California Payroll

Did you know that California has a requirement administered by the Franchise Tax Board to withhold state tax on payments made to non-resident independent contractors? That California is also one of five states with required, worker-funded temporary disability insurance?

California Income Tax Withholding

California's law requires employers to withhold state personal income tax (PIT) from their employees' wages and remit the amounts withheld to the Employment Development Department.

Persons in business for themselves (independent contractors) are not employees and generally not subject to withholding.

California has no specific reciprocal taxation agreements with other states, but residents of Arizona, Guam, Indiana, Oregon, and Virginia are allowed a credit toward their California income tax liability for taxes paid to their home states.

California Benefits

Temporary Disability Insurance:
The California state disability insurance (SDI) plan is a worker-funded program designed to compensate in part for the wage loss sustained by an employee unable to work because of illness or injury, the illness or injury of a family member, or the birth, adoption, or foster care placement of a new child. All employers not specifically exempt from coverage must provide temporary disability insurance for their employees either through the state program or through their own self-insured or commercial plan.

California Voting Rights:

Employer Right To Schedule Voting Hours	Pay Deduction For Voting Time Leave
Yes	Time Off with Pay Limited to 2 Hours

California requires employers to allow employees sufficient leave time to vote. The law does not specify the exact amount of leave time that must be granted. Unless they have a different agreement with employees, employers can grant time off at the beginning or end of a regular work shift, whichever gives employees the most time for voting and the least time away from work.

California Compensation

Employers covered by California's minimum wage law must pay employees at least $7.50 an hour. The minimum wage rate increases to $8.00 an hour, effective Jan. 1, 2008.

All employees are covered, except those specifically exempt by wage order; among those exempt are:

• Executive, administrative, or professional employees;
• Outside salespersons; and
• Lawyers, doctors, dentists, optometrists, architects, engineers, teachers, accountants, and other professionals licensed or certified by the state.

California Payroll

Employers covered by California's wage payment law must pay wages at least twice in a calendar month. Payment for the first half of the month must be made by the 26th day of the month and payment for the second half must be made by the 10th day of the following month.

California Unemployment:

Taxable Wage Base ($000s)	New Employer Rate (% Taxable Wages)	Employee Tax Rate (% Taxable Wages)	Period Effective
7,000	3.5	None	Calendar Year 2007

Helpful Links for California Payroll

California Franchise Tax Board
PO Box 1468
Sacramento, California 95812-1468
(800) 852-5711

California Economic Development Department - Taxpayer Assistance Center
P.O. Box 2068
Rancho Cordova, California 95741
(888) 745-3886

California Economic Development Department
800 Capitol Mall, MIC 83
Sacramento, California 95814
(888) 745-3886

California Laws
Access the State Constitution, Statutes and the 29 codes that comprise California law.

California Tax Service Center
The California Tax Service Center website offers a variety of resources for Small Business owners including payroll seminars and a Small Business Assistance Center.

California Employer's Guide
Download the 2007 version of the California Employer's Guide.

Tax Forms and Publications
Access helpful tax forms and publications from the California Employment Development Department's website.