How much does an employer pay for unemployment in California EDD?

So if my rate is say 3.4% and I have 12 employees all making well over $7k a year, I'm basically paying 3.4% of $7,000 per employee? That's $238 per employee per year? That seems lower than I expected.

Exactly right on the math. $238 per employee at 3.4% on the $7k wage base. For 12 employees that's about $2,856 annually in SUI alone. New employers in California actually start at a 3.4% rate for the first two to three years before EDD establishes your experience rating based on actual claim history.

Worth adding that SUI isn't the only unemployment-related tax employers pay. There's also the Employment Training Tax (ETT) which is a flat 0.1% on the same $7,000 wage base. Tiny amount but it's separate from SUI and often gets overlooked in these calculations.

Oh that actually makes way more sense. So the rate increase means some of my former employees must have filed claims recently? I let two people go last fall during slower season, I wonder if that triggered it.

Almost certainly yes. Seasonal layoffs tend to generate UI claims and those charges hit your reserve account. Doesn't mean you did anything wrong — it's just how the experience rating system works. Employers with steady long-term employees and low turnover tend to have the lowest rates over time.

same thing happened to my restaurant when I had to reduce staff one winter. rate went up the following year. just the reality of having seasonal fluctuations in your workforce unfortunately

I've never heard of this before. So it actually gets you through to a real person at EDD? The phone situation there is genuinely awful, I've tried like 8 times this week.

Yeah it got me through to an actual agent. Way better than hitting redial a hundred times. Especially useful when you have a deadline because you can't just wait around hoping to get lucky with the phones.

going to try this tomorrow morning. been trying to reach edd employer services for two weeks about a different notice and getting nowhere

Let me look... yes it says 'Unemployment Insurance Tax Rate Notice' at the top. So this is just the SUI piece you're talking about right?

Correct, that's purely your SUI rate. The ETT will also be on that notice but it's essentially always 0.1% so it won't be causing any major change. The SUI rate change is what you need to focus on and potentially respond to if you want to contest it.

I thought SDI was fully employee-paid in California? Am I wrong about that?

You're correct that SDI is withheld from employee wages in California — employers don't contribute to SDI directly for most standard situations. I shouldn't have muddied the waters there, apologies. The OP's notice is definitely just SUI and ETT.

Yes absolutely. If you believe the benefit charges on your account are incorrect — for example if a former employee's claim was improperly charged to your account because they quit voluntarily or were terminated for misconduct — you can protest those charges. The window to do so is typically pretty short though, usually 30 days from the notice date.

I'm so annoyed I didn't know this two years ago. I had an employee who I fired for stealing and somehow EDD still charged my account when he filed. Felt completely wrong but I didn't know I could push back.

For future reference, when a former employee files a UI claim, you should receive a Notice of Unemployment Insurance Claim Filed. Responding to THAT notice promptly with details of the separation (especially misconduct terminations) is the first line of defense before charges ever hit your reserve account.

Good question and the answer is sort of both. EDD pays claimants directly from the state UI fund. Employers contribute to that fund through their quarterly SUI taxes. The 'charging' to your reserve account is essentially an accounting mechanism that determines your future tax rate — it's not like EDD sends you a bill for each former employee's benefits. You've already paid into the pool through taxes, and your claims history affects how much you pay going forward.

Ok that makes a lot more sense. I was imagining employers getting invoices for specific employees which seemed really complicated. So it's more like insurance where everyone pays in and your premium adjusts based on your claims history.

That's actually a really accurate analogy. It functions very much like insurance — shared fund, individual experience rating, premium (rate) adjusts based on your claims history. EDD even uses the word 'reserve' intentionally to emphasize that pool concept.

This is true and it's a legitimate policy criticism. The $7k wage base hasn't been updated in decades in California. The tradeoff is that employers in CA pay relatively low dollar amounts per employee but when major downturns hit (like 2008 or 2020) the fund can get wiped out and California ends up borrowing from the federal government.

Is that a problem for me as an employer specifically? Like does fund solvency affect my tax rate?

It can actually. When California borrows from the federal government for the UI fund, employers may face a FUTA credit reduction, meaning you end up paying more in federal unemployment tax (FUTA) than the standard 0.6% credit allows. This happened during the pandemic era and can add up for businesses with multiple employees. Worth asking your accountant about FUTA credit reduction status when they get back from vacation.

Three hours is actually pretty standard for EDD unfortunately. I've done four-plus hours and got nothing.

