2019 CALIFORNIA EMPLOYER’S GUIDE

2023 CALIFORNIA

EMPLOYER'S GUIDE

DE 44 Rev. 49 (1-23) (INTERNET)

Cover + 118 pages

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 e-file and e-pay mandate (edd.EfileMandate) 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.payroll_taxes/e-Services_for_Business. htm) 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 California's New Hire Reporting Program (edd.Payroll_Taxes/New_Hire_Reporting.htm) 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, and Reporting: For information on how to prevent and detect fraud, visit Help Fight Fraud (edd.about_edd/fraud.htm). Refer to page 83 for information about UI fraud, or page 95 for Disability Insurance (DI) fraud.

Improper Payment of UI Benefits: When an employer is financially impacted by improper UI payments. The 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.htm).

California Employer News and Updates: Find the latest tax news, annual updates, and resources to support you and your business. Visit Employer News and Updates (edd.payroll_taxes/employernews.htm) and subscribe to receive emails about employment and payroll tax updates.

2023 Payroll Tax Rates, Taxable Wage Limits, and Maximum Benefit Amounts

Unemployment Insurance (UI) y The 2023 taxable wage limit is $7,000 per employee. y The UI maximum weekly benefit amount is $450. y The UI tax rate for new employers is 3.4 percent (.034) for a period of two to three years. y The employer rates are available online at e-Services for Business (edd.payroll_taxes/e-Services_for_Business.htm).

Employment Training Tax (ETT) y The 2023 ETT rate is 0.1 percent (.001) on the first $7,000 of each employee's wages.

State Disability Insurance (SDI) y The 2023 SDI withholding rate is 0.9 percent (.009). The rate includes Disability Insurance (DI) and Paid Family Leave (PFL). y The current SDI taxable wage limit and DI/PFL maximum weekly benefit amount are available online at Quick Statistics (edd.en/about_edd/quick_statistics/).

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 15 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.htm).

GGavaivninNNewewsosomm, ,GGovoevrenronror CALIFORNIA LABOR AND WORKFORCE DEVELOPMENTCCaAaliGlfiofoErnrNniaCiaYLLaabboorraannddWWoorkrkfoforcrceeDDeveevleoloppmmenetntAAgegnecnycy

Dear California Employer: Dear California Employer:

Gavin Newsom Governor

The Employment Development Department (EDD) appreciates your continued cTohnetrEibmutpiolonymtoetnhteDeecvoenlompmicewnteDll-ebpeainrtgmoefntth(isEDgrDe)aat pstparteec.iates your continued contribution to the economic well-being of this great state. With you in mind, we have made it easier to file and pay with e-Services for Business (Weditdh.cyao.ugoinv/mPianydr,owll_eThaaxvees/me-aSdeerviitceeass_ifeorr_toBfuilseinaensds.phatmy )w. iUthsein-gSeer-vSiceervsicfoersBfoursiness Bomcpa(enoauafdlsaysikdntmisen.ettcoe,epaasenay.tsatgoysnsomiu,soyv,ve,/a2ciPenao4fwatnasshydst,arottvos,nouieleedlr_ycswaouTusaupraaye,d,xdn2aeawad4tsnyeau/,dehypy7-osdotSouedauercatrmsreuyvaarasiycecnocadeawuoasgwrua_yee,nayfoe7tcytrckoio_ndo.uBfmauYoryunraoesmstnumiainaancpegtfwailosoeonersnymye),fe.oikalarUeu.tnpirYsaodaieonnnymmud,groaupcaelncalld-odhtSnjayuemmexfsirrltvaeuopriccrceaeachetn!yousmdruronfnoaolsltrdr,teoajBmu!nxuslaitsankirceneecetaoustursnnnisots,

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WWee appreciatee yyoouurr commitment to doing business in California and wish you continued scuocnctiensusedinstuhcecyeesasrinahtheeady.ear ahead.

SSiinncceerreellyy,,

NNANCY FAARRIIAASS DDirector

PO Box 826880 ? Sacramento, CA 94280-0001 ? edd. PO Box 826880 ? Sacramento, CA 94280-0001 ? edd.

MANAGE YOUR EMPLOYER PAYROLL TAX ACCOUNT ONLINE!

Use e-Services for Business to electronically:

? File tax returns and wage reports ? Make payments ? Update addresses ? And much more.

Enroll today at

e-Services for Business (edd.Payroll_Taxes/e-Services_for_Business.htm).

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

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

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

Start Here ................................................................................................................................................................. 4 Flowchart ............................................................................................................................................................ 5

2023 Forms and Due Dates .................................................................................................................................... 6

About Employers and When to Register ............................................................................................................... 7

Classifying Employees ........................................................................................................................................... 8 ABC Test, Employee or Independent Contractor? .............................................................................................. 8

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

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

California Personal Income Tax 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 2023........................................................................................................... 17

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

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

Required Forms ....................................................................................................................................................... 52 Report of New Employee(s) (DE 34):.................................................................................................................. 53

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

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

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Taxpayer Assistance Center 1-888-745-3886

 Sample DE 542 Form ................................................................................................................................... 56 Payroll Tax Deposit (DE 88):

Overview ....................................................................................................................................................... 57 Withholding Deposits .................................................................................................................................... 58 California Deposit Requirements .................................................................................................................. 58 Due Dates for Quarterly Tax Deposits .......................................................................................................... 59 2023 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 And Mailing Address Change .................................................................................................... 70 No Longer Have Employees ............................................................................................................................... 70 Close Your Business ........................................................................................................................................... 71 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 ........................................................................................................................................ 78 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

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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 ....................................................................................................................................... 94 Taxes ? Who Pays for State Disability Insurance? ............................................................................................. 94 Employee Benefits .............................................................................................................................................. 94 Employer 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 Online? .......................................................................................... 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

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SEMINARS TO HELP EMPLOYERS SUCCEED

The Employment Development Department (EDD) offers no-fee seminars to help established employers and new employers to understand and comply with California's payroll tax laws.

The EDD offers seminars on the following topics:

? State payroll tax reporting requirements and recordkeeping.

? Federal/State Basic Payroll Tax Seminar.

? State Labor Law and Payroll Tax Seminar.

? Employment Status Tax Seminar.

? Cannabis Industry and State Payroll Tax Seminar.

? AB 5 Motor Carrier Worker Classification Online Webinar.

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

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

? Federal/state payroll reporting and withholding requirements.

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

? Wage and hour rules and regulations.

? Employer and employee rights and responsibilities.

? Recordkeeping, reporting, and posting requirements.

Register for a tax seminar at Payroll Tax Seminar (edd.payroll_tax_seminars/).

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Taxpayer Assistance Center 1-888-745-3886

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