Elective Unemployment Compensation Coverage in California

Elective coverage is dealt with in California’s Unemployment Insurance Code Division 1, Part 1, Chapter 3, Article 4. Section 701 provides that an employing unit, not otherwise subject to this division, which files with the director its written election to become an employer for not less than two calendar years, is required to become, with the written approval of the election by the director, an employer subject to this division to the same extent as other employers as of the date stated in the approval.

Section 702 states that any employing unit for which services that do not constitute employment are performed, may file with the director a written election that all the services performed by individuals in its employ in one or more distinct establishments or places of business are to be deemed to constitute employment by an employer for all the purposes of this division for not less than two calendar years.

Section 702.5 says any employing unit for which services that do not constitute employment are performed, may file with the director a written election, agreed to by both the employing unit and the individuals in its employ, that all services performed by the individuals in one or more distinct establishments or places of business are to be deemed to constitute employment by an employer.

Section 702.6 says any employing unit who is an employer under this division may file with the director a written election to cover services performed by any of the specified eligible employees. The term “eligible employee” is defined in this section.

Section 703 provides that services not included within “employment” and performed entirely without this State, with respect to no part of which contributions are required and paid under an unemployment compensation law of any other state or of the Federal Government, are deemed to be employment if specified conditions are met.

Section 704 prohibits the director from approving an election if if he or she finds that any of the ten specified conditions exist.

Section 704.1 allows the director to terminate any elective coverage agreement under this article if he or she finds that any of the eight specified conditions exist. The director must give to the employing unit, or to the self-employed individual, a written notice of the director’s termination of the elective coverage agreement under this section.

Section 704.2 defines the phrases “normally and continuously engaged in a regular trade, business, or occupation” and “seasonal in operations.”

Section 705 provides that an elective coverage agreement approved by the director pursuant to any section of this article may be terminated as of January 1st of any calendar year only if the agreement has been in effect for two calendar years and if the employing unit or self-employed individual, on or before the 31st day of January of that year, has filed with the director a written application for termination.

Section 706 states that the director may for good cause waive the requirement of Section 705 that a written application for termination must be filed on or before the thirty-first day of January.

Section 707 provides that every employing unit which files an election to become an employer, or an application for termination, is required to post and maintain printed notices of the election or application on his or her premises. Individuals in the employ of any employing unit which files an election to become an employer are to be given a reasonable opportunity to file objections or to be heard in the matter prior to the director’s approval of the election.

Section 708 specifies that any individual who is an employer under this division or any two or more individuals who have so qualified may file with the director a written election that their services are to be deemed to be services performed by individuals in employment for an employer for all the purposes of this division.

In addition, upon the approval of the election by the director, the services of those individuals are to be deemed to constitute employment for an employer for all of the purposes of this division.

Section 708.5 states that any individual who is self-employed, who is not an employer, and who receives the major part of his or her remuneration from the trade, business, or occupation in which he or she is self-employed, may file with the director a written election that his or her services in connection with his or her trade, business, or occupation are to be deemed to be services performed by an individual in employment for an employer.

Section 709 specifies that any local public entity located in this state may elect to become an employer with respect to all its employees, including those with civil service or tenure positions, and may file its written election with the director.

Section 710 provides that any public entity or Indian tribe for which services that do constitute employment are performed and for which other services that do not constitute employment are performed may elect to become an employer for not less than two calendar years with respect to those other services and to have those other services performed by its employees constitute employment for that period.

Any public entity or Indian tribe that has elected coverage under this section may elect any method of financing coverage otherwise permitted, but the same method of financing coverage applies to all coverage by the public entity. An Indian tribe may make separate elections for itself and for each subdivision, subsidiary, or business enterprise wholly owned by that Indian tribe. 

Section 710.4 specifies that any public-school employer may elect to become an employer with respect to all employees who are a part of an appropriate unit, provided the election is the result of a negotiated agreement between the public-school employer and the certified employee organization.

Upon filing of an election, the filing entity, upon approval by the director, becomes an employer. Beginning at that time, the public-school employer is required to withhold from the wages of employees the contributions required for unemployment compensation disability benefits.

Section 710.5 states that any public agency may elect to become an employer with respect to all employees who are a part of an appropriate unit, provided the election is the result of a negotiated agreement between the public agency and the recognized employee organization.

The public agency employer also may elect to provide coverage to its management and confidential employees and to its employees who are not a part of an appropriate unit, but the election cannot be contingent upon coverage of other employees of the public agency employer.

Section 710.6 provides an Indian tribe may elect to become an employer with respect to all employees who meet either of the two specified conditions.

Section 710.7 says the State of California may elect to become an employer with respect to all employees who are part of an appropriate unit, provided the election is the result of a negotiated agreement between the State of California and the recognized employee organization.

Section 710.8 states the Trustees of the California State University can elect to become an employer with respect to all employees who are part of an appropriate unit, provided the election is the result of a negotiated agreement between the Trustees of the California State University and a recognized employee organization of the university, or is approved through an election held by a recognized employee organization of the university in accordance with the election procedures.

Section 710.9 provides a community college district may elect to become an employer with respect to all employees who are part of an appropriate unit established, if the election is the result of a negotiated agreement between the community college district and the certified employee organization.

In addition, the community college district employer may also elect to provide coverage to its management and confidential employees and to its employees who are not part of an appropriate unit, but the election cannot be contingent upon coverage of other employees of the community college district employer.