Chapter 1. General Provisions of California Unemployment Insurance Code >> Division 6. >> Chapter 1.
The department shall have the powers and duties necessary to
administer the reporting, collection, refunding to the employer, and
enforcement of taxes required to be withheld by employers pursuant
to Section 13020, except as otherwise provided by this division.
The definitions set forth in Sections 126, 127, 129, 133,
134, and 144 shall apply to this division.
The following provisions of this code shall apply to any
amount required to be deducted, reported, and paid to the department
under this division:
(a) Sections 301, 305, 306, 310, 311, 312, 317, and 318, relating
to general administrative powers of the department.
(b) Sections 403 to 413, inclusive, Section 1336, and Chapter 8
(commencing with Section 1951) of Part 1 of Division 1, relating to
appeals and hearing procedures.
(c) Sections 1110.6, 1111, 1111.5, 1112, 1112.1, 1113, 1113.1,
1114, 1115, 1116, and 1117, relating to the making of returns or the
payment of reported contributions.
(d) Article 8 (commencing with Section 1126) of Chapter 4 of Part
1 of Division 1, relating to assessments.
(e) Article 9 (commencing with Section 1176), except Section 1176,
of Chapter 4 of Part 1 of Division 1, relating to refunds and
(f) Article 10 (commencing with Section 1206) of Chapter 4 of Part
1 of Division 1, relating to notice.
(g) Article 11 (commencing with Section 1221) of Chapter 4 of Part
1 of Division 1, relating to administrative appellate review.
(h) Article 12 (commencing with Section 1241) of Chapter 4 of Part
1 of Division 1, relating to judicial review.
(i) Chapter 7 (commencing with Section 1701) of Part 1 of Division
1, relating to collections.
(j) Chapter 10 (commencing with Section 2101) of Part 1 of
Division 1, relating to violations.
(a) Except where the context otherwise requires, the
definitions set forth in this chapter, and in addition the
definitions and provisions of the Personal Income Tax Law referred to
and hereby incorporated by reference as set forth in the following
provisions of the Revenue and Taxation Code, shall apply to and
govern the construction of this division:
(1) "Corporation" as defined by Section 17009.
(2) "Fiduciary" as defined by Section 17006.
(3) "Fiscal year" as defined by Section 17011.
(4) "Foreign country" as defined by Section 17019.
(5) "Franchise Tax Board" as defined by Section 17003.
(6) "Husband" and "wife" as defined by Section 17021.
(7) "Individual" as defined by Section 17005.
(8) "Military or naval forces" as defined by Section 17022.
(9) "Nonresident" as defined by Section 17015.
(10) "Partnership" as defined by Section 17008.
(11) "Person" as defined by Section 17007.
(12) "Resident" as defined by Sections 17014 and 17016.
(13) "State" as defined by Section 17018.
(14) "Taxable year" as defined by Section 17010.
(15) "Taxpayer" as defined by Section 17004.
(16) "Trade or business" as defined by Section 17020.
(17) "United States" as defined by Section 17017.
(b) The provisions of Part 10 (commencing with Section 17001) and
Part 10.2 (commencing with Section 18401) of Division 2 of the
Revenue and Taxation Code, relating to the following items, are
hereby incorporated by reference and shall apply to and govern
construction of this division:
(1) Trade or business expense (Article 6 (commencing with Section
17201) of Chapter 3 of Part 10).
(2) Deductions for retirement savings (Article 6 (commencing with
Section 17201) of Chapter 3 of Part 10).
(3) Distributions of property by a corporation to a shareholder
(Chapter 4 (commencing with Section 17321) of Part 10).
(4) Deferred compensation (Chapter 5 (commencing with Section
17501) of Part 10).
(5) Partners and partnerships (Chapter 10 (commencing with Section
17851) of Part 10).
(6) Gross income of nonresident taxpayers Chapter 11 (commencing
with Section 17951) of Part 10).
(7) Postponement of the time for certain acts by individuals in or
in support of the armed forces (Article 3 (commencing with Section
18621) of Chapter 2 of Part 10.2).
(8) Disclosure of information (Article 2 (commencing with Section
19542) of Chapter 7 of Part 10.2). For this purpose "Franchise Tax
Board" as used therein shall mean the Employment Development
Department in respect to information obtained in the administration
of this division.
"Employee" means a resident individual who receives
remuneration for services performed within or without this state or a
nonresident individual who receives remuneration for services
performed within this state and includes an officer, employee, or
elected official of the United States, a state, territory, or any
political subdivision thereof, or any agency or instrumentality of
any one or more of the foregoing. "Employee" also includes an officer
of a corporation.
