Study guide · Law & Business · Employment Requirements
Paydays, Paystubs and the Final Check
About 28 minutes · 6 sections
What this guide covers
You can pay every hour you owe, at the right rate, and still be exposed. California puts deadlines on WHEN wages arrive, rules on WHAT the paystub says, and a separate penalty on the last check a departing worker gets. The final-pay rule is the one that surprises contractors: a worker you fire is owed everything immediately, and if you are late the penalty is that worker's full daily wage for every day you are late, up to thirty days. Nobody has to be underpaid for that to happen. On a crew where a laid-off framer earned $320 a day, a check that sits in the office for three weeks costs more than the check.
Key terms
- Waiting time penalty
- A penalty for paying final wages late. It is measured in DAYS OF THE EMPLOYEE'S WAGES, not as interest or a flat fine, which is why it grows so fast.
- Willfully
- In the final-pay penalty, failing to pay on purpose rather than by accident. It is not defined in the statute itself; a genuine good-faith dispute about whether any wages are owed is the usual answer to it.
- Pay period
- The stretch of work a single paycheque covers. The law sets outer limits on how long it can be and when the check for it must arrive.
The rules the exam tests
15 rules · 7 minPaydays and final wages
When you an employee, pay all earned wages immediately.
Discharge is the employer's decision, not the worker's, so the deadline runs from the end of the job. Pay all wages earned and unpaid at the time of discharge immediately — not on the next regular payday.
On the job
A discharged worker had no say in the timing and no chance to plan for it. Do not wait for your payroll cycle: the check is due the day you end the employment.
Exact wording
When an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately — not on the next regular payday.
When an employee with no definite-term contract quits without notice, pay all wages within 72 hours.
This deadline covers an employee who has no written contract for a definite period. You must pay all earned wages no later than 72 hours after the employee quits. Count calendar time, not business days.
On the job
Quitting is the employee's decision, so the law gives the employer a short window to compute the check. Note the unit: 72 hours is three calendar days, not three business days.
Exact wording
An employee not having a written contract for a definite period who quits without giving notice must be paid all earned wages no later than 72 hours after quitting.
You owe the final wages the day an employee quits after giving 72 hours' notice.
This rule covers an employee who has no written contract for a definite period. The notice must come at least 72 hours before quitting and must state the intent to quit. Pay the wages earned at the time of quitting, not later.
On the job
Notice is what buys the employer its preparation time, so a worker who gave notice has already provided it. Give notice and the deadline moves from 72 hours after to the last day itself.
Exact wording
An employee not having a written contract for a definite period who gave at least 72 hours' previous notice of intent to quit is entitled to their wages at the time of quitting.
You meet the 72-hour deadline by mailing the final check when the employee requests it.
An employee who quits without 72 hours' notice can be paid by mail — but only if the employee requests it and gives a mailing address. The date you mail it is the date of payment for the 72-hour deadline.
On the job
This is the practical escape when someone walks off and will not come back for a check. Mailing it on time counts as paying on time, so the postmark is what protects you.
Exact wording
An employee who quits without providing 72 hours' notice is entitled to receive payment by mail if the employee so requests and designates a mailing address, and the date of mailing is the date of payment for the 72-hour requirement.
If you pay final wages late, you owe up to 30 days of the worker's wages.
If you willfully fail to pay final wages by the final-pay deadline, the employee's wages continue as a penalty at the same rate from the due date. They stop when you pay, when an action starts, or after 30 days.
On the job
This is the section that turns a paperwork delay into real money. The penalty is the worker's own daily wage, so a higher-paid worker costs more, and thirty days is the ceiling rather than the norm.
Exact wording
If an employer willfully fails to pay final wages in accordance with the final-pay sections, the employee's wages continue as a penalty from the due date at the same rate until paid or until an action is commenced, but the wages do not continue for more than 30 days.
Pay the final check in full. Docking a tool keeps the waiting time penalty running.
Final wages are owed without abatement or reduction, so paying a discounted or offset amount does not satisfy the duty. If the failure is willful, the waiting time penalty runs on what you withheld, unless a good-faith dispute covers it.
On the job
Deducting for an unreturned tool and paying the rest does not put you in the clear; the penalty stops when the full amount owed is paid. But the gate is willfulness — what protects a withheld balance is a genuine good-faith dispute, not the partial check.
Exact wording
The waiting time penalty reaches a WILLFUL failure to pay 'without abatement or reduction'. Paying a discounted or offset amount — docking an unreturned tool from the final check and paying the rest — does not satisfy the duty, and the penalty runs on what was withheld unless a good-faith dispute covers it.
