Do you have to pay unemployment if you fire someone? California EDD employer side explained

Not exactly how it works — EDD decides whether the firing counted as misconduct, not you. If they rule it was just poor performance without deliberate wrongdoing, the former employee can still collect, and your reserve account still gets charged.

So even if I documented everything the person did wrong, EDD might still pay them out?

Documentation helps your case when you respond to that notice, but yeah, EDD makes the final call. Performance issues don't automatically equal misconduct in EDD's view — it has to be something more intentional on the employee's part.

Oh wow, so it doesn't hit me right now but it could affect my tax rate down the line?

Basically. The benefits paid out get charged to your reserve account, and when EDD recalculates your rate, that history matters. Smaller employers sometimes feel it more because the base is smaller.

This is a really important distinction. The charge goes to the account, not a direct bill to the employer for each claim. The notice you got is EDD asking your side of the story before they decide.

How hard was it to actually get a live person at EDD? Every time I've tried calling I either get a busy signal or sit on hold forever and then the line drops.

Yeah the regular line is brutal. That's why I went the Claimyr route — ended up talking to an actual agent that same day instead of spending hours redialing.

What's the form called that you send your response back on? Is it something that comes with the notice or do you have to find it separately?

It comes right with the notice EDD mails you. The notice is the DE 1101CZ and the response section is attached — you just fill it out and mail it back to the address on the notice within 10 days of the date printed on it.

Calendar days from the date on the notice, not business days. So don't sit on it. If you're mailing it, send it right away because postal time eats into those 10 days.

That's genuinely stressful for small business owners who don't check their mail every day.

I literally just got the notice yesterday which is why I'm scrambling. Good to know I need to move fast.

I mean, that's kind of the point of unemployment insurance — it's there for the worker. But I get the frustration, especially when the firing felt completely justified.

I understand what it's FOR. What bothers me is that employers get zero real notice that this is how the rate system works until it already happened to them.

For what it's worth, EDD does mail a Notice of Wages Used (DE 1545) that shows how much of the former employee's claim is being charged to your account. You can dispute it in writing within 15 days of the date on that notice if you think something's off.

Wait seriously? I thought the CASDI was partly for unemployment. I've been thinking about this wrong for years.

Yep, completely separate programs. UI tax is on the employer's quarterly payroll taxes, nowhere on the employee's check.

This is exactly what confused me in my original post. I assumed it came out of the employee's wages somehow. Glad I asked.

EDD's own language is pretty broad — basically the employee has to have done something intentionally wrong or violated a known workplace rule in a way that shows they just didn't care about keeping the job. Poor performance alone usually doesn't cut it because EDD sees that differently than deliberate rule-breaking.

So someone who was just bad at their job doesn't count as misconduct?

In most cases, no. The employer has to show it was more than just struggling with the work — it needs to look like the employee chose to do something wrong. That's why documentation of warnings and what you told the employee matters so much.

My HR person told me to always document that the employee was warned and given a chance to fix the behavior. EDD wants to see that it wasn't just a surprise termination.

EDD goes ahead and decides based only on what the former employee told them. And if EDD rules in the employee's favor, you lose the ability to appeal it at that point — the window closes.

So you're just handing them the win basically.

Exactly. Even if you have solid documentation, silence means EDD only hears one side. Responding is always the move even if you're not 100% sure what to say.

Nonprofits under 501(c)(3) have the option to go with what's called the reimbursable method instead of paying the regular UI tax. Under that setup they pay EDD back dollar-for-dollar for whatever benefits their former employees collect, instead of building up a reserve account. But if they chose that option they're locked into it for at least five full calendar years.

So the charge still exists for nonprofits, it's just structured differently?

Right, it's not like nonprofits get a free pass. Their former workers file and collect the same way as anyone else's.

That's really encouraging to hear. Did they tell you in advance what the interview would cover?

The notice EDD mails you (the DE 4800) lays out the questions they're likely to ask. You can prepare for it. The interviewer phoned at the exact time listed on the notice, pretty much right on schedule.