Whether an individual provides equipment in the performance of
services for remuneration shall not be considered in a determination
of whether that individual is an employee.
"Employee" does not include any individual if all of the
following conditions exist:
(a) The individual is licensed pursuant to the provisions of Part
1 (commencing with Section 10000) of Division 4 of the Business and
Professions Code and is performing services in the capacity of a
licensee, or the individual is engaged in the trade or business of
primarily in-person demonstration and sales presentation of consumer
products, including services or other intangibles, in the home or
sales to any buyer on a buy-sell basis, a deposit-commission basis,
or any similar basis, for resale by the buyer or any other person in
the home or otherwise than in a retail or wholesale establishment.
(b) Substantially all of the remuneration (whether or not paid in
cash) for the services performed by that individual is directly
related to sales or other output (including the performance of
services) rather than to the number of hours worked by that
(c) The services performed by the individual are performed
pursuant to a written contract between that individual and the person
for whom the services are performed and the contract provides that
the individual will not be treated as an employee with respect to
those services for state tax purposes.
(a) "Employee" also means any individual who is an
employee pursuant to Section 2750.5 of the Labor Code, of a person
who holds a valid state contractor's license pursuant to Chapter 9
(commencing with Section 7000) of Division 3 of the Business and
(b) When subdivision (a) does not apply, "employee" shall also
mean any individual who is an employee, pursuant to Section 2750.5 of
the Labor Code, of a person who is required to obtain a valid state
contractor's license pursuant to Chapter 9 (commencing with Section
7000) of Division 3 of the Business and Professions Code.
"Employee" does not include any member of a limited
liability company that is treated as a partnership for federal income
(a) "Employer" means any individual, person, corporation,
association, partnership, or limited liability company, or any agent
thereof, doing business in this state, deriving income from sources
within this state, or in any manner whatsoever subject to the laws of
this state, the State of California or any political subdivision or
agency thereof, including the Regents of the University of
California, any city organized under a freeholders' charter, or any
political body not a subdivision or agency of the state, and any
person, officer, employee, department, or agency thereof, making
payment of wages to employees for services performed within this
state, except as provided in subdivision (b).
(b) If the employer, as defined in subdivision (a), for whom the
employee performs or performed the service does not have control of
the payment of wages for such services, "employer" (except for
purposes of Section 13009) means the person having control of the
payment of such wages, whether or not the person having control of
the payment of such wages is subject to the jurisdiction of the laws
of this state.
An employment agency, as defined in paragraph (3) of
subdivision (a) or (h) of Section 1812.501 of the Civil Code shall
not be deemed the employer of the domestic worker for whom it
procures, offers, refers, provides, or attempts to provide work if
all of the factors set forth in Section 687.2 exist.
"Gross income" means all compensation for services including
fees, commissions, and similar items, except as otherwise provided
by this division. "Gross income" shall specifically include those
items relating to compensation specified by Article 2 (commencing
with Section 17081) of, and shall specifically exclude those items
relating to compensation specified by Article 3 (commencing with
Section 17131) of, Chapter 3 of Part 10 of Division 2 of the Revenue
and Taxation Code.
"Miscellaneous payroll period" means a payroll period other
than a daily, weekly, biweekly, semimonthly, monthly, quarterly,
semiannual, or annual payroll period.
"Payroll period" means a period for which a payment of wages
is ordinarily made to the employee by his or her employer.
"Wages" means all remuneration, other than fees paid to a
public official, for services performed by an employee for his or her
employer, including all remuneration paid to a nonresident employee
for services performed in this state, and the cash value of all
remuneration paid in any medium other than cash, except as provided
by this section. "Wages" includes tips received by an employee in the
course of his or her employment. The wages shall be deemed to be
paid at the time a written statement including tips is furnished to
the employer pursuant to Section 13055 or, if no statement including
those tips is so furnished, at the time received. "Wages" includes
compensation, that is deductible under Section 162 of the Internal
Revenue Code, paid to a member of a limited liability company filing
a federal corporate income tax return.
"Wages" shall not include remuneration paid under any of the
(a) For agricultural labor, as defined in subdivision (g) of
Section 3121 of the Internal Revenue Code.
(b) For domestic service in a private home, local college club, or
local chapter of a college fraternity or sorority.
(c) For service not in the course of the employer's trade or
business performed in any calendar quarter by an employee, unless the
cash remuneration paid for that service is fifty dollars ($50) or
more and the service is performed by an individual who is regularly
employed by the employer to perform the service. For purposes of this
subdivision, an individual shall be deemed to be regularly employed
by an employer during a calendar quarter only if either of the
following conditions is met:
(1) On each of some 24 days during the quarter, the individual
performs for the employer for some portion of the day service not in
the course of the employer's trade or business.
