2019 CALIFORNIA EMPLOYER’S GUIDE

Please note correction: Inside Cover State Disability Insurance (SDI):

? The 2021 DI/PFL maximum weekly benefit amount is $1,357.

We apologize for the inconvenience.

2021 CALIFORNIA

EMPLOYER'S GUIDE

DE 44 Rev. 447 (1-1281) (INTERNET)

Cover + 118 pages

CU

Important Information

Electronic Reporting and Payment Requirement: All employers must electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD). For more information, visit the e-file and e-pay mandate (edd.EfileMandate) and related noncompliance penalties or refer to page 49.

e-Services for Business: Employers can file, pay, and manage their employer payroll tax account online. For more information, visit e-Services for Business (edd.e-Services_for_Business) or refer to page 50.

State Information Data Exchange System (SIDES): Employers and third-party administrators can elect to electronically receive and respond to the EDD Notice of Unemployment Insurance Claim Filed (DE 1101CZ) using SIDES. For more information, visit SIDES (edd.SIDES).

New Employee Registry (NER): All employers are required by law to report all newly hired or rehired employees to the NER within 20 days of their start-of-work date. For more information, visit NER FAQs (edd.payroll_taxes/faq_-_california_new_employee_registry) or refer to page 53.

Payroll Tax Seminars: The EDD offers no-cost seminars to help employers comply with state payroll tax laws. For more information, visit payroll tax seminars (edd.payroll_tax_seminars) or refer to page 1.

Fraud Prevention, Detection, Reporting, and UI Rate Manipulation: For information on how to prevent and detect UI fraud, visit UI Fraud (edd.unemployment/fraud_and_penalties_what_you_need_to_ know) or refer to page 83.

Improper Payment of UI Benefits: Employers are financially impacted by improper UI payments. This problem can result in higher UI taxes for all employers. You can help by responding timely to requests for wage information. For more information, visit UI claim notices (edd.unemployment/responding_to_ ui_ claim_notices).

California Employer Newsletter: For the latest payroll tax news and helpful information, refer to the quarterly California Employer Newsletter (edd.payroll_taxes/california_employer_newsletter).

2021 Payroll Tax Rates, Taxable Wage Limits, and Maximum Benefit Amounts

Unemployment Insurance (UI) The 2021 taxable wage limit is $7,000 per employee. The UI maximum weekly benefit amount is $450. The UI tax rate for new employers is 3.4 percent (.034) for a period of two to three years. The employer rates are available online at e-Services for Business (edd.e-Services_for_Business).

Employment Training Tax (ETT) The 2021 ETT rate is 0.1 percent (.001) on the first $7,000 of each employee's wages.

State Disability Insurance (SDI) The 2021 SDI withholding rate is 1.2 percent (.012). The rate includes Disability Insurance (DI) and Paid Family Leave (PFL). The SDI taxable wage limit is $128,298 per employee, per year. The 2021 DI/PFL maximum weekly benefit amount is $1,300.

California Personal Income Tax (PIT) Withholding California PIT withholding is based on the amount of wages paid, the number of withholding allowances claimed by the employee, and the payroll period. Please refer to page 13 for additional information on PIT withholding or refer to the PIT withholding schedules available on page 17.

For additional rate or PIT withholding information refer to page 10 or visit Rates and Withholding (edd.payroll_taxes/rates_and_withholding).

DE 44 Rev. 47 (1-21) (INTERNET)

CALIFORNIA LABOR AND WORKFORCE DEVELOPMENT AGENCY

Gavin Newsom, Governor

California Labor and Workforce Development Agency

Sharon Hilliard Director

Gavin Newsom Governor

Dear California Employer:

The Employment Development Department (EDD) recognizes that the business community is essential to California's economic vitality and we are committed to making resources available to assist employers with meeting their payroll tax obligations.

