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August 5, 2020

California now issuing annual notice of UI benefit charges; COVID-19 UI benefits should not be charged to employer accounts

The California Employment Development Department (EDD) announced that the annual Form DE 428T, Statement of Charges to Reserve Account, is being issued to contributory employers with a mail date of September 4, 2020. The document reflects the employer's unemployment insurance (UI) benefit charges for the period of July 1, 2019 through June 30, 2020. These charges will be used in the computation of calendar year 2021 state UI tax rates. (EDD tax branch listserv news #443, August 4, 2020.)

As we reported, recently enacted fiscal year 2021 budget legislation (AB 103) provides that, from January 27, 2020, through December 26, 2020, contributory employer UI reserve accounts will not be charged for UI benefits paid as a direct result of COVID-19. (EY Tax Alert, 2020-1715; News release, governor's office, 6-29-2020.)

In its announcement, the EDD confirmed that the FY 2020 Form DE 428T "is only reflecting charges outside of the timeframe established by AB 103."

The AB 103 noncharge provision provides that to be relieved of COVID-19 UI benefit charges, an employer or an agent of an employer must not be found to be at fault for the payment of UI benefits under state law section 1026.1. State law section1026.1 was instituted in 2013 to meet federal requirements that employers not be relieved of UI benefit charge overpayments due to the employer's or its agent's failure to timely and/or adequately respond to UI benefit claim notices.

As a result, a protest of Form DE 428T may be denied if the employer failed to respond to the first claim notice, Form DE 1101CZ, Notice of Unemployment Insurance Claim Filed, or Form DE 1545, Notice of Wages Used for Unemployment Insurance (UI) Claim.

For more information on the benefit charge statement, see the EDD's Information Sheet: Statement of Charges to Reserve Account DE 428T (DE 428I).

Employer action is necessary

Because California, unlike most other states, only recently adopted the position of not charging employer accounts for COVID-19 UI benefits, employers should carefully check the annual statement to confirm that they are not being charged for benefits directly related to COVID-19.

If an employer disagrees with the UI benefit charges shown on the Form DE 428T, a protest may be submitted online or by mail. The protest must be submitted or postmarked within 60 days from the September 4, 2020 issuance date on the DE 428T. An extension of up to 60 days may be requested. The extension request must be timely submitted, in writing, and show good cause.


Contact Information
For additional information concerning this Alert, please contact:
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (
   • Debera Salam (
   • Kristie Lowery (
   • Peter Berard (


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