California payroll has some unique aspects and conditions. Some of the details and laws are set out in this article including information concerning: tax withholding and reporting unemployment insurance taxes and reporting wage and hour laws and child support withholding.
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
888-745-3886 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
888-745-3886 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
Employers 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.
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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.
California does allow compulsory direct deposit but the employee’s choice of financial institution must meet federal Regulation E regarding choice of financial institutions.
California does not allow compulsory direct deposit California requires the following information on an employee’s pay stub:
Employee’s Name Pay rate Gross and net earnings Amount and purpose of deductions Hours worked or work done if piece work California State Wage and Hour Law provisions concerning pay stub information detail the following information must be on the paystub.
Gross and net earnings
Hours worked at each hourly rate for hourly workers
Piece rate and number of pieces
Deductions
Pay period dates
Employee's name and social security number
Employer’s name and address
In California employees must be paid at least semimonthly, monthly for FLSA exempt employees. The lag time between earned and paid is governed by statute in California. Wages earned from the 1 st through the 15 th of the month must be paid by the 26 th . Wages earned from the 16 th through the end of the month must be paid by the 10 th of the following month. Exempt employees by the 26 th of the month for the entire month (a safe harbor is payment within 7 days after the pay period.) California payroll law requires that involuntarily terminated employees must be paid their final pay immediately within 72 hours for seasonal employees within 24 hours for certain motion picture (by next payday if laid off) and certain oil drilling employees. Voluntarily terminated employees must be paid their final pay within 72 hours immediately if 72 hours' notice of quit is given strikers on next regular payday.
Deceased employee’s wages to a maximum of $5,000.00 must be paid to the surviving spouse or conservator when an Affidavit of right and proof of identity are presented.
Escheat laws in California require that unclaimed wages be paid over to the state after one year.
The employer is further required in California to keep a record of the wages abandoned and turned over to the state for a period of seven years.
There is no provision in California law concerning tip credits against State minimum wage.
In California the payroll laws covering mandatory rest or meal breaks are a 30-minute meal break after five hours 30 minutes after 10 hours 10 minute rest after four hours.
California law concerning record retention of wage and hour records is two years..
The California agency charged with enforcing Child Support Orders and laws is: Department of Child Support Services P.O. Box 944245 Sacramento, CA 95244-2440
916-654-1532 www,childsup,cahwnet.gov/default.htm California has the following provisions for child support deductions:
When to start Withholding? 10 days after service
When to send Payment? Within 7 days of Payday.
When to send Termination Notice? When next payment is due
Maximum Administrative Fee? $1 per payment.
Withholding Limits? 50% of disposable earnings.
Please note that this article is not updated for changes that can and will happen from time to time.
Charles J. Read, CPA has been in the payroll, accounting and tax business for 30 years, the last fifteen in private practice. Mr. Read is the author of "How to Start a New Business."
To find professional payroll service at a budget price go to www.PayrollonaBudget.com a paperless payroll company.
» left by L. Seaton from Northern California (1 year 143 days ago.)
Yes, article was helpful. However, what if the employer does not pay you on the required pay date? Respond to this comment
» left by Anonymous (336 days 14 hours ago.)
Almost, If the employer does not pay within the maximum allowable time, is there any kind of penalty awarded to the employee? Respond to this comment
» left by The Author (334 days 5 hours ago.)
If your employer does not pay you on time you can get the wage and hour department on their case. But the most you as an employee are going to get is your paycheck. Respond to this comment
» left by dlpz from Orange Ca (320 days 3 hours ago.)
I signed up to work 4 hours on a Xmas. On x-mass our system went down. We were not able to work. After 3 hrs, our boss call and said to leave. Should I get paid for the hours I worked or the 4 hours I signed up for. Can you please help me find doc. show what I should get paid for? Respond to this comment
» left by deanna swinford from san diego (291 days 4 hours ago.)
My payroll department deposited my electronic payroll check. They deposited $85.00 on February 5, 2008, but it was suppose to be $1400.00 for 28 hours of work. I called the payroll department and they said that they never got my time sheets from my department. I had a copy of each time sheet, to verify hours. They said they could not pay me sooner than the 11th of this months even though the pay date was Febraury 5th. Isn't there a law that they have to pay me withint 24 or 48 hours, or was that for employees who were being dismissed. I didn't think they could make me wait a week. Respond to this comment
» left by Lois Lavender from Del Mar, CA (184 days ago.)
Good to see problems others have. What should employees do when they are scheduled for hrs. and new owners close for 3 days without notice. Do they owe employees mininum without tips?
» left by deb from jablonski (183 days 5 hours ago.)
My company is based in California, but I live in Nevada. Because the payroll laws are different in the 2 states, I would like to know which state law this company is required to follow.
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