In an effort to streamline the payroll tax reporting process we offer a variety of services to manage your employer payroll tax accounts online. Use e-Services for Business (eddservices.edd.) to file, adjust, and print returns, make payments and much more.

For additional information about any of our programs, services, seminars, or forms and publications, visit the EDD website (edd.) or call the Taxpayer Assistance Center at 1-888-745-3886.

We appreciate your commitment to doing business in California and wish you great success in the year ahead!

Sincerely,

SHARON HILLIARD Director

PO Box 826880 ? Sacramento, CA 94280-0001 ? edd. DE 44 Rev. 47 (1-21) (INTERNET)

MANAGE YOUR EMPLOYER PAYROLL TAX ACCOUNT ONLINE!

Use e-Services for Business to electronically file reports, make deposits, update addresses, and much more.

Enroll today at e-Services for Business (edd.e-Services_for_Business).

DE 44 Rev. 47 (1-21) (INTERNET)

Seminars to Help Employers Succeed .................................................................................................................. 1

Introduction .............................................................................................................................................................. 2

Payroll Tax Help, Forms, and Publications ........................................................................................................... 3

How to Get Started .................................................................................................................................................. 4 Flowchart ............................................................................................................................................................ 5

2021 Forms and Due Dates .................................................................................................................................... 6

Who Is an Employer and When to Register .......................................................................................................... 7

Who Is an Employee? ............................................................................................................................................. 8 ABC Test Employee or Independent Contractor ................................................................................................. 8

What Are State Payroll Taxes? ............................................................................................................................... 9 Unemployment Insurance ................................................................................................................................... 9 Employment Training Tax .................................................................................................................................... 9 State Disability Insurance ................................................................................................................................... 9 California Personal Income Tax .......................................................................................................................... 9 State Payroll Taxes (table) .................................................................................................................................. 10 Help Us Fight Fraud ............................................................................................................................................ 10

What Are Wages? .................................................................................................................................................... 11 Subject Wages .................................................................................................................................................... 11 Personal Income Tax Wages .............................................................................................................................. 11 Are Subject Wages and Personal Income Tax Wages the Same? ..................................................................... 11 Employers Subject to California Personal Income Tax Only ............................................................................... 11 Meals and Lodging .............................................................................................................................................. 12 Additional Information ......................................................................................................................................... 12

Personal Income Tax Wages Subject to California Withholding ......................................................................... 13 How to Determine Which Wages Require Personal Income Tax Withholding .................................................... 13 Marital Status, Withholding Allowances, and Exemptions Form W-4 and DE 4 ................................................. 13 Employer's Obligations for the Form W-4 and DE 4 ........................................................................................... 14 How to Determine Personal Income Tax Withholding Amounts .......................................................................... 15

What if Your Employee Wants Additional Personal Income Tax Withholding? ............................................. 15 How to Withhold Personal Income Tax on Supplemental Wages ....................................................................... 15 Quarterly Estimated Payments ........................................................................................................................... 15 Wages Paid to:

California Residents ..................................................................................................................................... 16 Nonresidents of California ............................................................................................................................ 16

Personal Income Tax Withholding on Payments to Nonresident Independent Contractors ................................ 16 Additional Information ......................................................................................................................................... 16

California Withholding Schedules for 2021........................................................................................................... 17

Electronic Filing and Payment Requirements E-file and E-pay Mandate for Employer .............................................................................................................. 49

Online Services e-Services for Business ...................................................................................................................................... 50 Express Pay ........................................................................................................................................................ 51

Required Forms ....................................................................................................................................................... 52 Report of New Employee(s) (DE 34):..................................................................................................................

