Payroll California Unique Aspects of California Payroll Law and Practice
Below is a MRR and PLR article in category Business -> subcategory Other.
Payroll in California: Understanding the Unique Aspects of California Payroll Law
Overview
California's payroll system has distinct features that set it apart from other states. This article explores key areas such as tax withholding, unemployment insurance, wage and hour regulations, and child support withholding in California.Tax Withholding and Reporting
The Employment Development Department (EDD) manages the collection and reporting of state income taxes in California. Employers must use the California Form DE 4A-4, a substitute for the federal W-4, for state income tax withholding.California treats Section 125 cafeteria plans and 401(k) deferrals unique to the IRS guidelines. Cafeteria plans are non-taxable for both income tax and unemployment insurance, while 401(k) contributions are taxable for unemployment but not for income tax.
Supplemental wages are taxed at a flat rate of 6%, whereas stock options and bonuses are taxed at 9.3%. Filing state W-2s is not required in California.
Unemployment Insurance
Managed by the Employment Development Department, the taxable wage base for unemployment is set at $7,000. Quarterly wage reporting needs to be submitted in magnetic media format if an employer has 250 or more employees.Unemployment records must be kept for at least four years and should include details such as employee names, social security numbers, and wages.
Wage and Hour Laws
The Department of Industrial Relations oversees wage and hour laws, with the current minimum wage at $6.75 per hour. Overtime is typically paid at one and a half times the regular rate after an eight-hour day or a 40-hour week.Employers must report all new hires, rehires, and contractors earning over $600. This involves providing employee and employer details, including social security numbers and federal employer identification numbers.
Employees must be paid at least semi-monthly, with specific deadlines depending on the working period. Terminated employees are generally required to receive their final paycheck within specific time frames.
California requires pay stubs to include information such as gross and net earnings, hours worked, rate of pay, deductions, and pay period dates.
Child Support Withholding
The Department of Child Support Services enforces child support orders. Withholding deductions begin 10 days after service, and payments must be made within seven days of payday. A small administrative fee of $1 per payment is allowed, with withholding limits set at 50% of disposable earnings.Record Keeping and Other Provisions
Employers have obligations regarding abandoned wages, which must be sent to the state after a year and recorded for seven years.Meal and rest breaks are mandated, including a 30-minute meal break for shifts over five hours and a 10-minute break every four hours.
California law does not allow tip credits against the state minimum wage, and record retention requirements for wage and hour records stipulate a two-year period.
Conclusion
California payroll regulations are detailed and unique, reflecting the state's specific laws and policies. Employers must remain aware of these regulations to ensure compliance. Please note that this information is subject to change, and it's essential to stay updated with the latest legal requirements.You can find the original non-AI version of this article here: Payroll California Unique Aspects of California Payroll Law and Practice.
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