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October 23, 2020
2020-2544

California issues guidance on liability for unemployment, disability and employment training tax for employees working temporarily in the state due to COVID-19

In its COVID-19 frequently asked questions (FAQs), the California Employment Development Department (EDD) states that it is providing limited relief from the obligation to pay state unemployment insurance (UI) tax, state disability insurance (DI) tax and the employment training tax (ETT).

Limited relief from California UI, DI and ETT tax

The EDD states that wages of nonresident employees who typically perform services in another state for an employer located outside of California will not be subject to the state's UI, DI and ETT taxes if those employees are temporarily performing services within the state due to COVID-19.

If a worker remains in California performing services after the resident state or federal public health officials have ended stay-at-home orders and the worker could have resumed working at their normal work location outside California, the worker and the employer will be considered subject to the California UI, DI and ETT taxes.

Further, if the employee continues to perform services in California after the COVID-19 pandemic has ended, those services will become subject to the California UI, ETT, and DI taxes.

For more information, refer to Information Sheet: Multistate Employment (DE 231D) (PDF).

Ernst & Young LLP insights

See EY Tax Alert 2020-2242 for a discussion of the California Franchise Tax Board's FAQs concerning nexus guidance for out-of-state corporations that previously had no connections with California but now have employees indefinitely teleworking in the state under Governor Gavin Newsom's stay-at-home order.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Kenneth Hausser (kenneth.hausser@ey.com)

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