Overview ................................................................................................................................................................... 53 Sample DE 34 Form ..................................................................................................................................... 54

Report of Independent Contractor(s) (DE 542): Overview ....................................................................................................................................................... 55 Sample DE 542 Form ................................................................................................................................... 56

edd. DE 44 Rev. 47 (1-21) (INTERNET)

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Taxpayer Assistance Center 1-888-745-3886

Payroll Tax Deposit (DE 88): Overview ....................................................................................................................................................... 57 Withholding Deposits .................................................................................................................................... 58 California Deposit Requirements .................................................................................................................. 58 Due Dates for Quarterly Tax Deposits .......................................................................................................... 59 2021 Quarterly Payment Table ..................................................................................................................... 59 Correcting Previously Submitted Payroll Tax Deposits ................................................................................. 60

Quarterly Contribution Return and Report of Wages (DE 9): Overview ....................................................................................................................................................... 62 Correcting a Previously Filed DE 9................................................................................................................ 62

Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C): Overview ....................................................................................................................................................... 63 Correcting a Previously Filed DE 9C............................................................................................................. 64

Quarterly Contribution and Wage Adjustment Form (DE 9ADJ): Overview........................................................................................................................................................ 65

Sample DE 9ADJ Form........................................................................................................................................ 66 Federal Forms W-2 and 1099 ............................................................................................................................. 68

Change to Your Business Status ........................................................................................................................... 70 Business Name Change ..................................................................................................................................... 70 Mailing Address Change ..................................................................................................................................... 70 No Longer Have Employees ............................................................................................................................... 70 Close Your Business ........................................................................................................................................... 70 Reopen Your Employer Payroll Tax Account ....................................................................................................... 71 Purchase, Sell, Transfer, or Change Ownership ................................................................................................. 71 What Is a Successor Employer? ......................................................................................................................... 72 It Is Against the Law to Change/Purchase a Business Entity Solely to Obtain a Lower UI Rate......................... 72

Additional Requirements ........................................................................................................................................ 72 Posting Requirements ......................................................................................................................................... 72 Required Notices and Pamphlets ....................................................................................................................... 72 Earned Income Tax Credit Information Act ......................................................................................................... 73 Plant Closure or Mass Layoff (WARN) ................................................................................................................ 74 U.S. Government Contractor Job Listing Requirements ..................................................................................... 76 Recordkeeping .................................................................................................................................................... 77

Employers' Bill of Rights Commitment ........................................................................................................................................................ 78 Employer Rights .................................................................................................................................................. 78 Office of the Taxpayer Rights Advocate .............................................................................................................. 78

Taxpayer Advocate Office ............................................................................................................................. 78 Settlements Office ........................................................................................................................................ 79

Protecting Your Privacy ....................................................................................................................................... 79 Offers in Compromise ......................................................................................................................................... 79

Unemployment Insurance Taxes ............................................................................................................................ 80 Methods of Paying for UI Benefits ...................................................................................................................... 80 How Your UI Tax Rate Is Determined ................................................................................................................. 80 Notice of Tax Rates ............................................................................................................................................. 81 Federal Unemployment Tax Act Certification ...................................................................................................... 81 Reserve Account Transfers ................................................................................................................................. 81 Wages in Another State....................................................................................................................................... 81 Interstate Reciprocal Coverage Elections for Multistate Workers ....................................................................... 82 Tips for Reducing Your UI Tax Rate .................................................................................................................... 82 Fraud Prevention, Detection, and Reporting........................................................................................................ 83 UI Rate Manipulation........................................................................................................................................... 83

edd. DE 44 Rev. 47 (1-21) (INTERNET)

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Taxpayer Assistance Center 1-888-745-3886

