Is unemployment based on gross net income? California EDD explained

That's such a relief honestly, gross is higher so that works in my favor. I'll check that calculator right now, thank you.

Good to know. I always assumed it was net because that's what you actually live on, but gross makes more sense from an administrative standpoint I guess.

Gross also means your wages match what your employer reported to EDD on their quarterly payroll filings, so the numbers line up without you having to explain deductions. Makes the whole thing cleaner.

Really glad you mentioned the DE 429Z because I didn't even know that was the form to look for. How long after you applied did yours actually arrive?

Mine showed up about 11 days after I filed. The agent said roughly two weeks but mine was a little faster. Definitely read every line on it and appeal within 30 days if anything looks wrong.

The hold times right now are genuinely terrible, 45 minutes and then it just drops. Might have to look into that myself.

Makes total sense when you frame it that way. Everyone's deductions are different so using net would be chaos.

Yeah that actually makes a lot of sense from EDD's perspective. I hadn't thought about it from their side.

Worth adding that your 401k contribution specifically won't hurt you here since EDD still counts that money as your wages even though you deferred it. Same with health insurance premiums your employer deducted.

Honestly the application asks for wages by quarter which trips people up. You have to add up your gross for each quarter, not just your last paycheck.

Yeah the quarterly breakdown is a thing. I pulled all my paystubs and added them up by quarter, took maybe 20 minutes but then I knew my numbers were right.

Oh wow I didn't realize it was quarterly, I was just going to put in one number. Let me go back and do this right.

Nope, all California the last two years, so I think I'm fine. But good to know.

Combined wage claims actually have to be filed by phone, fax or mail, not online, so definitely worth flagging early if someone has out-of-state wages.

Exactly, and the base period quarters still use gross wages even in a combined claim, same principle applies.

Overtime is just part of your regular wages, it goes into gross without any special treatment. Bonuses are also included since they're wages your employer paid you in that quarter.

okay cool so basically everything on the gross line of my W2 basically. that simplifies things

That's the right way to think about it, yes. What your employer paid you, all in, that's what flows into the base period calculation.

The highest quarter is the right answer. EDD takes whichever calendar quarter in your base period had the most gross wages and uses that figure to calculate your weekly benefit amount. It's not an average across the whole base period.

ugh okay yeah I definitely told my coworker the wrong thing. Thanks for the correction, sending her this thread now.

Happens to everyone. The average-of-all-quarters thing is a really common misconception. The highest quarter approach actually tends to be more favorable for most claimants.

EDD only switches to the alternate base period, which is the last four complete quarters, when your wages in the standard base period aren't enough to make a valid claim at all. It doesn't get used to bump up your weekly amount if you already qualify on the standard base period. It's really just a fallback for people whose recent earnings aren't captured in the standard lookback.

So if I got a big raise in the last few months those wages might not even show up in my claim. That's frustrating.

Yep, that's how the timing works out sometimes. A recent raise can fall in a quarter that's outside the standard base period window. It's not a mistake or something EDD can fix, it's just how the law sets up the lookback period.

Got hit with this myself. Got promoted six months before my layoff and my weekly amount was way lower than I expected because those new wages weren't in my base period. Nothing to appeal, just bad timing.

$450 is the cap?? I was making decent money so this is going to be a shock. Okay recalibrating my expectations.

Run the Unemployment Benefit Calculator on EDD's site with your actual quarterly numbers, it'll give you a realistic figure. Mine was lower than I hoped but at least I knew what to plan around before the first payment.

The cap thing genuinely catches people off guard. Someone I know was expecting like $700 a week and was planning her whole budget around that number.

Gross is the same answer for you regardless of how the job ended. How the job ended affects your eligibility, not the wage calculation. If EDD has questions about the firing they'll schedule a phone interview to hear both sides.

yeah i already got a notice scheduling that interview, the DE 4800. kinda nervous about it but at least i understand the wages part now

The DE 4800 notice has the date and time and also tells you which questions EDD will likely ask. Read it carefully and have your facts ready for whenever the interviewer phones at that scheduled time.

How did you finally get it resolved? Mine has been pending for three weeks and I can't get any information out of UI Online.

Eventually got through on the phone after a lot of tries. Had to hear both sides and EDD mailed a Notice of Determination. Keep certifying every two weeks even when everything says pending so those weeks can get paid if they rule in your favor.

Adjudication holds everything up and EDD rarely explains which exact issue is open. Phoning in and having an agent look at the actual account is the only way I've found to get real information rather than staring at that pending status.

The base period uses wages your employer reported to EDD. Tips that show up on your W2 as wages are part of your gross and flow into the calculation. If some of your tips weren't reported by your employer that's trickier, but basically EDD works from what's on record from employer filings.

my employer is pretty good about reporting so hopefully it all matches up. i'll double check my w2 before i enter anything

Cross-checking your W2 gross wages against what you enter is a solid habit. If there's a big discrepancy between what you put in and what EDD has from your employer it can slow things down.

