California to Lower Payroll Tax Electronic Filing/Payment Threshold: Employment Law Manual Updated, Legal Timetable Entries Added

Authors: Tracy Morley and Rena Pirsos, XpertHR Legal Editors

Under amendments to the Unemployment Insurance (UI) Code that take effect January 1, 2017, California employers with 10 or more employees will be required to:

  • File quarterly UI reports electronically and remit contributions by electronic funds transfer (EFT); and
  • File withholding tax reports electronically and remit tax payments by EFT.

Effective January 1, 2018, both of these requirements will apply to all employers. Current law requires employers with 250 or more employees to file UI reports and remit contributions electronically. Whether an employer must remit taxes by EFT is currently dependent on the amount of the employer's cumulative average payment for deposits in the lookback period.

In addition, between January 1, 2017, and December 31, 2018, an employer not previously required to file UI reports electronically and remit UI contributions by EFT, or not previously required to file withholding reports electronically, will not be penalized for failing to use electronic means, so long as the employer files and/or remits on time.

Penalty and waiver provisions have also been amended.

In light of this development, the following California sections of the Employment Law Manual have been updated:

New Legal Timetable entries have also been added.