California Independent Contractor Reporting FAQs

The information you provide is used to assist state and county agencies to locate parents who are delinquent in their child support obligations.

Any business or government entity that is required to file a federal Nonemployee Compensation (Form 1099-NEC) or Miscellaneous Information (Form 1099-MISC), for payments made for services performed by an independent contractor must report.

A service-recipient is any business or government entity that is required to file a federal Form 1099-NEC or 1099-MISC for services performed by an independent contractor.

A service-recipient can be any individual, person, corporation, association, or partnership, or agent, doing business in California, deriving trade or business income from sources within California, or in any course of trade or business subject to California law.

A service-recipient also includes the State of California or any political subdivision, including the Regents of the University of California, any charter city, or any political body not a subdivision or agency of the state, and any person, employee, department, or agent.

A service-provider is defined as an independent contractor. An independent contractor is any individual who is not an employee of the service-recipient for California purposes and receives compensation for work conducted in California or executes a contract for services performed in or outside California.

The service-recipient is required to report the following information:

• Federal employer identification number (FEIN)
• California employer payroll tax account number (if applicable)
• Business or government entity name, address, and phone number
• Social Security number (SSN) (if no FEIN or California employer payroll tax account number)

The service-recipient is required to report the following information regarding the service-provider:

• First name, middle initial, and last name
• Social Security number
• Address
• Start date of contract (if no contract, the date payments equal $600 or more)
• Amount of contract, including cents (if applicable)
• Contract expiration date (if applicable)
• Ongoing contract (check box if applicable)

You must report information to us within 20 calendar days of either:

• Making payments totaling $600 or more to an independent contractor in any calendar year.
• Entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier.

You must report each independent contractor once each year.

Online with e-Services for Business

• Submit a Report of Independent Contractor(s) (DE 542) on e-Services for Business.
  • For information on reporting independent contractors online, refer to our e-Services for Business FAQs or the Electronic Filing Guide for the Independent Contractor Reporting Program (DE 542M) (PDF).

Mail or Fax

• Submit a paper Report of Independent Contractor(s) (DE 542) using one of the following options:
  • Downloading a fill-in DE 542.
  • Ordering the form to be mailed to you through our Online Forms and Publications.
  • Printing your data directly from your computer to the DE 542 by following the Print Specifications.
  • Creating your own form with all the required information.
  • Calling the Taxpayer Assistance Center at 1-888-745-3886.
  • Visiting your nearest Employment Tax Office.

Mail your paper DE 542 to:

Employment Development Department
PO Box 997350, MIC 96
Sacramento, CA 95899-7350

Fax your paper DE 542 to: 1-916-319-4410

If you are unable to determine when total payments made equal or exceed $600, you can estimate the dollar amount of the contract. You must check the box on the Report of Independent Contractor(s) (DE 542) that indicates Ongoing. If there is no set contract amount, you can report when the total payments in a calendar year equal or exceed $600 and check the Ongoing box.

Yes. If either the contract amount or amount paid includes the cost of parts or materials, that cost must be included in determining whether the service-provider has been paid $600 or more.

A penalty of $24 may be issued for each late report, unless the failure is due to good cause.

Note: If there was an intentional agreement between the service-recipient and service-provider to not supply the required information or to supply a false or incomplete report, a penalty of $490 may be charged.

Under California law, service-recipients must report service-providers (independent contractors). You must report independent contractors whose services are performed for any of your business operations doing business in California, obtain trade or business income from California sources, or in any manner in the course of a trade or business subject to California law.

Example 1

If your business is headquartered in California and your California office hires an independent contractor (IC) who lives and works out-of-state. You must report this IC to the EDD because this IC performs services for your California business operation.

Example 2

Your business is headquartered in another state and has a branch office in California that uses ICs. Those ICs contracted through the California branch office must be reported.

Example 3

Your business is headquartered in another state and does not have any branch offices in California. Your business registered with a California state agency to have independent sales agents (ICs) sell your products in California. You must report these ICs to the EDD since they perform services for a business operation deriving income from California and subject to some California laws.

No. There are no shared agreements between the states for this purpose.

No. You are only required to report service-providers who are individuals working as independent contractors and are sole proprietors.

By law, you are required to obtain the following information from your service-providers who are sole proprietors:

• First name
• Middle initial
• Last name
• Address
• SSN

Make sure your service-providers complete the federal Request for Taxpayer Identification Number and Certification, Form W-9.

No. The reporting requirement is when you contract, and your service-provider receives $600 or more in the year. You only report once a year for each service-provider to meet this requirement.

No. Service-recipients who are not registered with the EDD are not required to register and receive a California employer payroll tax account number only for the purpose of reporting independent contractor service-providers. Service-recipients are required to complete the Report of Independent Contractor(s) (DE 542) (PDF) using their Social Security or federal employer identification number.

Yes, a contract can be written or verbal. You are required to report the independent contractor upon entering into a contract for $600 or more.

Yes, you must report the worker as an independent contractor on the Report of Independent Contractor(s) (DE 542) (PDF).

If the workers are engaged as employees, their services would not be reported as independent contractors. However, the business or government entity may be required to report the employees as part of the New Employee Registry (under Section 1088.5 of the California Unemployment Insurance Code) if the requirements of that section are met.

When a service-recipient hires workers who are not employees and is required to provide the workers with a Form 1099-NEC or 1099-MISC, the service-recipient is required to report the workers (service-providers) as independent contractors (under the provisions of Section 1088.8 of the California Unemployment Insurance Code).

Yes, reporting independent contractors is required.

Refer to: Section 1.6041-1(b), Title 26 of the Code of Federal Regulations. The term "trade or business" includes churches and nonprofit organizations.

Refer to California Legislative Information to find the Unemployment Insurance Code (UIC).

The California UIC Table of Contents will appear, select the Division 1 link; the code sections are grouped in numerical order on the right side of the page. Scroll down to “1085-1098,” select the link, and then scroll down to 1088.8.