December 1, 2023
California law allows employers to provide electronic employee notices for Earned Income Tax Credit, unemployment insurance
Under California AB 1355, enacted in 2023 and effective January 1, 2024 through December 31, 2029, California employers are allowed to send required notices about the California and federal Earned Income Tax Credit (EITC) and unemployment insurance to employee email accounts. Employees can opt out of electronic delivery and employers cannot terminate or take other adverse action against them for doing so.
Employee EITC notice
Employers must furnish notices about the California and federal EITC to employees for whom they are required to provide California unemployment insurance. Under current law, this notice must be mailed to an employee's last known address or directly handed to the employee and include instructions on how to claim the California and federal EITC tax credits. For federal EITC purposes, employers may use the language contained in the current IRS Notice 797 or similar IRS materials.
The EITC notice must be provided to employees either one week before or after, or at the same time as the Form W-2. Information required in the California EITC notice is available in the California Employer's Guide, p. 73. (California AB 1847 (2016).)
Notice to separated employees about California unemployment insurance
When employers discharge, lay off or place California employees on leave of absence, they are required to give them a copy California DE 1857D. Under current law, DE 1857D must either be mailed to the employee's last known address or handed directly to the employee. (California required notices and pamphlets.)
Ernst & Young LLP insights
Several states (and Philadelphia) require that employers provide employees notice concerning the EITC. Most recently, Colorado HB 12-1006 requires that, effective for tax year 2023, employers provide a written annual notice to their employees about the availability of the federal and Colorado EITC and child tax credits. (See EY Tax Alert 2023-1737.)
Most states require that employers provide notice about unemployment insurance to separated employees. For more information about these state requirements, see our special report.
Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor