Payroll California, Unique Aspects of California Payroll Law and Practice

The California State Agency that oversees theThe California new hire-reporting agency can be
collection and reporting of State income taxesreached at 916-657-0529 or on the web at
deducted from payroll checks is:California does allow compulsory direct deposit but
Employment Development Departmentthe employee's choice of financial institution must
800 Capitol Mallmeet federal Regulation E regarding choice of
Sacramento, CA 95814financial institutions.
888-745-3886California does not allow compulsory direct deposit
California requires that you use California form "DECalifornia State Wage and Hour Law provisions
4, Employee's Withholding Allowance Certificate"concerning pay stub information detail the
instead of a Federal W-4 Form for Californiafollowing information must be on the paystub.
State Income Tax Withholding.Gross and net earnings
Not all states allow salary reductions made underHours worked at each hourly rate for hourly
Section 125 cafeteria plans or 401(k) to beworkers
treated in the same manner as the IRS codePiece rate and number of pieces
allows. In California cafeteria plans: are not taxableDeductions
for income tax calculation; are not taxable forPay period dates
unemployment insurance purposes. 401(k) planEmployee's name and social security number
deferrals are: not taxable for income taxes; areEmployer's name and address
taxable for unemployment purposes.In California employees must be paid at least
In California supplemental wages are taxed at asemimonthly, monthly for FLSA exempt
6% flat rate, 9.3% for stock options and bonuses.employees. The lag time between earned and paid
You are not required to file California State W-2s.is governed by statute in California. Wages earned
The California State Unemployment Insurancefrom the 1st through the 15th of the month must
Agency is:be paid by the 26th. Wages earned from the 16th
Employment Development Departmentthrough the end of the month must be paid by
P.O. Box 826880 - MIC 94the 10th of the following month. Exempt
Sacramento, CA 94280-0001employees by the 26th of the month for the
888-745-3886entire month (a safe harbor is payment within 7
The State of California taxable wage base fordays after the pay period.)
unemployment purposes is wages up to $7000.00.California payroll law requires that involuntarily
California requires Magnetic media reporting ofterminated employees must be paid their final pay
quarterly wage reporting if the employer has atimmediately; within 72 hours for seasonal
least 250 employees that they are reporting thatemployees; within 24 hours for certain motion
quarter.picture (by next payday if laid off) and certain oil
Unemployment records must be retained indrilling employees. Voluntarily terminated
California for a minimum period of four years. Thisemployees must be paid their final pay within 72
information generally includes: name; social securityhours; immediately if 72 hours' notice of quit is
number; dates of hire, rehire and termination;given; strikers on next regular payday.
wages by period; payroll pay periods and payDeceased employee's wages to a maximum of
dates; date and circumstances of termination.$5,000.00 must be paid to the surviving spouse or
The California State Agency charged withconservator when an Affidavit of right and proof
enforcing the state wage and hour laws is:of identity are presented.
The Department of Industrial RelationsEscheat laws in California require that unclaimed
Division of Labor Standards Enforcementwages be paid over to the state after one year.
P.O. Box 420603The employer is further required in California to
San Francisco, CA 94142-3660keep a record of the wages abandoned and
The provision in the law for minimum wage in theturned over to the state for a period of seven
State of California is $6.75 per hour.years.
The general provision in California State LawThere is no provision in California law concerning
covering paying overtime in a non-FLSA coveredtip credits against State minimum wage.
employer is one and 1/2 times regular rate afterIn California the payroll laws covering mandatory
an 8 hour day, 40 hour week in most industries.rest or meal breaks are a 30-minute meal break
Check for other overtime rules and exemptions.after five hours; 30 minutes after 10 hours;
California State new hire reporting requirements10-minute rest after four hours.
are that every employer must report every newCalifornia law concerning record retention of wage
hire, rehire and contractor who is paid overand hour records is two years.
$600.00. The employer must report the federallyThe California agency charged with enforcing Child
required elements of:Support Orders and laws is:
Employee's nameDepartment of Child Support Services
Employee's addressP.O. Box 944245
Employee's social security numberSacramento, CA 95244-2440
Employer's name916-654-1532www,childsup,cahwnet.gov
Employers addressdefault.htm
Employer's Federal Employer Identification NumberCalifornia has the following provisions for child
(EIN)support deductions:
Plus date of hire; state EIN; date, dollar amount,When to start Withholding? 10 days after service
expiration date of contract.When to send Payment? Within 7 days of
This information must be reported within 20 daysPayday.
of the hiring or rehiring; or after $600.00 minimumWhen to send Termination Notice? When next
is met or contract is signed whichever is earlier.payment is due
.Maximum Administrative Fee? $1 per payment.
The information can be sent as a W4 orWithholding Limits? 50% of disposable earnings.
equivalent DE34 by mail, fax or electronically.Please note that this article is not updated for
There is a $24.00 to $490.00 penalty for a latechanges that can and will happen from time to
report in California.time.