California New Worker/Vendor Reporting

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California businesses are required to report to the Employment Development Department (EDD) new employees and independent contractors who receive $600 or more during the year.

The EDD requires that employers report the new employee(s) on Form DE 34 – Report of New Employees(s) within 20 days of hire.  There is no compensation floor in reporting the new employees(s).  Employees only need to be reported once.

The EDD also requires reporting for independent contractors hired by the business.  When a contract is established for over $600 with an independent contractor or they are paid over $600, EDD Form DE-542, Report of Independent Contractors must be completed and filed.  The independent contractors must be reported each year within 20 days of making the payment or entering into the contract.

The EDD can impose a penalty of $24 for each failure to timely report a contractor.

We suggest that each business report contactors they believe will reach the $600 total when preparing their annual 1099’s in January.  There is no penalty for reporting a contractor who later never receives over $600 in payments.

Both forms can be completed online at https://eddservices.edd.ca.gov/index.html.

If you have any questions regarding filing either or these forms, please contact our office.

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