California employers and employees have had to adapt to several changes in unemployment law. The changes below affect how you communicate eligibility, distribute required materials, and calculate unemployment taxes. Keeping current with these requirements helps you stay compliant.
Employers Can Now Inform Employees About Eligibility Via Email
With digital communication now at the forefront, California has modernized its unemployment laws accordingly. Thanks to changes made to Assembly Bill 1355, companies can notify their workers about their unemployment benefit eligibility via email for the next five years.
Here are some key EDD policies that support or relate to electronic communication:
SIDES (State Information Data Exchange System)
EDD allows employers to electronically receive and respond to the Notice of Unemployment Insurance Claim Filed (DE 1101CZ) through SIDES E-Response, so employer communications with EDD on eligibility issues are conducted digitally. Employers who use SIDES receive email notifications when they have a request to respond to, which suggests EDD is comfortable with digital communication in handling claim notices.
How to Participate in SIDES
- SIDES E-Response: This is for employers and third-party administrators (TPAs) with a lower number of unemployment claims. No special programming or software is needed. See Subscribe to SIDES E-Response for more details.
- SIDES Web Service: This is for employers and TPAs with a higher volume of unemployment claims, or who work in multiple states. This option requires the employer or TPA to work with EDD and the National Association of State Workforce Agencies to set up computer connections for SIDES. See How to Participate in SIDES Web Service for more information.
Responding to UI Claim Notices
EDD describes how employers respond to claim notices such as the DE 1101CZ and DE 1080CZ. It notes that employer responses help EDD determine eligibility, correct errors, or protest wage information.
UI Online, Claim Status and Eligibility
For claimants, EDD sometimes sends emails instructing them to complete an Eligibility Questionnaire online, which shows that EDD uses email as part of the eligibility verification process. This is not employer-to-employee communication, but it does indicate EDD’s acceptance of email-based workflows in eligibility steps.
Required Notices and Pamphlets Rule
EDD’s “Required Notices and Pamphlets” page requires employers to notify employees in writing if they are laid off, change status, or take leave. The rule calls for written notice but does not strictly define “writing”, so it may arguably extend to email where the employer keeps a record of it.
Workers must first consent to receive their information electronically, and employers are required to explain how employees can withdraw that consent at any time. If you intend to offer email notifications, provide employees with both the opt-in process and clear instructions for rescinding their agreement.
Businesses Must Distribute Updated Pamphlets
California recently updated two pamphlets that employers must provide to employees: a Time of Hire Pamphlet covering workers’ compensation, given at the time of hire, and a For Your Benefit pamphlet covering unemployment insurance, given at the time of an employee’s involuntary termination or leave.
The Workers’ Compensation Time of Hire Pamphlet
The Time of Hire Pamphlet (PDF), produced by the California Department of Industrial Relations (DIR), was revised on February 1, 2024. It must be given to all newly hired employees in California. It explains what workers’ compensation is, what benefits are provided, what an employee should do if they are injured, and how medical care works within the state’s workers’ compensation system.
The For Your Benefit Pamphlet
The California Employment Development Department (EDD) publishes the DE 2320, For Your Benefit: California’s Program for the Unemployed (PDF), to explain employees’ rights to unemployment insurance, disability insurance, and paid family leave. It was revised in January 2024 and must be furnished to California employees when they are discharged, laid off, or placed on a leave of absence.
The pamphlet must be provided no later than the effective date of the termination. It explains when to apply for benefits, what employees need in order to apply, how to apply, waiting periods, and paid family leave, among other topics.
Other State Pamphlets
While this is not an exhaustive list, employers should be aware of other pamphlets to provide at the time of hire, including:
- State disability insurance provisions. Employers must provide EDD’s Disability Insurance Provisions pamphlet, DE 2515 (PDF).
- California paid family leave. Employers must provide EDD’s Paid Family Leave insurance pamphlet, DE 2511 (PDF).
- Sexual harassment. California employers must provide employees with information about sexual harassment, either through the Civil Rights Department’s sexual harassment fact sheet (PDF) or in another writing.
- Rights of victims of domestic violence, sexual assault, and stalking. Employers must give new hires written notice of the right to protected time off (PDF) for medical treatment or legal proceedings.
EDD’s Required Notices Checklist
California’s “Required Notices and Pamphlets” list, maintained by EDD, includes:
- UI, DI, and PFL: Notice to Employees (DE 1857A) (PDF)
- UI only: Notice to Employees (DE 1857D) (PDF)
- DI and PFL only: Notice to Employees (DE 1858) (PDF)
- For Your Benefit pamphlet (DE 2320)
Employers should also give workers the For Your Benefit pamphlet if they take an extended leave of absence. At the latest, this information must be provided on the date of dismissal, so that workers have the guidance they need to take their next steps.
Unemployment Insurance Tax Rates Have Increased
A third change affects unemployment insurance tax. Because of the debt California accumulated while paying unemployment benefits during the COVID-19 pandemic, employers pay a reduced federal unemployment tax credit, which raises their FUTA cost. For the 2025 tax year the credit is reduced by 1.2 percent, costing California employers an additional per employee. The reduction increases by a further 0.3 percent for each year the federal loan remains outstanding, so this figure rises annually until the debt is repaid.
Alongside the procedural changes, the rates and structures that determine employer payroll liabilities have also been updated.
Contribution Rates for 2025
EDD’s Contribution Rates and Withholding page lists the following:
- UI tax rate: new employers start at 3.4% for two to three years. After that, rates range from 1.5% to 6.2% depending on experience, with an added 15% emergency surcharge under Schedule F+.
- ETT rate: 0.1% on the first $7,000 of wages.
- SDI rate: a withholding rate of 1.2%. Since January 1, 2024, all wages are subject to SDI, with no wage cap.
- The taxable wage base for UI and ETT remains $7,000 per employee per year.
For a full breakdown of how these rates are calculated and applied, review EDD’s California Employer’s Guide (DE 44).
What the Rate Changes Mean for Employers
- Employers with higher turnover or more UI claims may face higher rates because of their experience rating. Worker classification is a common source of disputes over these charges.
- The emergency surcharge raises baseline rates, which makes budgeting for UI costs more important.
- Employers buying a business with employees may be able to retain the previous owner’s UI tax rate under certain conditions.
Rate assignments can also be disputed. According to EDD’s Tax-Rated Employers page, you have a 60-day window after receiving your rate notice (DE 2088) to protest any discrepancies. If you believe your rate assignment is incorrect, for example because experience charges were misapplied, it is worth reviewing it within that window. Should a review turn into a wider examination of your payroll records, our guide to managing an EDD payroll tax audit sets out what to expect.
Because new employer rates begin at 3.4% and experienced employer rates span 1.5% to 6.2%, it is worth checking the latest EDD rate schedule each December.
Staying Compliant as the Rules Change
Keeping up with these changes helps California employers demonstrate compliance with state law, while employees keep direct access to the benefits the unemployment insurance system provides.
If you are unsure how any of these requirements apply to your own notice practices or payroll, speaking with an attorney can help you understand your obligations and your options. Our California unemployment benefits team works with both employers and claimants on issues arising under the unemployment insurance system.
