Voluntary Plan (VP) Security Deposit Requirements

As referenced in California Unemployment Insurance Code (CUIC) Section 3258:

An employer must submit a security deposit as part of the VP approval process. The deposit is used to cover the potential liability of the VP and to reimburse the Employment Development Department (EDD), if the employer fails to pay any assessments established in connection with the VP.

The formula used to determine the minimum required deposit amount is as follows:

Employers estimated taxable wages from previous year (PY) multiplied by 0.5 multiplied by the current State Disability Insurance Contribution rate, or

PY X 0.5 X 1.0% = VP minimum required security deposit.

The amount of security deposit in excess of the minimum $1,000 is determined by the number of employees covered, the size of the payroll, the class of risks, the financial standing of the employer, and any other relevant factors as determined by the EDD.

The security deposit must be submitted in one of the following forms:

  • Cash, in the form of a check, may be sent to the EDD, to secure the employer’s VP obligations.
  • Irrevocable Letter of Credit, from a United States financial institution.
  • Guarantee bond, issued by an admitted surety insurer.

For more information on the VP program, such as types of security deposits, reporting requirements, and disputed coverage claims, reference the Disability Insurance Employer’s Guide to Voluntary Plan Procedures (DE 2040).

For additional questions, visit VP FAQ, VP Forms and Publications, or contact us:

  • Voluntary Plan Group (VPG) at 1-916-653-6839 (TTY users dial the California Relay Service at 711)
  • Email: DIBVPSRW@edd.ca.gov
  • Write to:

    Employment Development Department
    Disability Insurance Branch, MIC 29 VP
    P.O. Box 826880
    Sacramento, CA 94280-0001