You must still pay all wages you concede are due during a dispute.
Wages conceded to be due are the part you agree the employee earned. Pay all of it without conditions and by the deadline that applies when there is no dispute. The employee keeps every remedy as to the balance claimed.
On the job
A dispute over one line of the check never licenses holding the clean part. Pay what you concede on the normal final-pay clock and fight only over the contested balance — holding it all is the one move with no defense.
Exact wording
In case of a dispute over wages, the employer must pay, without condition and within the time set by the article, all wages conceded to be due. The employee keeps every remedy as to the balance claimed.
Pay within 10 days after the Labor Commissioner determines your employee's wage claim is valid.
Your 10 days start when you receive notice that the wages are due, following the investigation and hearing. If you are able to pay and willfully fail to pay within those 10 days, you owe treble the damages your failure directly and foreseeably causes, plus any other penalty that applies.
On the job
Losing at the Labor Commissioner starts a 10-day clock, and sitting on the award while able to pay triples the worker's consequential damages.
Exact wording
If, after an investigation and hearing, the Labor Commissioner has determined the validity of an employee's claim for wages, the claim is due and payable within 10 days after the employer receives notice that the wages are due; an employer having the ability to pay who willfully fails to pay within those 10 days must, in addition to any other applicable penalty, pay treble the amount of any damages accruing to the employee as a direct and foreseeable consequence of the failure to pay.
A good faith dispute blocks the waiting time penalty. Losing the dispute is not bad faith.
Willful means you intentionally failed to pay wages when due. A good faith dispute over whether any wages are due is a defense, based in law or fact, that would defeat the claim if it succeeded. A defense with no evidence, an unreasonable defense, or one raised in bad faith is not protected.
On the job
This is where the penalty's teeth come off for the honest employer: a good faith dispute that the contested wages are due precludes the waiting-time penalty, even when the employer ultimately loses the argument. Conceded wages are different — intentionally holding those is willful by the definition's own terms.
Exact wording
A WILLFUL failure to pay means an intentional failure to pay wages when due, and a good faith dispute that any wages are due precludes waiting time penalties. A good faith dispute means a defense, based in law or fact, that would defeat the claim if it succeeded. Losing the dispute does not make it bad faith — but a defense unsupported by any evidence, unreasonable, or presented in bad faith gets no protection.
The waiting time penalty stops for the time an employee avoids or refuses payment.
Avoiding means the employee hides or stays away to avoid payment. Refusal counts only when the employer tenders payment in full — the wages plus any penalty already accrued. The penalty does not run for the time the employee avoids payment.
On the job
There is a way to stop the clock against a worker who will not take the check, but read what a full tender has to include: the wages AND any penalty that has already accrued. Offering only the wages does not qualify.
Exact wording
An employee who secretes or absents themselves to avoid payment, or who refuses to receive payment when it is fully tendered — including any penalty then accrued — is not entitled to the waiting time penalty for the time during which the employee so avoids payment.
A waiting time penalty suit is timely any time before the wage claim's limitations period expires.
The wage claim's deadline is the statute of limitations on an action for the wages from which the penalties arise. The penalty borrows that period, not a shorter one of its own, so filing before it runs out is timely.
On the job
The penalty claim borrows the wage claim's limitations period rather than a shorter one of its own, so the exposure does not quietly expire early.
Exact wording
Suit for waiting time penalties may be filed at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.
Pay your employees twice each calendar month on paydays you designate in advance.
Wages covered by the separation and special-category sections follow their own rules instead. For all other wages, you designate the two monthly paydays ahead of time as your regular paydays, rather than picking a pay date as each period ends.
On the job
Two things are required, not one: pay at least twice a month, AND fix the paydays ahead of time. Floating or ad hoc pay dates fail the second requirement even if the money arrives twice.
Exact wording
Wages other than those covered by the separation and special-category sections are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays.
Pay for the first half of the month by the 26th of that same month.
The first half means labor performed from the 1st through the 15th of a calendar month, inclusive. The 16th through the 26th is a range, not a single payday. For labor performed from the 16th through the last day of that month, pay between the 1st and the 10th of the following month.
On the job
These are the default semimonthly windows, and they are windows rather than single dates. Paying early is fine; paying after the closing date of the window is not.
Exact wording
Labor performed between the 1st and 15th days of a calendar month, inclusive, must be paid for between the 16th and the 26th day of that same month, and labor performed between the 16th and the last day of the month must be paid for between the 1st and the 10th day of the following month.
