employers may need to adjust their internal policies and procedures to align with changes in state requirements. 
  5. Avoid Penalties and Legal Issues: Failing to comply with state requirements can result in penalties, fines, or legal action against the employer. Annual rechecks help mitigate the risk of non-compliance by keeping employers informed of their obligations and responsibilities.

Performing a full audit for compliance involves several steps:

  1. Review Documentation: Gather all relevant documentation related to the client's PFL, SDI, and other compliance-related programs. This may include employee handbooks, policy manuals, benefit summaries, and any correspondence with state agencies.

  1. Assess Program Participation: Determine which PFL and SDI programs the client is currently participating in, including mandatory and voluntary programs. Identify any gaps or discrepancies in program participation.

  1. Evaluate Program Compliance: Review the client's practices and procedures to ensure compliance with state requirements for PFL, SDI, and other related programs. Verify that payroll deductions are being made accurately, employee notifications are being provided, and reporting obligations are being met.

  1. Check Employee Records: Examine employee records to confirm that all eligible employees are enrolled in PFL and SDI programs as state law requires. Ensure that employee contributions or employer premiums are being deducted correctly.

  1. Assess Documentation Practices: Evaluate the client's documentation practices to ensure that all required records, reports, and forms are being maintained accurately and up-to-date. Check for any missing or incomplete documentation.

  1. Identify Areas for Improvement: Identify any areas where the client's compliance practices may be lacking or where improvements could be made. This may include updating policies and procedures, providing additional training to staff, or implementing new software systems.

  1. Develop Action Plan: Develop an action plan outlining steps the client can take to address any compliance issues or deficiencies identified during the audit. Provide recommendations for improving compliance practices and ensuring ongoing adherence to state requirements.

  1. Follow-Up and Monitoring: Follow up with the client periodically to monitor progress on implementing the action plan and addressing compliance issues. Provide ongoing support and guidance as needed to ensure continued compliance with state requirements.

Best Practices for Payroll Platforms

As our most trusted payroll platforms, both Gusto and Rippling provide robust support for managing PFL and disability payments, including automated calculations, deductions, and compliance tracking. The specific features and user interface may vary between the two platforms, so businesses should evaluate their individual needs and preferences when choosing between Gusto and Rippling.

Both platforms offer PFL and DI management in mandated states like California and New Jersey, automating contribution calculations and deductions from payroll. Employers can configure policies and track absences through its interface. The key difference lies in the platform's interface and specific features offered, which may vary between Gusto and Rippling.

It's recommended to refer to the respective official websites of Gusto and Rippling for the most up-to-date information and details on their PFL and disability payment handling capabilities.

However, if you are an employer in states where these platforms do not manage tax payments and filings, here are some useful tips: 

  1. Understand State Requirements: Familiarize yourself with the specific tax payment and filing requirements of each state where the platform does not manage these tasks. Review state tax laws, regulations, and guidelines to ensure compliance with reporting deadlines and payment schedules.

  1. Set Up Internal Processes: Establish internal processes and procedures to manage tax payments and filings for states where the platform does not handle these tasks. Assign responsibilities to designated personnel within your organization to ensure that all tax obligations are met on time.

  1. Maintain organized records of tax payments, filings, and related documentation for each state. Use a centralized system or software solution to track deadlines, monitor compliance, and store important documents securely.

  1. Monitor Changes: Stay informed about any changes to state tax laws, rates, or filing requirements. Regularly review updates from state tax agencies and adjust your processes accordingly to ensure continued compliance.

  1. Seek Professional Advice: Consider consulting with tax professionals or advisors who are knowledgeable about multi-state tax compliance. They can provide guidance on complex tax issues, help interpret state tax laws, and assist with tax planning strategies to minimize liabilities.

  1. Plan for Deadlines: Be proactive in planning for tax payment and filing deadlines to avoid last-minute rush and potential penalties. Establish a calendar or reminder system to track important dates and allocate sufficient time for the preparation and submission of tax returns.

  1. Conduct annual compliance checks and auditing to identify any areas for improvement or areas of concern. Address any issues promptly and make necessary adjustments to ensure ongoing compliance with state tax requirements.

Registration Prerequisites

Setting up Paid Family Leave (PFL) and State Disability Insurance (SDI) programs may require various state registrations to ensure compliance with relevant laws and regulations. Here's a checklist of common state registrations needed before setting up PFL and SDI programs:

  1. Business Entity Registration: Ensure that your business is properly registered with the appropriate state agencies. This may include registering your business entity with the Secretary of State's office or similar regulatory bodies.

  1. State Tax ID Number: Obtain a state tax identification number from the state's Department of Revenue or Taxation. This number is necessary for reporting and remitting state taxes, including payroll taxes related to PFL and SDI programs.

  1. Employer Account Registration: Register your business as an employer with the state's labor or employment agency. This registration may be necessary for reporting employee wages, remitting unemployment insurance taxes, and participating in PFL and SDI programs.

  1. PFL Program Registration: If the state mandates a PFL program, register your business with the appropriate state agency responsible for administering PFL benefits. This registration may involve providing company information, setting up an online account, and agreeing to program terms and conditions.

  1. SDI Program Registration: Similarly, if the state mandates an SDI program, register your business with the state agency responsible for administering SDI benefits. This registration may include providing employer information, setting up an account, and agreeing to program requirements.

  1. Reporting and Compliance Obligations: Understand your reporting and compliance obligations under the state's PFL and SDI programs. This may include requirements for reporting employee wages, submitting quarterly or annual reports, and maintaining records related to leave usage and benefits.

  1. Employee Notifications: Ensure that you understand and comply with any requirements for providing employee notifications about PFL and SDI programs. This may include informing employees about their rights, benefits, and how to file a claim for leave.

  1. Premium Deductions: If applicable, set up procedures for deducting employee contributions or employer premiums for PFL and SDI programs. Ensure that deductions are made accurately and in compliance with state regulations.

  1. Training and Education: Provide training and education to relevant personnel within your organization about the requirements and procedures for administering PFL and SDI programs. This may include HR staff, payroll administrators, and supervisors responsible for managing employee leave.


Adhering to Paid Family Leave (PFL) and State Disability Insurance (SDI) regulations is of paramount importance for employers to ensure legal compliance, promote employee well-being, and maintain a positive workplace environment. It is also essential for you to stay informed about the frequent changes in state requirements related to PFL and SDI programs. State laws and regulations governing these programs can evolve rapidly, with updates to eligibility criteria, benefit amounts, reporting obligations, and more. While staying informed about changes in state requirements may require time and effort, the benefits far outweigh the challenges. Employers who proactively monitor and respond to changes in PFL and SDI regulations demonstrate their commitment to upholding the rights and well-being of their employees, fostering a culture of compliance, fairness, and respect in the workplace.

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