Congratulations on your decision to become a new employer in California. Before running your first payroll in California, you will need to complete federal and state tax account registrations, meet California’s state-mandated insurance and retirement requirements, and set up each new employee with the correct forms. For California employer registration help, check out our partner, CorpNet.
Federal and California State Tax Accounts
Before running payroll in California, you must set up the required federal and state tax accounts.
Federal Tax Accounts
Apply for a Federal Employer Identification Number (EIN)
Your business will need an Employer Identification Number (EIN, also called a FEIN) if you do not already have one.
The simplest way to get an EIN is to apply online with the IRS. There is no cost to apply.
For more information, read our help article: “Your Step-by-step Guide on How to Apply for EIN”
Enroll in EFTPS (Recommended)
Although it is not required, we recommend you enroll in the Electronic Federal Tax Payment System (EFTPS) — the IRS’s free online service for paying federal taxes electronically.
You can register online at eftps.gov.
To learn more, read our article: “What Is EFTPS?”
California State Tax Accounts
Register as a New Employer with California EDD
New employers in California must register with the California Employment Development Department (EDD) — the state agency that administers California’s payroll taxes and unemployment programs.
Register online through e-Services for Business at the California EDD website.
You must register within 15 days of the date you first paid wages exceeding $100.
After registering, you will be assigned an eight-digit employer account number.
The California EDD administers the following payroll taxes:
Unemployment Insurance (UI), also called State Unemployment Insurance (SUI)
Employment Training Tax (ETT)
State Disability Insurance (SDI), which includes Paid Family Leave (PFL — California’s program that provides partial wage replacement to employees who take time off to care for a seriously ill family member or bond with a new child)
Personal Income Tax (PIT) withholding, also known as state income tax (SIT) withholding
Intimidated by this? Try our partner, CorpNet, for state tax registration!
Get Your California SUTA Rate
Before running payroll in Patriot, you need to enter your California State Unemployment Tax Assessment (SUTA) rate.
The California new employer SUTA rate is 3.4% and will remain at that rate for a period of 2–3 years.
After your liability period is established, the California EDD will assign you a new SUTA rate each year. Visit the CA EDD rates page for current rates.
For more information, read our help article: “What Is SUTA Tax?”
⚠️ Do NOT include the Employment Training Tax (ETT) when entering your SUTA rate in Patriot Software. The ETT is automatically calculated by Patriot and should not be added to your SUTA rate entry.
State-mandated Requirements
Sign Up for Workers’ Compensation Insurance
California requires all employers with at least one employee to carry workers’ compensation insurance.
You can sign up through a private insurance provider or through a state-operated fund. Learn more about California workers’ comp requirements at the California Department of Industrial Relations.
Patriot Payroll offers a free pay-as-you-go (PAYG) workers’ comp integration through our partner, ERGO NEXT Insurance. Get a free quote with ERGO NEXT here.
Sign Up for State Disability Insurance
California requires most employers to provide State Disability Insurance (SDI) coverage, which includes Paid Family Leave (PFL).
Coverage can be obtained through the California state SDI plan or a private insurance plan.
Visit the California EDD Employer Information page for details on enrollment options
Enroll in CalSavers or Offer a Qualifying Retirement Plan
California requires all employers to either enroll in CalSavers — the state-mandated retirement savings program — or offer employees a qualifying retirement plan alternative.
Patriot has partnered with Vestwell to offer affordable retirement plans for small businesses that integrate with Patriot Payroll. Learn more about Patriot’s Vestwell integration here.
Setting Up Your New Employee
Complete Form I-9 (Employment Eligibility Verification)
Federal law requires all employers to verify each new employee’s identity and authorization to work in the United States using Form I-9.
Form I-9 is completed in two parts:
Employee completes Part 1 on or before their first day of work.
Employer completes Part 2 within three business days of the employee’s first day by reviewing the employee’s identity and work authorization documents.
