Before the First Employee Starts Work

All California employers must meet the following requirements before an employee begins work.

A California Employer Identification Number

An employer who becomes subject to the employment tax laws is required to register with the Employment Development Department (EDD) to obtain an identification number, which is the state equivalent of the federal tax identification number (Unemployment Insurance Code § 1086). This number can be obtained by filing a DE-1 Registration Form with the EDD. After an employer receives the identification number, it will also receive information concerning all state required employment taxes and reporting requirements (Unemployment Insurance Code § 1089).

Additional information can be obtained by writing to the EDD, Box 826880, Sacramento, CA 94280-0001, or by contacting the local Employment Tax District Office. For information concerning the federal tax identification number, contact the Internal Revenue Service

Workers' Compensation Insurance Coverage

All employers are required to have workers' compensation insurance or receive state approval to self-insure the required benefits. Employers that do not have workers' compensation insurance or are not authorized to be self-insured can be subject to significant criminal and civil penalties (Labor Code § 3700, et seq.). A large number of insurance companies offer plans for these benefits. In addition, the State Compensation Insurance Fund makes available such benefits to all employers.

Required Registration, Certification, or Licensing for Certain Industries

Certain businesses must be registered, certified or licensed prior to operating the business. Several different state agencies license or register businesses. The Division of Labor Standards Enforcement provides licensing or registration for the following types of businesses:

October 2016