Five states and Puerto Rico currently have a program that provides short-term disability benefits for employees. In effect, the state programs are a supplement to Social Security disability benefits, since Social Security doesn't cover the first six months of the disability. These state plans cover the period before Social Security benefits would start up. They require contributions from employees., much in the same way that the unemployment benefits program is financed by the employers of the employees it covers.
If your business is not located in California, Hawaii, New Jersey, New York, Puerto Rico, or Rhode Island, you don't have to worry about this additional disability coverage and responsibility. The funds are financed by employees' payroll deductions, and in Hawaii, New Jersey, New York, and Puerto Rico, employers also contribute. An employee's contributions are based on the employee's earnings and are withheld by the employer and transferred to the company.
All six places, except Rhode Island, allow an employer to opt out of the state plan and to put the employee contributions into a private plan. The plans must meet state requirements regarding coverage, eligibility, contribution amounts, and employee approval.
If your business is in a state that has a disability program, your state requires that any employer with one or more employees offer temporary disability benefits to any employee who is unable to work due to an illness or injury but who does not qualify for unemployment benefits or workers' compensation. For more information about your state's program, you can contact your state labor agency.