Law firms have certain reporting and notice requirements which must be fulfilled every time an employee is hired, let go (regardless of the reason), or goes on a leave of absence. These reporting requirements are detailed in the California Unemployment Insurance Code and regulations of the California Employment Development Department. Although compliance is easy, the failure to follow these rules can subject the firm to civil penalties, and in some case, is a crime.

New Employee Registry Reporting. All new hires must be reported to the State's Employment Development Department ("EDD") within twenty (20) days of the start of work under California's New Employee Registry Program. California Unemployment Insurance Code Section 10885. This program covers even part-time and temporary hires. If the employee completes a W-4, a report is required. This is so even if the employee works only a few days. The impetus behind this regulation has nothing to do with employment per se. According to EDD, children of child support debtors often become dependent on public assistance (welfare) because a parent fails to provide the requisite financial support as obligated. The primary purpose of the program is to increase child support collections and reduce the dependence of families of child support debtors on various state and federal public assistance programs. New Employee Registry reports are matched against child support records to help locate parents who are avoiding payment obligations so that a wage withholding order can be established or an existing support order can be enforced. Also, the program is supposed to detect and prevent fraudulent unemployment and workers' compensation payments through more timely detection of ineligible claimants.

Firms using payroll services or programs should double check with these services to determine whether the payroll services is handling the necessary New Employee Registry reporting. Although many payroll services have reporting programs in place, the obligation to report ultimately rests with the firm. If the payroll service is handling this obligation, it is recommended that the firm obtain written confirmation to this effect. Consider also obtaining an indemnity agreement from the payroll service in the event of a slip up on their part. Below are some guidelines from EDD regarding this reporting obligation:

Who has to report?
All employers in California must report.

Which employees must be reported?
Every newly-hired (or rehired employee) must be reported. This includes employees, regardless of age or projected wages, who work less than a full day, are part-time employees, are seasonal employees, or who discontinue their employment prior to the 20th day of employment.

A rehire occurs when the employment relationship ended and the returning individual is required to submit a new W-4 form to the employer.

What information must be reported?
Employee's full name, address, social security number, and start-of-work date.
Employer's name, address, California Employer Account Number, and Federal Employer Identification Number ("FEIN").

How is the report made?
Employers may use the EDD reporting form DE 34; or
A copy of the employee's W-4 form, so long as the employee's start-of-work date and the firm's California employer account number are indicated on the W-4; or

Alternative equivalent format such as other hiring documents; or Magnetic or electronic media.

When must the report be made?
New hires or rehires must be reported within 20 days of their start-of-work date.
Employers filing magnetically or electronically must report by two monthly transmissions which are not less than 12 days or more than 16 days apart.

What if the firm employs individuals in more than one state?
Multi-state firms that file magnetically may elect to report all new hires to one state in which they have employees. This election can be made any time by notifying the federal Department of Health and Human Services' Office of Child Support Enforcement.

What if an employee works in California, but does not live in California?
Employers must report all employees who work in California, regardless of where they live.

Is there a penalty if the report is late?
Yes. The Employment Development Department may assess a penalty of $24 for each failure to report a new hire, or $490 if the failure is the result of conspiracy between the employer and the employee not to supply the required report or to supply a false or incomplete report.

Where is the report filed?
Mail: Employment Development Department
P.O. Box 997016, MIC 23
West Sacramento, CA 95799-7016
Fax: 916-255-0951

How can the firm obtain additional information?
The Employment Development Department has established the New Employee Registry Hotline at 916-657-0529. EDD also has a website (www.edd.ca.gov/txner.htm) with further information. You may also download the required forms.

Departure Notices. Pursuant to Title 22, Section 1089-1 of the California Civil Code of Regulations, the firm must also follow certain requirements in the case of every employee departure. Notably, this includes even temporary departures, such as a leave of absence. The Regulation requires employers to give written notices to any employee who is discharged, laid off or even placed on a leave of absence. Employers who fail to comply with these notice requirements may be suspect to a fine and could be guilty of a misdemeanor as well. The following is a summary of the required communications:

First, the firm must provide each affected employee with an EDD pamphlet entitled "For Your Benefit: California's Program For The Unemployed." This pamphlet informs employees of the EDD's unemployment insurance and disability insurance programs. Copies of these pamphlets are available from the EDD, which provides them to employers free of charge. The pamphlet should be provided no later than the effective date of the action.

Second, the firm must post and maintain in places readily accessible to all employees an EDD Form entitled "Notice to Employees." This notice informs employees of their rights to unemployment insurance and disability insurance. Copies of this form are also available from the EDD at no cost.

Third, the employer must give the employee a written notice regarding the employee's change in status no later than the effective date of the discharge or layoff or the start date of the leave of absence. The notice also must contain the following information, at a minimum: (1) the employer's name; (2) the employee's name; (3) the employee's Social Security account number; (4) whether the action was a discharge, layoff, leave of absence or change in status from employee to independent contractor; and (5) the effective date of the action. The firm may obtain a sample notice which satisfies these requirements directly from the EDD or the firm can develop its own notice, provided all five of the required elements appear in the notice.