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If you are covered by employment tax laws, you must register with the EDD to obtain an identification number. To obtain your identification number, file a DE 1 - Registration Form for Commercial Employers with the EDD. When you receive your identification number, you will also receive information about all state-required employment taxes and reporting requirements.
This topic contains the following information:
When you register with the EDD, the EDD establishes a reserve account for you. The account is used to determine your annual contribution rate. It also serves as a cumulative record of all the credits and charges against you since starting your business and paying wages. The EDD determines your contribution rate by a ratio of your reserve balance to the average taxable payroll in the preceding three years. A rate of 3.4 percent is required for new employers.
By February 28, the EDD notifies you of its UI rates for the entire calendar year. Every quarter, you must report to the EDD the amount of taxable wages paid and the calculated tax due. You must also pay the tax due. Tax payments should be submitted with a properly completed
DE 88/DE 88ALL - Payroll Tax Deposit, unless payments are made electronically through the
The unemployment tax wage base in California is $7,000, which is the same as the federal unemployment tax wage base.
California employers who are required to provide unemployment insurance must notify all employees that they may be eligible for the federal Earned Income Tax Credit (EITC) and the California EITC.1 The EITC is a tax credit available to workers who do not exceed specific salary and investment income thresholds, who have valid Social Security numbers, and who meet certain other requirements.
You must file returns with the EDD about an employee’s wages, contributions, taxes withheld and other required information quarterly.2
You must use the following forms to fulfill the reporting requirements:
If you fail to file the quarterly returns on time, you will be subject to penalties.
All employers must file all unemployment insurance reports and returns electronically and remit all contributions for unemployment insurance premiums by electronic funds transfer.
Make certain that any employer representative or payroll agent you use to prepare your employment tax returns, wage reports or payroll tax deposits follows the electronic submission rules.
The e-file and e-pay mandate requires the following returns, reports and payments to be electronically submitted:
You may request a waiver if you are unable to electronically submit employment tax returns, wage reports and payroll tax deposits. You may request a waiver for a period of only one year. The EDD may grant the waiver if you can establish that there is a lack of automation, a severe economic hardship, a current exemption from filing electronically for federal purposes or other good cause.3
Failure to comply with the e-filing and e-pay mandate will result in penalties. For payroll tax deposits, the penalty is 15 percent of the amount due. Visit the
The Federal Unemployment Tax Act (FUTA) provides guidelines to states in setting up their UI programs. A 6.0 percent federal tax is imposed on all employers on wages of up to $7,000 annually per worker. Employers can receive a 5.4 percent credit when they participate in a state UI program, making the effective FUTA tax 0.8 percent. The FUTA tax is due January 31 of each year.
More information about FUTA credit reductions can be found on the
You are relievedof certain taxes and penalties if you failed to make a timely return or payment because you received written advice from the EDD. If you reasonably relied on the EDD’s written advice, you are relieved of taxes, additions to tax and penalties when:
If you are eligible, you can make a voluntary contribution to reduceyour tax rate by one, two or three levels. You cannot make voluntary contributions if you have a negative reserve account balance, are a new employer, have an unpaid liability on September 30 of the previous year or if you are already assigned the lowest possible rate.
In February of each year, the EDD notifies eligible employers of the amounts they can pay to reduce their rate. You have until the last working day in March to make a voluntary contribution.
If you have an unpaid liability on September 30 and were not notified of the liability prior to September 1, or if your unpaid liability on September 30 is the subject of a timely petition for reassessment, you can make a voluntary contribution.
Voluntary contributions are not prepayments of any legally due taxes and are not deductible on any future tax return. A voluntary contribution is an additional UI payment whose sole purpose is to reduce your UI contribution rate. You must carefully determine if a voluntary contribution will reduce your overall UI costs. You cannot receive a refund of a voluntary contribution.
