“Wages” include all compensation that you pay to an employee for services performed in covered employment, including:

• Salary.
• Commissions.
• Bonuses.
• Piece rate wages.
• Reasonable cash value for payment in-kind, such as meals and lodging.
• Tips.
• Amounts in lieu of cash wages to offset an employee’s debts.
• Sickness and accident payments, except those made under workers’ compensation law.
• Fringe benefits that you provide or pay for, such as use of the organization car, parking, etc.
• Pension and retirement contributions you make, unless the contributions go to a qualified plan.
• Your contributions under a qualified cash or deferred arrangement, such as a 401(k) or Roth IRA. The employee contributions must be excluded from their gross income under section 402a8 of the Internal Revenue Code (IRC).
• Your contributions under a state pickup plan, such as a pension plan. Your contributions must be made as a result of a salary reduction agreement, in which the employee elects an amount of taxable income to be voluntarily withheld from their pay.
• Amounts deferred under a nonqualified, deferred compensation plan.
• Sick pay from third-party payers.
• Sick pay from you.
• Employee tax payments you make for state disability insurance and/or under the Federal Insurance Contributions Act (FICA).

In addition, wages paid by all federally recognized Indian tribes are subject to state UI taxes. Indian tribes employing one or more employees must register with the EDD.

Payments That Are Not Considered Wages

For the purposes of UI, the following types of payments are not considered wages:

• Reimbursement of required or necessary business expenses that the employee incurs while working for you, such as travel expenses.
• Insurance or annuity payments from a qualified plan to an employee for retirement.
• Sickness or accident disability payments that you make to an employee more than six calendar months following the last month in which the employee worked, including third-party sick pay.
• Severance payments if the purpose is to supplement unemployment compensation benefits.
• Vacation or holiday pay earned but not paid before the termination of employment.
• Health insurance premiums or health care expenses you pay on behalf of your employee or your employee’s dependents.
• Sickness or accident disability under a workers’ compensation law.
• Moving expenses, if it is reasonable to believe the expenses constitute an allowable deduction to the employee under the IRC section 217.
• Employee achievement awards, if it is reasonable to believe the amount is excludable from gross income under IRC section 74c.
• Scholarship payments or fellowship grants, if it is reasonable to believe the amount is excludable from gross income under IRC section 117.
• Dependent care assistance programs, if it is reasonable to believe the amount is excludable from gross income under IRC section 129.
• Payments to or from the following types of pension plans:
• Your payments to a trust, as defined by IRC section 401a.
• An annuity plan, as defined under IRC section 403a.
• A simplified employee pension plan (SEP-IRA) unless the payment is made as a result of a salary reduction agreement.
• An annuity contract as defined under IRC section 403b, unless the payment is made as a result of a salary reduction agreement.
• An exempt governmental deferred compensation plan as defined in IRC section 3121v3.
• Cafeteria plans, which provide participants an opportunity to receive some benefits on a pre-tax basis.
• Payments made due to a violation of the Worker Adjustment and Retraining Notification Act (WARN).

For information on the WARN Act, see Mass Layoffs and Plant Closings.