Layoffs and Disability Benefits: What Every California Worker Should Know Before Date Of Termination, Part 2

If you have a mental and/or physical illness that affects your ability to work, consider getting medical leave and disability benefits. This is especially important if you think a layoff is coming (and you will be part of it!) If you have pets, they will thank you for it, because the more you know how to take care of yourself, the more you know how to take care of your loved ones.

During a layoff, workers are routinely told by the HR staff to apply for unemployment. But if a worker is disabled, California’s State Disability Insurance (SDI) can be a better option, because it can pay more and last longer than unemployment (see Part 1 of this series).

In addition to SDI, some workers have disability insurance through their employer (“employer sponsored”). Employer sponsored disability policies can pay more than SDI for higher income earners. California’s SDI covers participants of the entire CA labor market, while an employer sponsored policy only covers employees of a specific company. This means that after your layoff, you still have coverage for SDI while you are looking for a similar job (the EDD calls this participating in the labor market. I will write another article on this later). But your employer sponsored disability coverage ends with your termination. If you become disabled after your employment, you are not covered. Here is an example:

Carmen Cornelius Catnip was employed as a software engineer at Big Corp. One day, she heard rumors of a layoff that might affect her. The thought of job searching depressed her. She had chronic back pain and depression. Even if she found a new job, could she pass probation? However, she did not want to think about it.

Depressed and feeling lost, at times, she thought about suicide. She felt too ill to look for another job. But she had always considered herself a hard worker, so disability was out of the question (“Isn’t that for bedridden people?” she thought). Looking back, she realized she had been unhappy for a long time.    

When the layoff finally came, Ms. Catnip followed the advice of the HR department and applied for unemployment. She got $450/week, which did not fully cover her expenses. She had interviews on jobs she feared she couldn’t keep.

Then one day, Ms. Catnip tried to kill herself and was admitted to the county hospital. She was finally completely broken—meeting her own strict definition of disability. Encouraged by her doctors and family, she applied for disability benefits. Since she was still in the labor market (she was looking for work), she was still covered under SDI. However, since she became disabled after her employment at Big Corp (arguable), her disability was not covered by the Big Corp. disability policy. She received $1620/week from SDI, much better than the $450/week from unemployment. The Big Corp. policy would have added another $1000/week to her income.

Now let’s see what happened to Bobo Bohemian Dobermann (BBB), a coworker of Ms. Catnip. He shared a similar job and salary with Ms. Catnap. He had chronic fatigue syndrome for years. While he did OK at work, he knew he wouldn’t be able to maintain new employment. So when BBB heard about the upcoming layoff, he talked to his doctor about possibly applying for disability. His doctor knew BBB had been struggling at work for years. When he asked the doctor if she would support his disability claim, she said, of course, yes. So BBB went on medical leave and applied for disability benefits. Like Ms. Catnip, BBB received SDI. But unlike her, BBB got an additional $1000/week from the employer sponsored disability policies. That’s because BBB established he become disabled while still employed at Big Corp. At the end, both Catnip and Dobermann were fine and returned to work. However, with some planning, Dobermann was able to receive more income.

(For the record, I am both a cat and a dog person.) If you are interested in learning how to take a disability break and get paid, please check out my book on amazon.

(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.)