EDD DE 44: California Employer's Guide

The UI program was established as part of a national program administered by the U.S. Department of Labor under the Social Security Act. The UI program provides temporary payments to individuals who are unemployed through no fault of their own. Who Pays It? The UI program is funded through payroll taxes paid by the employer. Tax-rated employers pay a percentage on the first $7,000 in wages paid to each employee in a calendar year. The UI rate schedule and amount of taxable wages are determined annually. New employers pay 3.4 percent (.034) for a period of two to three years. The UI rate could increase to a maximum of 6.2 percent (.062) or decrease to a minimum of 1.5 percent (0.015) based on an employer’s experience rating and the balance in the UI Fund. For an explanation of the experience rating method, refer to Information Sheet: California System of Experience Rating (DE 231Z) (PDF) (edd.ca.gov/pdf_ pub_ctr/de231z.pdf). Government entities and certain nonprofit employers may elect the reimbursable method of financing UI in which they reimburse the UI Fund on a dollar-for-dollar basis for all benefits paid to their former employees. Employment Training Tax What Is ETT? ETT provides funds to train employees in targeted industries to improve the competitiveness of California businesses. The ETT fund promotes a healthy labor market by helping California businesses invest in a skilled and productive workforce while developing the skills of new and incumbent workers. Who Pays It? ETT is an employer-paid tax. Employers are subject to pay 0.1 percent (.001) for ETT on the first $7,000 in wages paid to each employee in a calendar year. The tax rate is set by statute at 0.1 percent (.001) of UI taxable wages for employers with positive UI reserve account balances and subject to section 977(c) of the California Unemployment Insurance Code (CUIC). The maximum tax is $7 per employee per year ($7,000 x .001). State Disability Insurance Tax What Is SDI Tax? SDI allows the Disability Fund to pay Disability Insurance (DI) and PFL benefits to eligible California workers. DI benefits are paid to eligible California workers who lose wages when they are unable to work due to a non-work- related illness, injury, or pregnancy. PFL benefits are paid to eligible California workers who take time off work to care for a seriously ill child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner. Benefits are also available to new parents who need time to bond with a new child entering the family by birth, adoption, or foster care placement. Benefits are also available to California workers who participate in a qualifying event because of a spouse, registered domestic partner, parent, or child’s military deployment to a foreign country. Who Pays It? The SDI program is funded through a payroll deduction from employees’ wages. Employers withhold 1.3 percent (.013) for SDI on all subject wages paid to each employee in a calendar year. The SDI rate is set by law and may