Pay overtime by the payday for the next regular payroll period.
Overtime means wages earned for labor in excess of the normal work period. Pay those wages no later than the payday for the next regular payroll period. The extra cycle covers computing the hours, nothing more.
On the job
Overtime gets one extra cycle, which is the concession for computing it. It does not get held indefinitely while a dispute over hours is worked out.
Exact wording
Wages earned for labor in excess of the normal work period must be paid no later than the payday for the next regular payroll period.
Pay your weekly, biweekly or semimonthly payroll within seven calendar days of its close.
Section 204 is the payday-timing rule, with a twice-a-month default schedule. If you run a weekly, biweekly, or semimonthly payroll and pay no more than seven calendar days after the payroll period closes, Section 204 is deemed satisfied.
On the job
This is the safe harbor most contractors actually run on. If your payroll closes Sunday and you pay the following Friday, you are inside it regardless of where those dates fall against the 1st-15th windows.
Exact wording
Section 204 is deemed satisfied if the wages of employees on a weekly, biweekly, or semimonthly payroll are paid not more than seven calendar days following the close of the payroll period.
Take away
11 rules · 6 minWage statements and deductions
Hand each employee an itemized paystub every payday. Cash and personal checks are no exception.
Each wage statement must be accurate and in writing, and it must come either semimonthly or at each wage payment. Give it as a detachable part of the payment, or separately if you pay by personal check or cash.
On the job
The paystub is a legal document, not a courtesy. Paying by cash or personal check does not remove the requirement — it just means the statement has to be handed over separately.
Exact wording
An employer must furnish each employee an accurate itemized statement in writing, either semimonthly or at the time of each payment of wages, as a detachable part of the payment or separately if wages are paid by personal check or cash.
Put all nine items on every you give an employee.
The nine items on an itemized wage statement are: gross wages earned; total hours worked, except as provided in subdivision (j); the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis; all deductions; net wages earned; the inclusive dates of the period for which the employee is paid; the name of the employee and only the last four digits of the social security number or another employee identification number; the name and address of the legal entity that is the employer; and all applicable hourly rates in effect during the pay period with the corresponding hours worked at each rate.
On the job
Nine items is the number worth memorizing, and the two that get missed most are the inclusive dates of the pay period and the hours worked at EACH rate when someone worked at more than one.
Exact wording
The itemized wage statement must show nine items: gross wages earned; total hours worked, except as provided in subdivision (j); the number of piece-rate units earned and any applicable piece rate if paid on a piece-rate basis; all deductions; net wages earned; the inclusive dates of the period for which the employee is paid; the name of the employee and only the last four digits of their social security number or another employee identification number; the name and address of the legal entity that is the employer; and all applicable hourly rates in effect during the pay period with the corresponding hours worked at each rate.
Show only the last four digits of the social security number on the paystub.
You have two options on the wage statement: the last four digits of the employee's social security number, or an employee identification number that is not a social security number. Printing the full number is not allowed.
On the job
Printing the full number is itself the violation. Payroll software that carries the whole SSN onto the stub is a common and entirely avoidable exposure.
Exact wording
The wage statement may show only the last four digits of the employee's social security number, or an employee identification number other than a social security number.
Keep the deduction records three years at a location in California.
Record wage deductions in ink or another indelible form, dated with the month, day, and year. As the employer, keep a copy of the statement and the deduction record on file for at least three years, at the place of employment or a central location within California. A copy means a duplicate of the itemized statement given to the employee, or a computer-generated record that accurately shows all the required information.
On the job
Three years, and it has to be somewhere in California. Records kept only on an out-of-state payroll service's servers do not obviously satisfy the location requirement.
Exact wording
Deductions made from payment of wages must be recorded in ink or other indelible form, properly dated showing the month, day, and year, and a copy of the statement and the record of deductions must be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California. For this purpose a 'copy' includes a duplicate of the itemized statement given to the employee or a computer-generated record that accurately shows all the required information.
You have 21 calendar days to answer a wage-statement records request. An oral request counts.
A current or former employee may ask to inspect wage-statement records or receive a copy, in writing or orally. You must comply as soon as practicable, and no later than 21 calendar days from the date of the request.
On the job
The request does not have to be in writing to start the clock — an oral one counts. Twenty-one calendar days is short enough that 'we will get to it' is not a plan.
Exact wording
An employer receiving a written or oral request from a current or former employee to inspect or receive a copy of wage-statement records must comply as soon as practicable and no later than 21 calendar days from the date of the request.
