If the provisions of this article are in conflict with the provisions of a memorandum of understanding reached pursuant to Chapter 12 (commencing with Section 3560) of Division 4 of Title 1 of the Government Code, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.

As used in this article:

If an employee is temporarily disabled by illness or injury arising out of and in the course of state employment, he or she shall become entitled, regardless of his or her period of service, to receive industrial disability leave and payments, in lieu of workers’ compensation temporary disability payments and payment under Section 89527, for a period not exceeding 52 weeks within two years from the first day of disability. The payments shall be in the amount of the employee’s full pay less withholding based on his or her exemptions in effect on the date of his or her disability for federal income taxes, state income taxes, and social security taxes not to exceed 22 working days of disability subject to Section 89529.08. Thereafter, the payment shall be two-thirds of full pay. Payments shall be additionally adjusted to offset disability benefits, excluding those disability benefits payable from the State Teachers’ Retirement System, the employee may receive from other employer-subsidized programs, except that no adjustment will be made for benefits to which the employee’s family is entitled up to a maximum of three-quarters of full pay. Contributions to the Public Employees’ Retirement System or the State Teachers’ Retirement System shall be deducted in the amount based on full pay. Discretionary deductions of the employee including those for coverage under a state health benefits plan in which the employee is enrolled shall continue to be deducted unless canceled by the employee. State employer contributions to the Public Employees’ Retirement System and state employer normal retirement contributions to the State Teachers’ Retirement System shall be made on the basis of full pay and state contributions pursuant to Sections 22871 and 22885 of the Government Code because of the employee’s enrollment in a health benefits plan shall continue.

An employee who is receiving industrial disability leave benefits shall continue to receive all employee benefits which he or she would have received had he or she not incurred disability.

The disabled employee shall not receive temporary disability indemnity or sick leave or annual leave with pay for any period for which he or she receives industrial disability leave; however, he or she may elect to waive the provisions of this article and to receive disability indemnity pursuant to Divisions 4 (commencing with Section 3200) and 4.5 (commencing with Section 6100) of the Labor Code and to receive payments under Section 89527 in lieu of the benefits provided in this article. If the amount of the employee’s benefits payable under this article is less than the amount he or she would receive under Divisions 4 (commencing with Section 3200) and 4.5 (commencing with Section 6100) of the Labor Code, the employee shall be deemed to have rejected the benefits of this article and shall be paid benefits pursuant to Divisions 4 (commencing with Section 3200) and 4.5 (commencing with Section 6100) of the Labor Code.

Division 4.7 (commencing with Section 6200) of the Labor Code shall not apply to employees to which this article applies.

If an employee continues to be temporarily disabled after termination of benefits under this article, he or she shall be entitled to the benefits provided by Division 4 (commencing with Section 3200) and 4.5 (commencing with Section 6100) of the Labor Code and to payments under Section 89527.

Payments shall be contingent on the complete medical certification of the illness or injury including diagnosis and any prognosis of recovery. Further, payments shall be contingent on the employee’s agreement to cooperate and participate in a reasonable and appropriate vocational rehabilitation plan when furnished by the state subject to appropriate medical approval as determined by the trustees.

The trustees or its designee shall adopt any rules and regulations necessary for the administration of this article for its employees.