You must keep payroll records for all employees for at least four years. Records must include:
If you are covered by the state’s unemployment and disability insurance programs, you must post Form DE 1857A - Notice to Employees - Unemployment Insurance, State Disability Insurance and Paid Family Leave. If you fall under only the UI program, post Form DE 1857D - Notice to Employees - Unemployment Insurance Benefits.6
When discharging, laying off or placing an employee on a leave of absence, you must providethat employee with a current EDD pamphlet DE 2320 - For Your Benefit. This pamphlet informs employees of their benefit rights under the UI program.
You may provide materials related to benefit rights and claims for benefits via email in PDF, JPEG, or other digital image file type format, if the employee affirmatively, and in writing, by email, or by some form of electronic acknowledgment, opts into receipt of electronic statements or materials.7
In the case of electronic acknowledgment, the acknowledgment form must do all of the following:
The employee may revoke the agreement at any time in writing, by email, or by some form of electronic acknowledgment.
You must also provide written notice about the change in the employee’s status. At minimum, this notice must include the following information:
You must give the employee the notice and pamphlet no later than the effective date of the action.9 Failure to comply with these requirements constitutes a misdemeanor.10
You can download UI forms and publications from the
You can find the required
Form DE 1857A - Notice to Employees - Unemployment Insurance, State Disability Insurance and Paid Family Leave
on the
2025 California and Federal Labor Law Poster, which contains the 17 state and federal required posters, compiled by CalChamber. To order the
2025 California and Federal Labor Law Poster, call (800) 331-8877, or visit our
Civil and criminal penalties may be assessed against employers and claimants who fail to meet certain UI responsibilities.
Failure to provide a Form W-2 to employees can result in monetary fines. These fines vary depending on whether the failure to provide is intentional or not intentional. If the Form W-2 is furnished to employees late, a fine may also result, unless reasonable cause exists for the lateness. The IRS assesses these penalties on employers.
If you intentionally fail to register with the EDD as an employer, you are subject to a penalty of $100 per non-reported employee. This penalty applies only to the calendar quarter in which you had the highest number of employees.
You must file the DE 9 - Quarterly Contribution Return and Report of Wages with the EDD or be subject to penalties.
Failure to file a timely return will result in a penalty of 15 percent of the tax due, plus interest compounded daily. If the return is not filed within 60 days of the last timely date, an additional penalty of 15 percent will be charged on unpaid contributions due on the return.
In addition, a wage item penalty of $20 per unreported worker may be charged if the EDD does not receive your wage detail.
Any person who makes a claim for benefits using a false name, false SSN or other false identification is disqualified from eligibility for UI. It is a misdemeanor to use a false name, false SSN or other false identification to obtain, increase, reduce or defeat UI benefits.11
Employers who engage in money laundering to pay workers in cash and to evade paying employer taxes may be assessed a penalty of 100 percent of taxes due. Any individual, officer, major stockholder or person in charge of the affairs of a business entity is personally liable for the penalty. Money laundering under this law typically occurs when a contractor pays a subcontractor by check, ostensibly for contract services. The subcontractor cashes the check and then returns a portion of the cash to the contractor. The contractor uses this cash to pay the workers under the table. The transactions result in no records of wage payments and no employer contributions or employee payroll deductions.
Any employer, employee, officer or agent of an employer can be subject to a penalty for willfully making a false statement, representation or failing to report a material fact concerning a termination. The penalty ranges from 2 to 10 times the weekly benefit amount of the claimant. Any of the parties presenting false information will be subject to the penalty, as will the employer.12
1. Revenue and Taxation Code sec. 19853
2. UI Code sec. 1088
3. UI Code secs. 1088, 1110
4. UI Code sec. 1233
5. UI Code sec. 1085
6. 22 CCR 1089-1(c)
7. UI Code sec. 1089(e)
8. 22 CCR 1089-1(d)(2)
9. 22 CCR 1089-1(d)(1)
10. UI Code sec. 1089
11. UI Code secs. 1257, 2101
12. UI Code sec. 1142