An employee injured by a knowing, intentional paystub violation recovers the greater of damages or penalties.
An employee who suffers injury from your knowing and intentional failure recovers whichever is greater: all actual damages, or $50 for the initial pay period in which a violation occurs and $100 per employee for each violation in a subsequent pay period, up to an aggregate $4,000. An isolated, unintentional payroll error due to a clerical or inadvertent mistake is not a knowing and intentional failure. In reviewing for compliance, the factfinder may consider whether you had adopted, and were complying with, policies, procedures, and practices that fully comply with the wage statement requirements.
On the job
Per employee, per pay period, up to $4,000 each. A formatting mistake repeated across a crew for a year is not a small problem, which is why paystub templates are worth checking once, carefully.
Exact wording
An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with the wage statement requirements is entitled to recover the greater of all actual damages, or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000). A 'knowing and intentional failure' does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake, and in reviewing for compliance the factfinder may consider whether the employer had adopted, and was complying with, policies, procedures, and practices that fully comply with the section.
An employee need not prove harm when you give no wage statement.
Deemed injury means the employee does not have to prove actual harm to claim the wage statement penalty. It applies when you provided no wage statement, and also when a statement lacks accurate and complete information on a required item and the employee cannot promptly and easily determine that information from the statement alone.
On the job
The employee does not have to prove harm when there was no statement, or when the statement left out required information the employee could not work out from it alone — the injury is presumed. The penalty itself still requires a knowing and intentional failure.
Exact wording
An employee is deemed to suffer injury for the wage statement penalty if the employer fails to provide a wage statement, or if the employer fails to provide accurate and complete information on any of the required items and the employee cannot promptly and easily determine from the wage statement alone the information the statute lists.
You may not take back wages you already paid an employee.
Taking back covers cash handed back, a kickback, or a charge on a later check for breakage or a shortage. If you are the employer, you may not collect or receive any part of wages already paid to that employee.
On the job
Paid wages stay paid: the employer cannot claw back part of a paycheck, which is why breakage and shortages are the employer's cost.
Exact wording
It is unlawful for an employer to collect or receive from an employee any part of wages previously paid to that employee.
You may deduct wages when the law requires it or the employee authorizes it in writing.
The bans on taking back or secretly withholding wages do not reach a deduction that meets any one of these tests: state or federal law requires or empowers it; the employee expressly authorizes it in writing to cover insurance premiums, hospital or medical dues, or other deductions that are not a rebate from the standard wage set by collective bargaining, wage agreement, or statute; or a collective bargaining or wage agreement expressly authorizes it as a health and welfare or pension contribution.
On the job
The lawful deductions are the ones the law requires or the employee authorizes in writing for benefits; a deduction for a dropped saw fits neither.
Exact wording
The prohibitions on taking back or secretly withholding wages do not make it unlawful for an employer to withhold or divert part of an employee's wages when state or federal law requires or empowers it, or when the employee expressly authorizes in writing a deduction to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate from the standard wage set by collective bargaining, wage agreement, or statute, or when a health and welfare or pension contribution is expressly authorized by a collective bargaining or wage agreement.
When you terminate someone, pay all vested vacation at the final rate. No policy overrides that.
Unless a collective bargaining agreement says otherwise, you must pay all vested, untaken vacation as wages at the final rate when you terminate an employee under a contract or policy giving paid vacation, following its eligibility and time-served terms. No contract or policy may provide for forfeiting it.
On the job
Vested vacation is wages at the final rate and cannot be forfeited; accrued paid sick leave has no such payout rule, which is the exam's pairing.
Exact wording
Unless a collective bargaining agreement provides otherwise, whenever an employment contract or employer policy provides paid vacation and an employee is terminated without having taken vested vacation time, all vested vacation is paid as wages at the final rate under that contract or policy's eligibility and time-served terms, and no contract or policy may provide for forfeiture of vested vacation on termination.
A payroll register covers one pay period and every worker paid in it.
The payroll register shows each worker's hours, gross earnings, each deduction, and net pay, with column totals for the period. The employee earnings record is its companion, running the same figures for one worker across the whole year.
On the job
The register is the period view and the earnings record is the person view; the register's totals are what post to the books and drive the payroll tax deposits and returns, and the exam asks which report is which.
Exact wording
A payroll register is the report for one pay period that lists every worker paid in it, showing each worker's hours, gross earnings, each deduction, and net pay, with column totals for the period; the employee earnings record is its companion, running the same figures for one worker across the year.