(2) The individual was regularly employed, as determined under
paragraph (1), by the employer in the performance of the service
during the preceding calendar quarter.
(d) For services by a citizen or resident of the United States for
a foreign government or an international organization.
(e) For services performed by a nonresident alien individual as
designated by regulations prescribed by the department.
(f) For services performed by a duly ordained, commissioned, or
licensed minister of a church in the exercise of his or her ministry
or by a member of a religious order in the exercise of duties
required by the order.
(g) (1) For services performed by an individual under the age of
18 years in delivery or distribution of newspapers or shopping news,
not including delivery or distribution to any point for subsequent
delivery or distribution.
(2) For services performed by an individual in, and at the time
of, the sale of newspapers or magazines to ultimate consumers, under
an arrangement under which the newspapers or magazines are to be sold
by him or her at a fixed price, his or her compensation being based
on the retention of the excess of the price over the amount at which
the newspapers or magazines are charged to him or her whether or not
he or she is guaranteed a minimum amount of compensation for the
services, or is entitled to be credited with the unsold newspapers or
magazines turned back.
(h) For services not in the course of the employer's trade or
business, to the extent paid in any medium other than cash.
(i) To, or on behalf of, an employee or his or her beneficiary
under any of the following situations:
(1) From or to a trust which is exempt from tax under Section
17631 of the Revenue and Taxation Code at the time of payment, unless
the payment is made to an employee of the trust as remuneration for
services rendered as an employee and not as a beneficiary of the
(2) Under or to an annuity plan which, at the time of payment, is
a plan qualified pursuant to Chapter 5 (commencing with Section
17501) of Part 10 of Division 2 of the Revenue and Taxation Code.
(3) Under or to a bond purchase plan which, at the time of
payment, is a bond purchase plan qualified pursuant to Chapter 5
(commencing with Section 17501) of Part 10 of Division 2 of the
Revenue and Taxation Code.
(4) For a payment which qualifies for deduction by an employee
pursuant to Section 219 of the Internal Revenue Code if, at the time
of payment, it is reasonable to believe that the employee will be
entitled to a deduction under that section for payment.
(5) Under a cafeteria plan (within the meaning of Section 125 of
the Internal Revenue Code).
(j) To a master, officer, or any other seaman who is a member of a
crew on a vessel engaged in foreign, coastwise, intercoastal,
interstate, or noncontiguous trade.
(k) Pursuant to any provision of law other than Section 5(c) or 6
(l) of the Peace Corps Act, for service performed as a volunteer or
volunteer leader within the meaning of that act.
(l) In the form of group-term life insurance on the life of an
(m) To or on behalf of an employee, and to the extent that, at the
time of the payment of remuneration it is reasonable to believe that
a corresponding deduction is allowable for moving expenses pursuant
to Article 6 (commencing with Section 17201) of Chapter 3 of Part 10
of Division 2 of the Revenue and Taxation Code.
(n) (1) As tips in any medium other than cash.
(2) As cash tips to an employee in any calendar month in the
course of his or her employment by an employer, unless the amount of
the cash tips is twenty dollars ($20) or more.
(o) For service performed by an individual on a boat engaged in
catching fish or other forms of aquatic animal life under an
arrangement with the owner or operator of the boat pursuant to which
all of the following apply:
(1) The individual does not receive any cash remuneration, other
than as provided in paragraph (2).
(2) The individual receives a share of the boat's (or the boats'
in the case of a fishing operation involving more than one boat)
catch of fish or other forms of aquatic animal life or a share of the
proceeds from the sale of the catch.
(3) The amount of the individual's share depends on the amount of
the boat's (or the boats' in the case of a fishing operation
involving more than one boat) catch of fish or other forms of aquatic
This subdivision shall apply only where the operating crew of the
boat (or each boat from which the individual receives a share in the
case of a fishing operation involving more than one boat) is normally
made up of fewer than 10 individuals.
(p) For any medical care reimbursement made to, or for the benefit
of, an employee under a self-insured medical reimbursement plan
pursuant to Section 105(h)(6) of the Internal Revenue Code.
(q) To, or on behalf of, an employee to the extent not includable
in gross income pursuant to Section 13006.
(r) For services to which Section 633 applies.
(a) For purposes of the report required by subdivision (a)
of Section 1088 and the statement required by Section 13050, "wages
subject to personal income tax" means all of the following:
(1) Remuneration defined as wages by Section 13009, except that in
the case of tips received by an employee in the course of his or her
employment, the amounts shall include only those tips included in
statements furnished to the employer, pursuant to Section 13055.
