Independent Contractor Reporting

You must report independent contractor information to us within 20 calendar days if either of the following applies:

• You paid $600 or more to an independent contractor in any calendar year.
• You enter into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier.

Independent contractors must be reported once per calendar year for any new or ongoing contracts.

If you are submitting reports online, you must submit 2 monthly reports that are not less than 12 days and not more than 16 days apart. Independent contractors should only be reported once per calendar year for any new or ongoing contracts.

What to Report

Business or government entity (Service -Recipient):

• 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)

Independent contractor (Service-Provider):

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

Online with e-Services for Business

• Submit a Report of Independent Contractor(s) (DE 542) on e-Services for Business.
• For more 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 (PDF).
• 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 (PDF).
• 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 don't report on time, you may be charged a $24 penalty for each failure without good cause. If the failure is intentional or the report is false, the penalty increases to $490.

You can estimate the contract amount and must check the Ongoing box on the Report of Independent Contractor(s) (DE 542). If there is no set contract amount, you can report when the total payments in a calendar year reach $600 or more and check the Ongoing box.

Yes. If the contract amount or amount paid includes the cost of parts or materials, that cost counts toward the $600 total when determining if the threshold has been met.

Under California law, service-recipients must report independent contractors. You must report independent contractors who provide services for any of your business operations in California, earn trade or business income from California sources, or are involved in any trade or business activities that are subject to California law.

Example 1

Your business is based in California and you hire an independent contractor (IC) who lives and works out-of-state. You must report this IC to the EDD because they are doing work for your California business.

Example 2

If your business is based in another state and has an office in California, you must report independent contractors working through your California office.

Example 3

If your business is based in another state and do not have branch offices in California but you registered to have independent sales agents (ICs) sell your products in California. You must report these ICs to the EDD since your business generates income from California sales and you are 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 including a limited liability company treated as a sole proprietorship for federal income tax reporting purposes.

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

• 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. 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 when 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 you hire workers who are not employees and you are required to file a Form 1099-NEC or Form 1099-MISC, you need to report the workers 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.

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

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