You must retain each employee’s completed Form I-9 for as long as the individual works for you. For more information, read:
Have Employee Fill Out Federal Form W-4
Have your new California employee fill out Form W-4, Employee’s Withholding Certificate, for federal income tax withholding.
For more information about Form W-4, read our help article “What Is a W-4 Form, and What Is It Used For?”
Have the Employee Complete California State Form DE
Have your new employee fill out California State Form DE 4 — the Employee Withholding Allowance Certificate used to determine the correct amount of California state income tax (SIT) to withhold.
Report New Hires to California
You must report new hires and rehires to the California New Employee Registry within 20 days of the hire or rehire date. California new-hire reports can be submitted two ways:
Online through the California EDD e-Services for Business portal
By mail (see the California New Hire Reporting page for instructions)
Meet California Minimum Wage Requirements
California employers must comply with minimum wage requirements at all three levels. You are required to pay whichever rate is highest:
Federal minimum wage: Set by the federal government
California state minimum wage: $16.90 per hour in 2026
California also has a separate Fast Food Minimum Wage of $20.00 per hour.
HEALTHCARE WORKER MINIMUM WAGE: Nonexempt healthcare workers who work at certain covered facilities and who provide healthcare services or support providing healthcare will see a minimum wage increase as scheduled in the law. The new rates will range from $19.28 to $25 per hour. You can check out the state’s page for full details. (https://www.dir.ca.gov/dlse/Health-Care-Worker-Minimum-Wage-FAQ.htm)
LOCAL MINIMUM WAGE INCREASES: Numerous cities and counties across California will increase their hourly minimum wage. The new rates are below.-Alameda: $17.76-Berkeley: $19.61-Emeryville: $20.34-Fremont: $18.05-Glendale hotel with 60+ guest rooms: $25-Long Beach hotels with 100+ guest rooms: $26.50-Los Angeles City: $18.42-Los Angeles City hotels with 60+ guest rooms: $25 with health benefits-Los Angeles City hotels with 60+ guest rooms: $29.25 if no health benefits-Unincorporated Los Angeles County: $18.47-Malibu: $17.91-Milpitas: $18.50-Pasadena: $18.57-San Francisco: $19.61-Santa Monica: $18.47-Santa Monica hotels: $25-West Hollywood hotels: $20.87
Local minimum wage: Many California cities and counties have their own minimum wage rates that may be higher than the state rate.
San Diego Minimum wage for Hospitality workers: Hospitality employers (generally hotels, event centers, and amusement parks) will be subject to new hourly minimum wage requirements as follows:
Hotels and amusement parks: $19
Event centers: $21.06
Alameda: $17.7
Berkeley: $19.61
Emeryville: $20.34
Fremont: $18.05
Glendale hotel with 60+ guest rooms: $25
Long Beach hotels with 100+ guest rooms: $26.50
Los Angeles City: $18.42-Los Angeles City hotels with 60+ guest rooms
$25 with health benefits
Los Angeles City hotels with 60+ guest rooms: $29.25 if no health benefits
Unincorporated Los Angeles County: $18.47
Malibu: $17.91
Milpitas: $18.50-Pasadena: $18.57
San Francisco: $19.61
Santa Monica: $18.47
Santa Monica hotels: $25
West Hollywood hotels: $20.87
Obtain Labor Law Posters
California employers must display all required federal, state, county, and city labor law posters in a location where employees can read them.
Access all required posters on the California Department of Industrial Relations website.
Get annual poster updates and all federal, state, county, and city labor law updates through Patriot’s labor law poster store, powered by PosterElite.
Record-Keeping Requirements
California employers are required to keep employee payroll records for at least three years. For more information, read our help article: “What Employers Should Know About Employee Payroll Records”
Once you have all the necessary information in place, you will be able to set up payroll for your business in Patriot. Let us know if you have any questions — we are here to help!
This is not an all-inclusive list of requirements for new California employers. Please check with the State of California and the federal government for full compliance.