(2) Remuneration described in subdivisions (a), (b), (f), and (l)
of Section 13009, to the extent included in gross income.
(3) Payments made by a third party for sick pay as specified in
(A) Any employer who receives a report of wages from a third-party
payer as provided for in subdivisions (a) and (b) of Section 931.5
shall report those wages to the department as required under
paragraph (2) of subdivision (a) of Section 1088.
(B) Any third-party payer described in Section 931.5 who fails to
report wages to an employer as provided for in that section shall
report those wages to the department as required under paragraph (2)
of subdivision (a) of Section 1088.
(b) (1) A person or entity shall not be required to register with
the Employment Development Department solely for the purpose of
reporting wages subject to personal income tax pursuant to Section
1088 unless that registration is otherwise required by this code.
(2) A person or entity shall not be required to withhold any tax
under Section 13020 for wages, as defined by this section, unless
that person or entity is required to withhold tax for those wages as
defined by Section 13009.
"Withholding agent" means any person required to deduct and
withhold any tax under the provisions of Section 13020.
The department shall retain the possession and control of
all records, papers, offices, equipment, supplies, moneys, funds,
appropriations, land, and other property real or personal held for
the benefit or use of the Franchise Tax Board in the performance of
the duties, powers, purposes, responsibilities, and jurisdiction of
the Franchise Tax Board that were previously delegated by Section
15702.1 of the Government Code and that are vested in the department
by Section 13000.
All regulations heretofore adopted by the Franchise Tax
Board pursuant to powers transferred to the department by this
division and in effect immediately preceding the operative date of
this division, shall remain in effect and shall be fully enforceable
unless and until readopted, amended, or repealed by the director.
This division does not apply to the payment of interest
obligations not taxable under this division.
The department is authorized to require such information
with respect to persons subject to the taxes imposed by this division
as is necessary or helpful in securing proper identification of such
When necessary to make effective the provisions of this
division, the name and address of the recipient of income shall be
furnished upon demand of the person paying the income.
Unless otherwise specifically provided, the provisions of
any law effecting changes in withholding under this division shall
begin in the manner set forth by Section 18665 of the Revenue and
(a) Except as otherwise provided by this division or other
express provision of law, the information furnished or secured
pursuant to this division shall be used solely for the purpose of
administering the tax laws or other laws administered by the person
or agency obtaining it. Any willful unauthorized inspection or
unwarranted disclosure or use of the information by the person or
agency, or the employees and officers thereof, is a misdemeanor. For
purposes of this section, "inspection" means any examination of
confidential information furnished or secured pursuant to this
(b) The department shall notify a taxpayer of any known incidents
of willful unauthorized inspection or unwarranted disclosure or use
of the taxpayer's confidential tax records, but only if criminal
charges have been filed for the willful unauthorized inspection or
(a) (1) With respect to tax advice, the protections of
confidentiality that apply to a communication between a client and an
attorney, as set forth in Article 3 (commencing with Section 950) of
Chapter 4 of Division 8 of the Evidence Code, also shall apply to a
communication between a taxpayer and any federally authorized tax
practitioner to the extent the communication would be considered a
privileged communication if it were between a client and an attorney.
(2) Paragraph (1) may only be asserted in any noncriminal tax
matter before the Employment Development Department.
(3) For purposes of this section:
(A) "Federally authorized tax practitioner" means any individual
who is authorized under federal law to practice before the Internal
Revenue Service if the practice is subject to federal regulation
under Section 330 of Title 31 of the United States Code, as provided
by federal law as of January 1, 2000.
(B) "Tax advice" means advice given by an individual with respect
to a state tax matter, which may include federal tax advice if it
relates to the state tax matter. For purposes of this subparagraph,
"federal tax advice" means advice given by an individual within the
scope of his or her authority to practice before the federal Internal
Revenue Service on noncriminal tax matters.
(C) "Tax shelter" means a partnership or other entity, any
investment plan or arrangement, or any other plan or arrangement if a
significant purpose of that partnership, entity, plan, or
arrangement is the avoidance or evasion of federal income tax.
(b) The privilege under subdivision (a) shall not apply to any
written communication between a federally authorized tax practitioner
and a director, shareholder, officer, or employee, agent, or
representative of a corporation in connection with the promotion of
the direct or indirect participation of the corporation in any tax
shelter, or in any proceeding to revoke or otherwise discipline any
license or right to practice by any governmental agency.
(c) This section shall be operative for communications made on or
after the effective date of the act adding this section.