California Payroll Requirements

09/23/2019 02:14 PM

California Payroll Tax Withholding Information

    AB-5 Worker status Assembly Bill No. 5 : Employees and independent contractors

    Employer Registration – California business owners must register online with the Employment Development Department.

    Withholding – Employees need to fill out Form DE4. There are two different methods for withholding: calculation or wage bracket. Supplemental rates are to withheld at a flat 6.6% unless bonus or stock option. Then, they are withheld at 10.23%.

    Overtime laws – California has some of the most restrictive overtime laws in the nation. Employers must pay hourly employees one and one-half times their regular hourly rate for every hour worked over 40 in a week; for every hour worked over eight in a single workday; for the first eight hours worked on the seventh consecutive workday of a workweek; and double the regular rate for each hour over 12 in a workday, and, in most industries, for every hour over the seventh consecutive workday.

    State Unemployment Insurance – The state unemployment wage base for 2018 and 2019 is $7,000.
    New employers pay a SUTA Rate of 3.4% for 2018 and 2019. Experienced employers can find their rate online.

    State Disability Insurance – The 2018 SDI withholding rate is 1.0%. The 2019 SDI withholding rate is 1.0%. The rate includes Disability Insurance (DI) 

    and Paid Family Leave (PFL).

    The SDI taxable wage limit for 2019 is $118,371 per employee, per year. The 2019 DI/PFL maximum weekly benefit amount is $1,183.71.
    The SDI taxable wage limit for 2018 is $114,967 per employee, per year. The 2018 DI/PFL maximum weekly benefit amount is $1,149.67.

    Labor Laws – California’s minimum wage in 2019 is $12.00 for employers with 26 or more employees and $11.00 for employers with 25 or fewer employees. 

    California employers should check their city for different minimum wage laws. If the employee is fired, the employer must pay the employee’s termination pay immediately. If the employee quits, the employer must pay the final payroll within 72 hours, or immediately if the employee gives 72 hours notice.

    Workers CompensationCalifornia employers are required by law to have workers' compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers' compensation benefits. Workers' comp insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.

    New Hire Reporting – New hires should be reported online or mailed to:
    Employment Development Department
    P.O. Box 997016, MIC 96
    Sacramento, CA 95799-7016
    Fax: 916-319-4400

    Child Support –  Child support withholding can be paid online or sent to:
    CA SDU
    P.O. Box 989067
    West Sacramento, CA 95798-9067
    Phone: 866-901-3212

    Helpful Links –
    CA Employment Development Department
    California Department of Industrial Relations 
    CA Department of Child Support Services