This is exactly the kind of situation Claimyr was built for honestly. I mentioned it earlier in the thread but it's at claimyr.com — basically it handles the hold queue for you and rings you when an agent is actually on the line. Would have saved you those three hours of just sitting there.

wait you just leave it running and it calls you when someone picks up? that's actually genius. I have a business to run I can't just sit on hold all morning

This is incredibly helpful, thank you. So even if my rate went up it's not going to be a catastrophic amount per employee, it's more about the long-term rate trajectory?

Exactly. And the good news is rates can come back down. If you have a stable couple of years with minimal claims, EDD's annual rate calculation will reflect that improvement. The experience rating looks at a rolling window of your claims history, not just one bad year.

How many years back does EDD look for the experience rating calculation?

The reserve ratio calculation generally looks at the past three fiscal years of contribution and benefit charge history. So one rough year doesn't permanently define your rate — it smooths out over the three-year window.

I had no idea there was a federal component too. So my accountant should be calculating both SUI and FUTA every quarter?

SUI is paid to California EDD quarterly with your DE 9 and DE 9C forms. FUTA is reported annually on IRS Form 940 though you may need to make quarterly deposits if your FUTA liability exceeds $500. Your accountant definitely should be handling both but good that you're aware they're separate obligations.

One correction — FUTA deposits are made to the IRS not to EDD. EDD handles all the state-level stuff (SUI, ETT, SDI withholding, PIT withholding). The federal unemployment tax runs through federal tax channels completely separately.

Generally, voluntary quits do NOT result in a valid UI claim for the employee, which means no charge to your account. However the employee still has the right to FILE a claim, and EDD will investigate the circumstances. If EDD determines the quit was 'for good cause' attributable to the employer (like unsafe working conditions, significant pay cuts, hostile environment), the employee can still qualify and your account gets charged. This is why it's really important to respond to every Notice of Unemployment Insurance Claim Filed even for employees who quit.

That's a little scary honestly. So even if someone just walks out with no notice I could potentially get charged?

It's uncommon for a true voluntary quit with no employer fault to result in charges, but it does happen when employees argue the circumstances. Documenting the separation well and responding to EDD notices quickly is your best protection.

I had an employee quit and then claim constructive dismissal. EDD initially approved their claim and charged my account. I had to appeal and provide all this documentation proving the working conditions were normal. Won the appeal eventually but it took months.

Eight months is brutal, I'm sorry. Have you been able to reach anyone live at EDD employer services at all during this time? If not, Claimyr might be worth trying — claimyr.com — it's specifically good for cutting through the phone barrier when you're stuck in limbo. There's a demo video at https://youtu.be/JmuwXR7HA10 that shows how it works. Getting an actual agent on the line when you have a pending appeal can sometimes get things moving faster than just waiting for mail.

I have tried calling literally dozens of times. Always either disconnected or on hold forever. I'll check out that Claimyr thing because at this point I'm desperate. Can't believe a $2,000 dispute has eaten this much of my time.

For your appeal, make sure you have the hearing date clearly on your calendar and gather every piece of documentation you can — any text messages, emails, or witness statements about the employee's reasons for leaving. EDD appeals at the CUIAB level are more formal than most people expect and going in prepared makes a significant difference.

Actually the standard practice is that the 3.4% new employer rate applies until EDD has enough data to calculate a meaningful experience rate, which typically requires at least two to three full fiscal years of payroll and claims history. One year isn't sufficient data for a stable rate calculation so most new employers are at 3.4% for 2-3 years.

ok fair enough i stand corrected. I thought mine changed after year 1 but maybe i'm misremembering

It can feel like year 1 because you start receiving rate notices annually from the beginning, but the actual rate on those early notices is still the new employer default. The experience-rated calculation kicks in once EDD has the required base period history.

Great outcome! And yeah getting a live agent to explain the reserve ratio threshold is way more useful than trying to decode those notices on your own. Good luck with the response deadline.

Glad you got it sorted. The rate increase might also just smooth itself out in a year or two if you don't have more claims. Seasonal businesses deal with this constantly.

Thanks for the update and for the Claimyr tip. Just tried it myself for my own EDD notice situation and it worked. Finally talked to someone after two weeks of getting nowhere.

Wait so even if I have zero claims next year my rate could still increase because of the overall fund health?

Yes unfortunately. The schedule EDD applies to all employers shifts based on the UI fund balance. If the fund is depleted (like after a recession), EDD moves to a higher schedule and everyone's base rates rise. Your position within the schedule depends on your reserve ratio, but the schedule itself is a macro-level variable you can't influence.

This is accurate and honestly one of the least-understood aspects of California employer UI taxes. The biennial rate notices include the schedule letter (Schedule A through F roughly) and your rate within that schedule. Bad economic years can move you from Schedule A to Schedule C even with a clean claims record.

This thread has genuinely taught me more about UI taxes than my accountant ever has. Bookmarking this.