BILL NUMBER: AB 3021 ENROLLED
BILL TEXT
PASSED THE ASSEMBLY AUGUST 26, 2004
PASSED THE SENATE AUGUST 25, 2004
AMENDED IN SENATE AUGUST 19, 2004
AMENDED IN SENATE AUGUST 17, 2004
AMENDED IN SENATE JULY 22, 2004
AMENDED IN ASSEMBLY MAY 20, 2004
AMENDED IN ASSEMBLY APRIL 14, 2004
INTRODUCED BY Committee on Labor and Employment (Koretz (Chair),
Mullin (Vice Chair), Chu, Hancock, and Laird)
FEBRUARY 24, 2004
An act to amend Section 1088 of the Unemployment Insurance Code,
relating to employment.
LEGISLATIVE COUNSEL'S DIGEST
AB 3021, Committee on Labor and Employment. Payroll reports.
Existing law requires employers to file with the Employment
Development Department reports of employer contributions and wages
paid to the employer's workers during certain prescribed periods.
This bill would require an employer with more than 250 employees,
beginning on or after January 1, 2006, to include in its first wage
report of the calendar year information relating to the number of
individuals the employer employed, or hired as service-providers for
whom the employer is required to report specified information in
California, outside of California, but within the United States, and
outside of the United States during the prior calendar year. The
bill would require the department to report this information
collected from employers to specified legislative committees and to
post this information on the department's Web site. This bill would
require the department to assess penalties against employers for
failing to comply with this reporting requirement and for
underreporting individuals employed or service-providers hired by the
employer, as provided. This bill would establish the Payroll
Reporting Penalty Fund and require penalties collected pursuant to
this bill to be deposited into that fund. Moneys in the fund would
be available only upon appropriation by the Legislature, and would be
expended for the purpose of covering the cost of collection and
enforcement.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1088 of the Unemployment Insurance Code is
amended to read:
1088. (a) (1) Each employer shall file with the director within
the time required by subdivision (a) or (d) of Section 1110 for
payment of employer contributions, a report of contributions and a
report of wages paid to his or her workers in the form and containing
any information as the director prescribes. An electronic funds
transfer of contributions pursuant to subdivision (f) of Section 1110
shall satisfy the requirement for a report of contributions. The
report of wages shall include individual amounts required to be
withheld under Section 13020 or withheld under Section 13028.
(2) (A) In order to enhance efforts to reduce tax fraud and to
reduce the personal income tax reporting burden, effective January 1,
1997, the report of wages shall also include the full first name of
the employee and total wages, as defined in Section 13009, paid to
each employee. This paragraph shall apply to reports of wages for
all periods ending on or before December 31, 1999.
(B) For all periods beginning on or after January 1, 2000, the
report of wages shall also include total wages subject to personal
income tax, as defined in Section 13009.5, paid to each employee.
(3) Beginning on or after January 1, 2006, for employers with more
than 250 employees, the employer's first report of wages of the
calendar year shall also include all of the following:
(A) The number of California residents employed by the employer,
or hired as service-providers for whom the employer is required to
report information pursuant to Section 1088.8, during the prior
calendar year.
(B) The number of individuals employed by the employer, or hired
as service-providers for whom the employer is required to report
information pursuant to Section 1088.8, outside of California but
within the United States during the prior calendar year.
(C) The number of individuals employed by the employer, or hired
as service-providers for whom the employer is required to report
information pursuant to Section 1088.8, outside of the United States
during the prior calendar year.
(4) (A) The department, on an annual basis, shall report the
information collected pursuant to paragraph (3) to the Senate
Committee on Labor and Industrial Relations and the Assembly
Committee on Labor and Employment.
(B) The department, on an annual basis, shall post the information
collected by the employer pursuant to paragraph (3) on the
department's Web site.
(5) An employer shall be assessed a penalty, by the department,
for one of the following:
(A) A penalty of one thousand dollars ($1,000) for the failure to
comply with the requirements of paragraph (3).
(B) A penalty of not less than twenty-four dollars ($24) per
underreported employee or service-provider if the employer
underreports by more than one-half the number of individuals or
service-providers employed by the employer.
(6) Funds derived from penalties assessed pursuant to paragraph
(5) shall be deposited into the Payroll Reporting Penalty Fund, which
is hereby established in the State Treasury. Moneys in that fund
shall be available only upon appropriation by the Legislature, and
shall be expended for the purpose of covering the cost of collection
and enforcement.
(b) Each employer shall file with the director within the time
required by subdivision (b) or (d) of Section 1110 for payment of
worker contributions, a report of contributions containing the
employer's business name, address, and account number, the total
amount of worker contributions due, and any other information as the
director shall prescribe. The director shall prescribe the form for
the report of contributions. An electronic funds transfer of
contributions pursuant to subdivision (f) of Section 1110 shall
satisfy the requirement for a report of contributions.
(c) In addition to the report of contributions and report of wages
required by employers under subdivision (a), an individual who has
elected coverage under subdivision (a) of Section 708 is also
required to file a separate report of contributions, subject to Part
2 (commencing with Section 2601).
(d) Any employer making an election under subdivision (d) of
Section 1110 shall submit the report of wages described in
subdivision (a), within the time required for submitting employer
contributions under subdivision (a) of Section 1110.
(e) In addition to the report of contributions and report of wages
described in subdivision (a), each employer shall file with the
director an annual reconciliation return showing the total amount of
wages, employer contributions required under Sections 976 and 976.6,
worker contributions required under Section 984, the amounts required
to be withheld under Section 13020 or withheld under Section 13028,
and any other information as the director shall prescribe. This
annual reconciliation return shall be due on the first day of January
following the close of the prior calendar year and shall become
delinquent if not filed on or before the last day of that month.
This subdivision shall not apply to individuals electing coverage
under Section 708 or 708.5 or employers electing financing under
Section 821.
(f) For purposes of making a report of wages under subdivision
(a), employers who are required under Section 6011 of the Internal
Revenue Code and authorized regulations thereunder to file magnetic
media returns, shall, within 90 days of becoming subject to this
requirement, do one of the following:
(1) Submit a magnetic media format to the department for approval,
and upon receiving approval from the department, submit any
subsequent reports of wages on magnetic media.
(2) Establish to the satisfaction of the director that there is a
lack of automation, a severe economic hardship, a current exemption
from submitting magnetic media information returns for federal
purposes, or other good cause for not complying with the provisions
of this subdivision. Approved waivers shall be valid for six months
or longer, at the discretion of the director.
(g) The Franchise Tax Board shall be allowed access to the
information filed with the department pursuant to this section.
(h) If an employer demonstrates that an undue hardship would be
imposed, the director may authorize an exemption from the requirement
in subdivision (a) to report individual amounts withheld under
Section 13020 and the requirement in subdivision (e) to file the
annual reconciliation return for the 1995 calendar year only. Any
request for exemption must be filed on or before January 15, 1995.
Upon approval of a request for exemption under this subdivision, the
employer shall file quarterly returns and reports of wages in the
manner and method prescribed by the director for the 1995 calendar
year only.