So you have to do a phone interview too as the employer?

Yeah, when there's a question about why someone stopped working, EDD interviews both sides. They want to hear the employer's story directly, not just from the paperwork.

Absolutely. If EDD issues a Notice of Determination you disagree with, you have 30 calendar days from the mailing date on that notice to appeal in writing. It goes to the California Unemployment Insurance Appeals Board and an administrative law judge holds the hearing. You can represent yourself or have someone with you.

Is it worth appealing if you're a small business owner without a lawyer?

People do it without lawyers all the time. The hearing is fairly structured — testimony under oath, you present your documents and your side of the story. Whether it's worth it depends on how much is being charged and how solid your documentation is.

How specific did the questions get? Like did they ask about individual incidents?

Very specific. They asked about the last incident before termination, what the employee was told at each warning, and whether they signed the write-ups. Have those documents in front of you during the interview.

This is the thing — EDD is pretty thorough on the employer interview side. They're not just rubber-stamping the employee's story.

EDD's decision is about why someone stopped working and whether it counts as misconduct — the employment type doesn't change that framework. The at-will nature of employment means you could fire without cause legally, but EDD can still decide the person qualifies for benefits if the reason doesn't meet the misconduct bar.

So at-will doesn't protect the employer from unemployment charges?

Not in terms of UI eligibility, no. At-will is a legal concept for the employment relationship, not an EDD eligibility test.

It doesn't come immediately. It usually shows up after EDD has processed some of the benefit payments and assigned them to your account. The 15-day window to dispute it starts from the date printed on that notice, so read it as soon as it arrives.

And that's separate from the original DE 1101CZ notice?

Completely separate. The DE 1101CZ is EDD telling you someone filed a claim and asking your side. The DE 1545 comes later and shows what's actually being charged to your account.

The 10-day response window is the thing that gets people. Most small business owners don't even realize the clock is running.

Exactly that. I didn't respond in time on my first claim years ago and by the time I figured out what had happened the window to appeal had passed too.

So you can dispute what shows on the DE 1545 even after the benefits have already been paid to the former employee?

Yes, the dispute on the DE 1545 is specifically about whether the charge was assigned to your account correctly, not about whether the former employee should have gotten benefits. Those are two separate issues.

Does that dispute go through the same appeal process as the eligibility decision?

Different process — you respond in writing directly to EDD about the DE 1545 within that 15-day window. The formal appeal through CUIAB is for the eligibility determination on the DE 1080CZ.

Your account only gets charged for the weeks they actually collected, so a short claim costs less than a long one. If they found work fast, the total charge to your reserve account would be proportionally smaller.

That's at least something. I've been dreading a former employee's claim but she told someone she already had interviews lined up.

You'll see the actual weeks on the DE 1545 when it arrives. That's the clearest picture of what hit your account.

How much did your rate actually change? I keep hearing it goes up but no one says by how much.

Honestly I'd rather not say the specific numbers because every business's reserve account history is different and the starting rate varies. What I will say is the difference was noticeable enough that I hired an HR consultant after that to tighten up our process.

The documentation thing is real. Even if the behavior was bad, without the paper trail EDD has less reason to call it misconduct.

This is exactly the breakdown I needed. I'm going to respond to the notice today and include the written warnings I have. Thanks to everyone in this thread — came in confused and leaving with an actual plan.

Good luck with the response. Getting it in quickly is the most important thing right now.

Make sure to keep a copy of everything you send. If it escalates to an appeal hearing, your documentation trail starts with what you submitted in that first response.

Also keep the envelope the DE 1101CZ came in if you still have it — the postmark date can matter if there's ever a question about when you received the notice versus the date printed on it.

Interesting to see this from the former employee's angle. I hadn't thought about what they're seeing on their end while I'm dealing with the notice on mine.

Yeah the pending status shows up right away but it doesn't tell you much about why. The agent was able to tell me exactly which step my claim was stuck at.

The phone interview is where EDD gets both stories. After yours the interviewer phones the employer too. That's how the process is supposed to work.