Unique Aspects of California Payroll Law and Practice

The California State Agency that oversees the collection and reporting of State income taxes deducted from payroll checks is:

Employment Development Department
800 Capitol Mall
Sacramento, CA 95814

California requires that you use California form "DE 4A-4, Employee's Withholding Allowance Certificate" instead of a Federal W-4 Form for California State Income Tax Withholding.

Not all states allow salary reductions made under Section 125 cafeteria plans or 401(k) to be treated in the same manner as the IRS code allows. In California cafeteria plans: are not taxable for income tax calculation; are not taxable for unemployment insurance purposes. 401(k) plan deferrals are: not taxable for income taxes; are taxable for unemployment purposes.

In California supplemental wages are taxed at a 6% flat rate, 9.3% for stock options and bonuses.

You are not required to file California State W-2s.

The California State Unemployment Insurance Agency is:

Employment Development Department
P.O. Box 826880 - MIC 94
Sacramento, CA 94280-0001

The State of California taxable wage base for unemployment purposes is wages up to $7000.00.

California requires Magnetic media reporting of quarterly wage reporting if the employer has at least 250 employees that they are reporting that quarter.

Unemployment records must be retained in California for a minimum period of four years. This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.

The California State Agency charged with enforcing the state wage and hour laws is:

The Department of Industrial Relations
Division of Labor Standards Enforcement
P.O. Box 420603
San Francisco, CA 94142-3660

The provision in the law for minimum wage in the State of California is $6.75 per hour..

The general provision in California State Law covering paying overtime in a non-FLSA covered employer is one and 1/2 times regular rate after an 8 hour day, 40 hour week in most industries. Check for other overtime rules and exemptions.

California State new hire reporting requirements are that every employer must report every new hire, rehire and contract who is paid over $600.00. The employer must report the federally required elements of:

Employee's name
Employee's address
Employee's social security number
Employer's name
Employer's address
Employer's Federal Employer Identification Number (EIN)

Plus date of hire; state EIN; date, dollar amount, expiration date of contract.

This information must be reported within 20 days of the hiring or rehiring; or after $600.00 minimum is met or contract is signed whichever is earlier.
The information can be sent as a W4 or equivalent DE34 by mail, fax or electronically.
There is a $24.00 to $490.00 penalty for a late report in California.

The California new hire reporting agency can be reached at 916-657-0529 or on the web at www.edd.cahwnet.gov/txner.htm .

California does allow compulsory direct deposit but the employee's choice of financial institution must meet federal Regulation E regarding choice of financial institutions.