California’s first paycheck starts a 15-day EDD clock. Workers’ comp is due before anyone clocks in.

The $100 / 15-day EDD clock

Unemployment Insurance Code § 675 defines a commercial employer. You are an employer if, for some portion of a day in this year or last year, you have one or more employees in employment. You also must pay more than one hundred dollars ($100) in wages during any calendar quarter.

§ 1086 is the registration clock. The EDD restates it in plain language. If you operate a business and hire employees, you must register as an employer within 15 days when you pay more than $100 in wages in a calendar quarter. Household employers are a different $750 cash-wage test on that same EDD page. This scorecard is the commercial path.

EDD’s example on that page: a sole proprietor who pays $75 in March has not crossed $100 in the first quarter. Paying $500 in April makes the business register effective April 1. That is because more than $100 was paid in the second quarter. Partnership draws are not wages on that page even if labeled as salary.

How you actually get the eight-digit number

The primary path is e-Services for Business. EDD Step 3 says: enroll, log in, choose New Employer, then register for an Employer Payroll Tax Account Number. After registration you receive an eight-digit employer payroll tax account number (example format 000-0000-0). That is the number EDD assigns after you register. EDD also calls this a State Employer Identification Number (SEIN). You need that number for returns, wage reports, payments, and account updates.

A paper alternate still exists. That paper registration form is the Commercial Employer Account Registration and Update Form (DE 1). EDD says most commercial employers should use that form if they cannot register online. Mail-in registration may take 10–14 days. Do not submit DE 1 until $100 in wages has been paid. EDD does not publish a registration fee for opening the employer payroll tax account. Do not pay a fee that appears only on a software page.

New hire: DE 34 within 20 calendar days

The New Employee Registry page requires you to report newly hired employees. The report is due within 20 calendar days of the start-of-work date. That date is the first day services were performed for wages. Rehires after a separation of at least 60 consecutive days follow the same 20-day clock. The new-hire report is DE 34. Unemployment Insurance Code § 1088.5 is the statute. If you file online through e-Services, EDD asks for two monthly reports. Those reports must be not less than 12 days and not more than 16 days apart. EDD publishes a $24 penalty per unreported employee, and $490 if the failure is an intentional agreement not to report. Those are EDD’s published new-hire penalties, not a software fee.

Workplace injury insurance before anyone clocks in

DIR’s Before the First Employee Starts Work page lists workers’ compensation insurance, or state approval to self-insure, among the requirements that apply before an employee begins work. Labor Code § 3700 is the duty to secure payment of compensation. The DWC employer FAQ says that if a business employs one or more employees, it must satisfy that requirement.

Labor Code § 3700.5(a) makes knowing failure to secure compensation a misdemeanor. It is punishable by imprisonment in the county jail for up to one year, or by a fine of up to double the premium that would otherwise have been due, but not less than ten thousand dollars ($10,000), or by both.

How Gusto and Patriot describe California

Confirm the live account on e-Services and the live coverage on DIR.

Gusto’s California help article says it works with Middesk (Gusto’s business-verification company) to register state income-tax withholding and state unemployment insurance when you do not already have a California account. After that, Gusto still asks you to enter the eight-digit EDD account number (format 123-4567-8) and the agency-assigned unemployment-tax rate. Leave Employment Training Tax (ETT) out of that rate field. The same article lists DE 9, DE 9C, DE 88, and DE 34 among forms it files or reports. Middesk’s registration does not include third-party administrator (TPA) setup or power-of-attorney setup. Use the unemployment-tax rate on your EDD notice, not a number from a software page. Read Gusto’s article. See Gusto on the directory.

Patriot’s California help article tells you to register with EDD through e-Services. It states the 15-day / $100 clock. Full Service claims DE 9 and DE 9C after Form 8655 and third-party administrator (TPA) authorization. The same article puts DE 34 on you. Use the state unemployment tax (SUTA) rate on your EDD notice, not Patriot’s published percentage. A payroll login is not workplace injury insurance. Read Patriot’s article. See Patriot on the directory.

Related guide: Hiring your first employee lists the federal forms that sit next to this 15-day clock.

Related guide: Can I do my own payroll? covers the federal payday and deposit work that still sits on you after the EDD account is open.

Related guide: Independent contractor vs employee is the federal label check before you open this EDD account.

Related guide: Best payroll software for small business is a checklist for grading a product against this EDD account.

Related guide: How to pay employees is the paycheck. Paying wages is what starts this 15-day clock.

Related guide: How to pay tips to employees is the federal tip report and the taxes on tips. Paying wages is what starts this 15-day clock.

Related guide: How to run payroll is the federal payday after this EDD account is open: hours, withholding, the employer share, and the deposit.

Also forming a company in California? Process Score compares registered agents there.