Skip to main content

California Requirements for Independent Contractors

Posted by attorney Henry Lively

In California, any business that pays an independent contractor is required to report the existence of a contract by completing EDD Form DE 542, "Report of Independent Contractors", either when a contract is established or when $600 is paid or is expected to be paid to the worker. The workers must be reported each year within 20 days of either making payments to them totaling $600 or more or entering into a contract with them for at least that amount.

If the business provides a tax identification number rather than a Social Security number, there is no way to report the independent contractor. Therefore, only individual taxpayers with a Social Security number need to be reported.

The penalty for failure to timely report the contractor is $24 for each failure. A penalty of $490 may also appy if the failure is the result of a conspiracy between the service recipient and the service provider.

Author of this guide:

Was this guide helpful?

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer