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California Employers Must Register Independent Contractors

  • January 9, 2001

California employers retaining "independent contractors" who are individuals/sole proprietors (NOT corporations, partnerships, or LLCs,) must file a new form (DE 542) with the Employment Development Department, the state agency responsible for collecting employment data and administering unemployment insurance benefits. The law, effective January 1, 2001, applies to any independent contractor for whom the employer is required to file a Form 1099Misc with the Internal Revenue Service. The form requires the following information to be provided about the employer: Federal employer identification number, California identification number, social security number, and business name, address and telephone number.

The form must also include the following information regarding the independent contractor: first name, middle initial and last name; social security number, address, start date of contract, amount of contract (including cents), contract expiration date, and checking a box if it is an ongoing contract. The form must be filed within 20 days of contracting for more than $600.00. Penalties begin at $24.00 for each failure to file the report.

©2001 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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