You are correct. Paid Family Leave (PFL) is either administered by a governmental agency or a private insurer.
When the PFL is paid by the state of California, then the amount is reported by the Employment Development Department (EDD) on a Form 1099-G, which will make it a non-taxable event for the state. In other words, the PFL is not reportable or taxable to the Franchise Tax Board.
When the PFL is paid my an insurer, then the PFL is reported on the Form W-2 as income. You will then check that it is a PFL W-2. The reason is to ensure that the appropriate adjustment is made to exclude the amount as income on the California return.
Vacation and sick leave are considered fringe benefits an employer may choose to offer; therefore, the benefits are not considered PFL.