I wish the application just said 'gross wages' instead of just 'wages,' that one word would have saved me a lot of confusion.

Hard agree. The word 'wages' by itself is ambiguous to anyone who doesn't already know the system. Would be a simple fix on EDD's end.

So much of the confusion in that application could be cleared up with two or three words of clarification. The instructions assume everyone already knows how EDD defines things.

I actually do some freelance design work so this is really useful to know. Gross for that too even though no taxes are withheld?

Report the gross amount earned in that week, yes, even for freelance or gig income where there's no withholding. EDD has a Report Wages option in UI Online you can use before certifying to work out how it affects your payment for that week.

The partial week earnings rule is way more generous than I expected honestly. I figured any work at all would just wipe out your benefit for that week.

How did you get the ID.me thing sorted, did EDD walk you through it on that call?

The agent explained that my ID.me verification had gone through but the link to my EDD account hadn't completed. They flagged it on their end and told me to expect processing to continue. Got paid within a few days after that.

Identity verification issues are surprisingly common and UI Online gives absolutely no indication that's what's holding things up. Looks identical to any other pending situation.

I did get something about CalJOBS in my documents, good reminder to actually handle that before the deadline.

The notice is called the DE 8405 and the deadline is printed on it. 21 days goes faster than you think when you're dealing with everything else around a layoff.

CalJOBS is at caljobs.ca.gov and posting a resume there is pretty straightforward. Took me maybe 15 minutes once I had my work history together.

Severance paid under a company plan or policy isn't counted as wages for unemployment purposes, so it won't inflate your base period earnings or cause EDD to deny your claim over it. That said, EDD's list of things to report when certifying does include severance pay, so you report it as the certification question asks and EDD handles it from there. You can file your claim right away even if you're receiving severance.

okay good, i was holding off filing thinking the severance would cause problems but i'll go ahead and file now

Filing right away is the right call. The claim starts on the Sunday of the week you apply, so every week you wait is a week you can't get back.

EDD cross-references with employer-reported payroll records. Your employer has been filing quarterly wage reports with EDD as part of normal payroll taxes, so EDD already has your wage data before you even apply. What you enter in the application should match those records.

ah so they already know. i should probably just make sure my numbers match my w2 then

Matching your W2 is exactly the right approach. Any big discrepancy between what you report and what your employer filed tends to trigger more questions.

Your cousin has the wrong information. EDD takes the single highest-paid quarter out of your base period, not an average of all four. Using the highest quarter is generally more favorable for most people than an average would be.

yeah the highest quarter answer makes more sense for a system that's supposed to help people. good to have the right answer before i file.

The average misunderstanding is everywhere and it's been floating around for years. Highest quarter, gross wages, formula applied, $40 to $450 a week is the actual picture.

The base period looks at the specific calendar quarters, not an average across your whole career. Depending on when those pay cuts happened relative to your claim date, your highest quarter might still be from the period when you were earning full salary. It really comes down to timing, which quarters fall in your base period window and which one had the most gross wages.

My cuts started about six months ago so my higher salary quarters are probably still in there. Fingers crossed the timing works out.

The Unemployment Benefit Calculator on EDD's site lets you try different quarterly figures so you can estimate different scenarios. Worth running your numbers through it before you count on a specific weekly amount.

Glad you caught it in time. Missing that CalJOBS deadline can stop payments and then you're in a whole adjudication situation trying to get things restarted.

Nobody told me about it at any point in the application, I only found out from this thread. EDD could really do a better job of flagging that one upfront.

The DE 8405 is easy to overlook in the stack of mail EDD sends after you apply. Worth reading every piece of mail that comes from them even if it looks like junk.

oh interesting i didn't know pension income could affect unemployment. not in that situation but good to know

Social Security is the one that doesn't get deducted or even reported, which surprises people. But a pension tied to past employment is on EDD's radar.

My situation clears the pension issue since I'm nowhere near retirement age but that's useful context for people who are.

Same base period and gross wage calculation applies to partial claims. When you certify you report your gross earnings for the weeks you worked reduced hours and EDD applies the partial earnings formula. The first $25 or 25 percent of weekly gross, whichever is more, doesn't count against you and the rest gets subtracted from your weekly benefit amount.

okay good, was afraid my situation being partial instead of full layoff changed how they calculated everything. glad to know the gross wage basis is the same.

Partial unemployment is really underused. A lot of people don't realize you can file when hours get cut, they think you have to be fully out of work.

Okay I had no idea unemployment was taxable at all. I definitely need to think about whether to do the withholding. Thanks for flagging that.

A lot of people get a rough surprise in April when they haven't withheld anything. The 10 percent option you can choose right in the certification process, doesn't require any separate form.

California not taxing it is actually nice. Federal is enough of a hit on its own.