Standard trade practice
Take away
7 rules · 8 minNotice at hire and new-hire reporting
Give each new employee a written wage notice at the time of hiring.
Write the notice in the language you normally use for employment information. It must state the rate or rates of pay and their basis including overtime rates; any allowances claimed toward minimum wage; the regular payday; your name including any doing-business-as names, physical and mailing address, and telephone number; your workers' compensation carrier's name, address, and telephone number; the employee's paid sick leave rights; and any applicable federal or state emergency or disaster declaration issued within 30 days before the first day of work. Tell employees in writing of any change to that information within seven calendar days after the change. You may skip that written change notice only if all the changes show on a timely under section 226, or another writing required by law gives notice of all the changes within seven days of the changes.
On the job
The notice is the exam's list question: pay rate and basis, payday, employer identity, the workers' compensation carrier, and sick-leave rights.
Exact wording
At the time of hiring, an employer must give each employee a written notice, in the language the employer normally uses for employment information, stating the rate or rates of pay and their basis including overtime rates; any allowances claimed toward minimum wage; the regular payday; the employer's name including any doing-business-as names, physical and mailing address, and telephone number; the name, address, and telephone number of the employer's workers' compensation carrier; the employee's paid sick leave rights; and any applicable federal or state emergency or disaster declaration issued within 30 days before the first day of work. The employer must notify employees in writing of any change to the information in the notice within seven calendar days after the change, unless all the changes are reflected on a timely wage statement under section 226 or notice of all the changes is given in another writing required by law within seven days of the changes.
File your contributions report, quarterly return, and wage report with EDD when contributions are due.
The three are the report of contributions, the quarterly return, and the report of wages paid to your workers, each in the form the director prescribes. Paying contributions by electronic funds transfer satisfies the report of contributions. Since January 1, 2018, you must file all three electronically, unless the department grants a waiver at your request. The quarterly return shows total wages, the employer contributions for unemployment insurance and the employment training tax, the worker contributions for disability insurance, and the personal income tax withheld. The report of wages shows each employee's name, social security number, and wages.
On the job
The quarterly return and the employee wage report are two filings, the DE 9 and DE 9C in EDD's forms; the exam asks which is which.
Exact wording
Each employer files with the Employment Development Department, within the time set for paying employer contributions, a report of contributions, a quarterly return, and a report of wages paid to its workers in the form the director prescribes; an electronic funds transfer of contributions satisfies the report of contributions. Since January 1, 2018, all employers must file the report of contributions, quarterly return, and report of wages electronically, unless the department grants a waiver on the employer's request. The quarterly return shows total wages, the employer contributions for unemployment insurance and the employment training tax, the worker contributions for disability insurance, and the personal income tax withheld, and the report of wages shows each employee's name, social security number, and wages.
Report new hires to EDD. A rehire after a 60-day break counts as a new hire.
Within 20 days of hiring, report to EDD each employee who works in this state and whom you expect to pay wages — including a rehire, meaning a worker who was separated from you for at least 60 consecutive days. If you transmit reports electronically, you may instead send two monthly transmissions, not less than 12 nor more than 16 days apart. For each failure to report as and when required, EDD may assess, unless the failure is due to good cause, $24, or $490 if the failure results from a conspiracy between you and the employee not to supply the report or to supply a false or incomplete one.
On the job
Twenty days, and a rehire after a 60-day break is a new hire again; the DE 34 is EDD's form for it.
Exact wording
Each employer must report to the Employment Development Department the hiring of any employee who works in this state and to whom it anticipates paying wages, and the rehiring of any employee who had been separated from the employer for at least 60 consecutive days, within 20 days of hiring; an employer transmitting reports electronically may instead submit two monthly transmissions not less than 12 nor more than 16 days apart. For each failure to report a hire as and when required, unless the failure is due to good cause, the department may assess a penalty of $24, or $490 if the failure is the result of a conspiracy between the employer and employee not to supply the report or to supply a false or incomplete one.
You must report a service-provider to the Employment Development Department within 20 days of reaching $600.
A service-provider is an individual who is not your employee. You report only if you do business in California and you file, or must file, a federal information return for that compensation. You have 20 days, counted from the earlier of two things: entering a contract for $600 or more, or your payments to that person first totaling $600 or more in a year. Report the service-provider's full name, address, and social security number; your name, business name, address, and telephone number; your federal employer identification number, California state employer account number, social security number, or other identifying number the department requires; the date the contract is executed, or, if there is no contract, the date payments first totaled $600; and the contract's total dollar amount, if any, and its expiration date.