Unemployment Insurance Benefits........................................................................................................................ 84 Unemployment Insurance Funding ..................................................................................................................... 84 Benefit Amount .................................................................................................................................................... 84 Benefit Qualifications .......................................................................................................................................... 84 Qualifying UI Wages ........................................................................................................................................... 85 UI Eligibility Determination .................................................................................................................................. 85 How to Designate an Agent or Single Address.................................................................................................... 85 How to Request an Electronic DE 1545 .............................................................................................................. 85 Responding to Notices ........................................................................................................................................ 86 Subsequent Benefit Year..................................................................................................................................... 87 Notices of Determination, Ruling, or Modification................................................................................................ 88 UI Benefits ? Appeal Rights................................................................................................................................. 89 False Statement Penalty...................................................................................................................................... 90 Benefit Audits to Determine Fraud....................................................................................................................... 90 Back Pay Award................................................................................................................................................... 91 Workers' Compensation Benefits......................................................................................................................... 91 Statement of Charges.......................................................................................................................................... 92 Alternate Base Period.......................................................................................................................................... 92 Layoff Alternatives................................................................................................................................................ 93

Partial UI Claims............................................................................................................................................ 93 Work Sharing Program.................................................................................................................................. 93

Notice of Layoff.................................................................................................................................................... 93 Wage Notices ...................................................................................................................................................... 93

State Disability Insurance Program ....................................................................................................................... 94 Taxes ? Who Pays for State Disability Insurance? ............................................................................................. 94 Employee Benefits .............................................................................................................................................. 94 Claim Notices ...................................................................................................................................................... 94 SDI Online............................................................................................................................................................ 95 Voluntary Plan ..................................................................................................................................................... 95 Self-Employed Benefits ....................................................................................................................................... 95 Workers' Compensation Insurance ..................................................................................................................... 95 SDI Fraud ............................................................................................................................................................ 95

Employment and Training Services ....................................................................................................................... 96 EDD Workforce Services .................................................................................................................................... 96 Employment Training Panel ................................................................................................................................ 96

Funding ......................................................................................................................................................... 96 How Is ETP Different? .................................................................................................................................. 96

General Information ............................................................................................................................................ 97 Trade Adjustment Assistance .............................................................................................................................. 97 Work Opportunity Tax Credit................................................................................................................................ 98 eWOTC................................................................................................................................................................ 98

Labor Market Information ....................................................................................................................................... 99 What Labor Market Information Is Available on the Web? .................................................................................. 99 Multiple Location and/or Function Employers ..................................................................................................... 99 How Your Industry Code Is Determined .............................................................................................................. 99 The Importance of Occupational Information ...................................................................................................... 100

Information and Assistance by Topic .................................................................................................................... 101

Glossary ................................................................................................................................................................... 108

Index ..........................................................................................................................................................................113

Instructions for Ordering Forms and Publications .............................................................................................. 117

edd. DE 44 Rev. 47 (1-21) (INTERNET)

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Taxpayer Assistance Center 1-888-745-3886

SEMINARS TO HELP EMPLOYERS SUCCEED

The Employment Development Department (EDD) offers no-fee seminars, either classroom-style or online. They are customized to help educate both existing and established employers as well as new employers to better understand and comply with the state payroll tax laws.

The classroom seminars are offered in a variety of locations throughout California. The EDD also offers online seminars that allow you the flexibility to learn at your own pace and wherever you choose to access the Internet.

The EDD offers seminars on:

State payroll tax reporting requirements and recordkeeping. Determining if workers are employees or independent contractors. Managing Unemployment Insurance costs. Calculating and completing payroll tax forms.

The EDD and the Internal Revenue Service (IRS) jointly offer seminars on:

Federal/state payroll reporting and withholding requirements.

Online filing and payment options.

Difference between employees and independent contractors and the importance of proper worker classification.

The EDD and the Department of Industrial Relations, Division of Labor Standards Enforcement jointly present classes on:

Wage and hour law application.

Employer and employee rights and responsibilities.

Recordkeeping, reporting, and posting requirements.

The EDD offers online seminars on:

Information to help you enroll and get started using e-Services for Business to manage your employer payroll tax account online.

Differences between employees and independent contractors.

Register for a tax seminar near you at payroll tax seminar (edd.payroll_tax_seminars/).

edd. DE 44 Rev. 47 (1-21) (INTERNET)

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Taxpayer Assistance Center 1-888-745-3886

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