Independent Contractor Reporting Requirements

Background

California State Senate Bill 542 was passed during the 1999-2000 legislative session and signed into law. This law requires businesses and government entities to report specified information to the Employment Development Department (EDD) on independent contractors.

Who Must Report

Any business or government entity (defined as a "service-recipient") that is required to file a federal Form 1099-MISC for services performed by an independent contractor (defined as a "service-provider") must report. A service-recipient means any individual, person, corporation, association, or partnership, or agent thereof, doing business in this State, deriving trade or business income from sources within this State, or in any manner in the course of trade or business subject to the laws of this State.

An independent contractor is defined as an individual who is not an employee of the business or government entity for California purposes and who receives compensation or executes a contract for services performed for that business or government entity either in or outside of California.

Benefits of the Program

The information you provide to EDD will increase child support collection by helping to locate parents who are delinquent in their child support obligations.

Effective Date

January 1, 2001.

When the Information Must Be Reported

You must report to EDD within twenty (20) days of EITHER making payments totaling $600 or more OR entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier.

What Information Must Be Reported

You are required to provide the following information that applies.

Business or government entity’s (service-recipient):

• Federal employer identification number
• California employer account number
• Social security number
• Business name, address, and telephone number

Independent contractor’s (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)

General Information

Report independent contractor information on the Report of Independent Contractor(s) (DE 542) form or online with EDD’s expanded e-Services for Business. To obtain forms and/or information, call our hotline number (916) 657-0529. You may also call our toll-free number (888) 745-3886, visit your local Employment Tax Office listed in your local telephone directory in the State Government section under “Employment Development Department,” or online.

Where to Send Reports

Employment Development Department
P.O. Box 997350, Document Management Group, MIC 96
Sacramento, CA 95899-7350