On the job
The $600 threshold and the 20-day clock on the independent-contractor report, the DE 542, are the tested figures.
Exact wording
A service-recipient doing business in California that makes or must make a federal information return for compensation paid to a service-provider, an individual who is not its employee, must report that service-provider to the Employment Development Department within 20 days of the earlier of first making payments that in the aggregate equal or exceed $600 in a year or entering into a contract for $600 or more. The report states the service-provider's full name, address, and social security number; the service-recipient's name, business name, address, and telephone number; the service-recipient's federal employer identification number, California state employer account number, social security number, or other identifying number the department requires; the date the contract is executed or, if there is no contract, the date payments in the aggregate first equal or exceed $600; and the total dollar amount of the contract, if any, and the contract expiration date.
Complete and sign Section 2 of the Form I-9 within three business days of hire.
Section 2 is the employer review and verification. Have the new hire complete and sign Section 1 of Form I-9 at the time of hire; a preparer or translator may assist. Within three business days of hire you must also physically examine the identity and employment-authorization documents the person presents, or examine them under an authorized alternative procedure, and be satisfied that they appear genuine and relate to that person. If the employment lasts less than three business days, do the examination and Section 2 at the time of hire. Keep the signed Form I-9 for three years after the date of hire or one year after employment ends, whichever is later, on paper, electronically in a system that meets the regulation's electronic-retention standards, or on microfilm or microfiche. You are entitled to at least three business days' notice before an authorized agency inspects your forms.
On the job
Section 1 at hire, examination AND a signed Section 2 within three business days, and retention for three years from hire or one year from separation, whichever is later; the form is kept, not filed with any agency — and eyeballing the documents without completing Section 2 is not compliance.
Exact wording
An employer must ensure that a newly hired individual completes Section 1 of Form I-9 at the time of hire and signs the attestation, with a preparer or translator assisting if needed; must, within three business days of the hire, physically examine — or examine under an authorized alternative procedure — the documentation the individual presents establishing identity and employment authorization and ensure that it appears genuine and to relate to the individual, AND complete Section 2, the employer review and verification, and sign its attestation within the same three business days; where the employment is for less than three business days both must be done at the time of hire. The employer retains the signed Form I-9, on paper, electronically in a system that meets the regulation's electronic-retention standards, or on microfilm or microfiche, for three years after the date of hire or one year after the date employment ends, whichever is later, and is entitled to at least three business days' notice before an authorized agency inspects its forms.
Write every document's identification number and expiration date on the Form I-9.
In Section 2 you may accept only unexpired original documents, and you note an expiration date only where the document has one. Use the space provided on the form. Accept a receipt for the application to replace a lost, stolen, or damaged document in place of that document, unless the person indicates, or you know or should know, that the person is not authorized to work; the replacement must be presented within 90 days of the hire, or, on reverification, of the date employment authorization expires. Accept no receipt where the employment is for less than three business days. Two other documents are designated receipts and you must accept them too: from a person who attests to being a lawful permanent resident, the arrival portion of Form I-94 or I-94A with an unexpired 'Temporary I-551' stamp and a photograph, with the Form I-551 due by the stamp's expiration date or, if the stamp has none, within one year of the I-94's issuance; and from a person who attests to being an alien authorized to work, the departure portion of Form I-94 or I-94A with an unexpired refugee admission stamp, with an unexpired Form I-766, or an unrestricted social security card plus a List B identity document, due within 90 days of the hire or of the date authorization expires on reverification. A minor under 18 who cannot produce a List B identity document is exempt from producing one if a parent or legal guardian completes Section 1, writes 'minor under age 18' in the minor's signature space, and completes the preparer/translator certification, and you write 'minor under age 18' in the List B document-number space in Section 2. A person with a disability placed by a nonprofit organization, association, or rehabilitation program may follow the same steps with the placing organization's representative, writing 'special placement' instead. Copying the documents is optional. If you make a copy or electronic image, keep it with the Form I-9 or with the employee's records and keep it retrievable. A copy does not relieve you of fully completing Section 2. Copying only the documents of people of certain national origins or citizenship statuses may violate the anti-discrimination provisions.
On the job
The document check is a recorded act, not a glance: numbers and expiry dates go on the form, a receipt for a replacement document must be accepted, and photocopies never substitute for Section 2.
