Contribution Rates under the UI Code

Division 1, Part 1, Chapter 4, Article 3 of the California Unemployment Insurance Code deals with contribution rates. Section 976 provides employer contributions to the Unemployment Fund accrue and become payable by every employer for each calendar year with respect to wages paid for employment. 

Section 976.5 authorizes every employer to submit a voluntary unemployment insurance contribution for the purpose of redetermining its unemployment insurance contribution rate. No redetermination of a contribution rate is to be made unless the voluntary contribution is submitted as required.

Section 976.6 states that, in addition to other contributions required by this division, employers, with exceptions, are required to pay into the Employment Training Fund contributions at the rate of 0.1 percent of wages.

Section 977 provides that, if the employer’s net balance of reserve equals or exceeds that percentage of his or her average base payroll which appears on any line in column 1 of the table set forth in this section, but is less than that percentage of his or her average base payroll which appears on the same line in column 2 of that table, his or her part paid during the 12-month period ending upon the computation date, employers must pay into the Unemployment Fund contributions for the succeeding calendar year.

In addition, whenever the balance in the Unemployment Fund on September 30 of any calendar year is equal to or less than 1.8 percent and greater than 1.6 percent of the wages in employment subject to this part paid during the 12-month period ending upon the computation date, employers are required to pay into the Unemployment Fund contributions for the succeeding calendar year upon all wages.

There are additional rules for when the balance in the Unemployment Fund is between 1.6 and 1.4, 1.4 and 1.2, 1.2 and 1, 1 and .08, and .08 and .06.

Section 977.5 deals with whenever the balance in the Unemployment Fund on September 30 of any calendar year is less than 0.6 percent of the wages in employment.

Section 979 states that, on or before January 10 of each calendar year, the director is required to prepare a statement based on records of the department declaring which of the employer tax schedules must be in effect for that calendar year and whether the emergency solvency surcharge must be added. The statement is a public record and be final and binding for that calendar year. The statement has to include specified information.

Section 980 requires certain amounts to be excluded for purpose of determining the balance in the Unemployment Fund, including amounts credited, unexpended advances, amounts paid in advance by certain employers, and other conditions.

Section 980.5 requires certain amounts to be included for purpose of determining the balance in the Unemployment Fund such as unreimbursed balances of benefits paid.

Section 981 requires exclusion of all wages paid in employment under any type of coverage pursuant to which reimbursement of benefits is permitted or required in lieu of the contributions required of employers.

Section 982 says that no employer is eligible for a contribution rate of more or less than 3.4 percent for any rating period unless his or her reserve account has been subject to benefit charges during the period of 12 complete consecutive calendar quarters ending on the computation date for that rating period and he or she is qualified.

In addition, a new employer is not eligible for a contribution rate of more or less than 3.4 percent unless his or her reserve account has been subject to benefit charges during the period of 12 complete consecutive calendar months ending on the computation date and the new employer is qualified. The terms “new employer” and “average base payroll” are defined.

Section 984 requires each worker to pay worker contributions at the rate determined by the director pursuant to this section with respect to wages. On or before October 31 of each calendar year, the director is required to prepare a statement, which is a public record, declaring the rate of worker contributions for the calendar year and must notify promptly all employers of employees covered for disability insurance of the rate.

In addition, worker contributions required are at a rate determined by the director to reimburse the Disability Fund for unemployment compensation disability benefits paid and estimated to be paid to all employers and self-employed individuals covered by those sections. And, on or before November 30th of each calendar year, the director is required to prepare a statement, which is a public record, declaring the rate of contributions for the succeeding calendar year for all employers and self-employed individuals.

Section 984.5 requires the director to prepare a statement on or before November 30 of each calendar year, which is a public record, declaring the rate of contributions of the succeeding calendar year for all employers and self-employed individuals. The director must notify promptly the employers and self-employed individuals of the rate.

Section 985 specifies the amount of the part of the remuneration with respect to employment.

Section 986 requires employers to withhold in trust the amount of his workers’ contributions from their wages at the time the wages are paid, show the deduction on his payroll records, and furnish each worker with a statement in writing showing the amount which has been deducted, in such form and at such times as may be prescribed; and hold in trust the amount of his workers’ contributions, at the time their wages are paid.

Section 987 requires each employer to be liable for any and all contributions required to be made by his workers on account of wages which he has paid to them regardless of whether or not he has deducted the contributions from the workers’ wages at the time they were paid, but no employer is liable for worker contributions required on behalf of himself or of any of his employees with respect to wages paid while there is in effect at the time the wages were paid a rule or regulation or interpretation of the director or of the department that such wages were not subject to such contributions.

Section 987.7 states that, if the worker contributions required in any one month to be made because of the receipt of cash tips and cash gratuities exceed the wages of the worker under the control of the employer, the worker may furnish the employer, on or before the 10th day of the following month, or, if the amounts are estimated, on or before the last day of the month following the calendar quarter, an amount equal to the excess.

In addition, if the worker contributions required by Section 984 with respect to cash tips and cash gratuities exceed the amount of worker contributions that can be collected by the employer from the wages of the worker, the excess must be paid by the worker.

Section 988 specifies that, in case of the insolvency or bankruptcy of an employer, contributions by workers, payable as provided, are not to be considered any part of the employer’s assets and are to be paid to the director prior to the payment of any other claim against the employer.

Section 989 says that the annual tax rate or contribution rate which under this division is determined to apply to any particular employee or any particular employer, or group of employees or group of employers, is required to be made public and available for public inspection but in no case shall the amount of tax paid by any employee or employer, or group of employees or group of employers, be disclosed to the public.

Section 990 specifies that, in the payment of any contributions, a fractional part of a cent is to be disregarded unless it amounts to one-half cent ($0.005) or more, in which case it is increased to one cent ($0.01).

Section 991 provides that any contributions paid to the Unemployment Fund or Disability Fund either with respect to wages on which contributions previously have been paid in error and without negligence on the part of the employing unit to another state having an unemployment compensation law, or with respect to wages on which contributions computed under the Federal Unemployment Tax Act previously have been paid in error and without negligence on the part of the employing unit to an agency of the federal government, are deemed to have been paid to the department at the time of the erroneous payment to the other state or to the federal agency, if payment is made to the department by the employing unit within 30 days after the employing unit is given notice by the director of the determination that payment must be made to the department.

Section 992 states that, during the time that the Federal Unemployment Tax Act is amended so that employers are allowed credits amounting to 100% of the tax on account of contributions paid under this division, then the additional amount of contributions must be paid into the Unemployment Fund.

Section 993 requires every employer who is subject to the tax under FUTA must pay into the Unemployment Fund an amount equal to five-tenths of 1 percent, or such other percentage as applies for a calendar year pursuant to FUTA, of all wages paid by him or her in employment and included in the measure of the contributions allowed as the credit against the tax imposed by FUTA.

Section 995 requires the department to submit to the Legislature in January and May of each year a report on the status of the Unemployment Fund and the Unemployment Compensation Disability Fund. Each report must include both actual and forecasted information on the fund balances, receipts, disbursements, claim data, tax rates, and employment levels.