Exact wording
In completing Section 2 the employer may accept only unexpired original documents and must note the identification number and expiration date, if any, of every document in the space provided on the Form I-9. Unless the individual indicates, or the employer has actual or constructive knowledge, that the individual is not authorized to work, the employer must accept a receipt for the application for a replacement document that was lost, stolen, or damaged in lieu of the document, provided the replacement is presented within 90 days of the hire (or, on reverification, of the date employment authorization expires); no receipt may be accepted where the employment is for less than three business days. Two other documents are designated receipts and must likewise be accepted: for an individual who attests to being a lawful permanent resident, the arrival portion of Form I-94 or I-94A bearing an unexpired 'Temporary I-551' stamp and a photograph, with the Form I-551 due by the stamp's expiration date or, if it has none, within one year of the I-94's issuance; and for an individual who attests to being an alien authorized to work, the departure portion of Form I-94 or I-94A bearing an unexpired refugee admission stamp, with an unexpired Form I-766, or an unrestricted social security card plus a List B identity document, due within 90 days of the hire or of the date authorization expires on reverification. A minor under 18 who cannot produce a List B identity document is exempt from producing one if a parent or legal guardian completes Section 1, writes 'minor under age 18' in the minor's signature space, and completes the preparer/translator certification, and the employer writes 'minor under age 18' in the List B document-number space in Section 2; an individual with a disability placed by a nonprofit organization, association, or rehabilitation program may follow the same procedure with the placing organization's representative, substituting 'special placement'. Copying the documents is optional; if a copy or electronic image is made it must be retained with the Form I-9 or with the employee's records and remain retrievable, it does not relieve the employer of fully completing Section 2, and copying only the documents of individuals of certain national origins or citizenship statuses may violate the anti-discrimination provisions.
You must reverify a worker's Form I-9 by the day the work authorization expires.
Follow the same document presentation and examination procedures, note the new document's identification number and expiration date, if any, on the form, and sign the reverification attestation by hand or by compliant electronic signature. If you do not, that individual may no longer be employed. When an Employment Authorization Document was presented together with a Notice of Action stating it is automatically extended, reverify when the automatic extension expires. No new hire occurs when an individual is continuing in employment with a reasonable expectation of employment at all times: approved paid or unpaid leave, a promotion, demotion, or pay raise, a temporary layoff for lack of work, a strike or labor dispute, reinstatement after a suspension or termination found unjustified, a transfer between distinct units of the same employer, or continued employment with a related, successor, or reorganized employer, including one that continues to employ some or all of a previous employer's workforce in a corporate reorganization, merger, or sale of stock or assets, provided the successor obtains and maintains the previous employer's records and Forms I-9. It is also not a new hire when an individual moves between employers in the same multi-employer association while continuing in the same bargaining unit under the same collective bargaining agreement and the designated agent records each hire and termination date, or when the employment is seasonal. To claim continuing employment, you must establish both that the individual expected to resume employment at all times and that the expectation is reasonable.
On the job
Work authorization has an expiry date and the employer owns the calendar; a lack-of-work layoff and recall, or a seasonal crew's spring return, is not a new hire, so it does not restart the I-9.
Exact wording
If an individual's employment authorization expires, the employer must reverify on the Form I-9 that the individual is still authorized to work — not later than the date the authorization expires, following the same document presentation and examination procedures, noting the new document's identification number and expiration date, if any, on the form and signing the reverification attestation by hand or by compliant electronic signature — or the individual may no longer be employed; where an Employment Authorization Document was presented together with a Notice of Action stating it has been automatically extended, reverification applies when the automatic extension expires. No new hire occurs where an individual is continuing in employment with a reasonable expectation of employment at all times: approved paid or unpaid leave, a promotion, demotion, or pay raise, a temporary layoff for lack of work, a strike or labor dispute, reinstatement after a suspension or termination found unjustified, a transfer between distinct units of the same employer, or continued employment with a related, successor, or reorganized employer — including one that continues to employ some or all of a previous employer's workforce in a corporate reorganization, merger, or sale of stock or assets — provided the successor obtains and maintains the previous employer's records and Forms I-9; an individual who moves between employers in the same multi-employer association while continuing in the same bargaining unit under the same collective bargaining agreement, where the designated agent records each hire and termination date; or an individual engaged in seasonal employment. An employer claiming continuing employment must also establish that the individual expected to resume employment at all times and that the expectation is reasonable.
Take away
4 rules · 2 minState payroll taxes and withholding
You calculate California income tax withholding from the exemption certificate your employee files.
The certificate must be on the form the department prescribes, and it sets the withholding exemptions you may allow. If marital status cannot be determined from the certificate, treat the employee as unmarried. If the department advises you in writing that the certificate does not properly reflect the allowable exemptions, allow no exemptions until your employee files a new certificate.
On the job
The DE 4 is the state counterpart of the federal W-4; the exam asks which form sets California withholding.
Exact wording
An employer uses the exemption certificate the employee files with it, in the form the department prescribes, to determine the withholding exemptions allowed in computing California personal income tax withheld; if marital status cannot be determined from the certificate the employee is treated as unmarried, and no exemptions are allowed once the department advises the employer in writing that the certificate does not properly reflect the allowable exemptions until a new certificate is filed.
Workers pay disability insurance on their wages at a rate between 0.1 and 1.5 percent.
The director must declare the disability insurance rate by October 31 of the prior year, and it may not exceed 1.5 percent nor fall below 0.1 percent. The contribution applies to wages as the code defines them.
On the job
State disability insurance is the one state payroll tax that comes out of the worker's wages; unemployment contributions and the employment training tax are the employer's.
Exact wording
Each worker pays worker contributions for disability insurance at the rate the director sets for the calendar year, declared by October 31 of the prior year, on wages as the code defines them; the rate may not exceed 1.5 percent nor fall below 0.1 percent.
For unemployment insurance, wages exclude anything you pay one worker above $7,000 in a year.
The $7,000 limit runs per individual, per employer, per calendar year: pay above it for employment is not wages under the Unemployment Insurance Code.
On the job
This is the state UI wage base: the contributions the code measures on wages stop at $7,000 per employee each year and start again in January — an employee paid $9,000 generates contributions on $7,000.
Exact wording
For the Unemployment Insurance Code, 'wages' does not include remuneration in excess of $7,000 paid to an individual by an employer during any calendar year with respect to employment.
You pay 0.1 percent into the Employment Training Fund on top of your other contributions.
The Employment Training Fund contribution is 0.1 percent of the wages section 930 specifies, and you pay it on top of your other contributions required by the Unemployment Insurance Code. It is collected the same way and at the same time as contributions under sections 977 and 977.5. Excepted employers the code names, and employers that have elected an alternate method of financing unemployment benefits, do not pay it.
On the job
The Employment Training Tax is the employer's, not the worker's, and it rides on the same $7,000 wage definition as unemployment insurance: with SDI and personal income tax withheld from the worker and UI and ETT paid by the employer, the exam asks which is which.
Exact wording
In addition to the other contributions the Unemployment Insurance Code requires, every employer — other than the excepted employers the code names and those that have elected an alternate method of financing unemployment benefits — pays contributions into the Employment Training Fund at the rate of 0.1 percent of the wages section 930 specifies, collected in the same manner and at the same time as the contributions required under sections 977 and 977.5.
Take away
Important numbers to know
Where people go wrong
Sounds right: The waiting time penalty is interest on the money I was late paying.
Where’s the catch?
Sounds right: Fired or quit, they all get paid on the next payday.
Where’s the catch?
Sounds right: If I am genuinely disputing whether I owe the money, I am exposed anyway.
Where’s the catch?
Sounds right: Our payroll company sends the stubs, so the paystub rules are their problem.
Where’s the catch?
Sounds right: Wage statement records can live wherever our payroll software keeps them.
Where’s the catch?
Glossary
Every term this guide defines, in one place. Each is also defined where it first appears.
- Discharge
- The employer ends the employment — fired or laid off. It is the employer's decision, and it triggers a different deadline than an employee quitting.
- Itemized wage statement
- The paystub. California requires it in writing, with nine specific items on it, every time you pay wages.
Keep going
- Practice questions for Law & Business — Employment Requirements is 20% of the exam.
- Job scenario: The Pay Stub
- Job scenario: Three Clocks on One Friday
- Also in Employment Requirements: Wages and Hours: What the Crew Is Owed
- Also in Employment Requirements: Paid Sick Leave: What the Crew Accrues
- Every number on one page — this guide’s figures alongside every other Law & Business guide’s.
Test yourself: 7 questions for this guide
A paid account adds more ways to practice and prepare: study questions after every chapter, practice questions for every topic, timed practice exams, and job scenarios drawn from real jobs. A free account gets you one timed practice exam and saves your progress across devices. Here is one of this guide's questions:
You lay off a framer on Tuesday morning because the job finished early. Payroll runs Friday. When is the check due?
AnswerTuesday — immediately, at the time of discharge. A layoff is an employer-initiated separation, so the discharge rule applies and the regular payday is irrelevant. Waiting until Friday is three days late, and if the failure is willful the waiting time penalty runs at that framer's daily wage for every day the full amount is unpaid.
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