Who pays for unemployment benefits in California EDD?

Wait so my boss's company actually pays MORE taxes because I filed? Is that why some employers fight unemployment claims?

Exactly right. When an employer's former employees collect UI benefits, it raises their 'experience rate' which increases their UI tax payments to California EDD. That's a major reason some employers contest claims - it directly affects their bottom line.

this explains SO much. my last employer sent me this whole packet contesting my claim and i was so confused why they even cared

ohhhh I think I've seen SDI on my check before! So that's different from the unemployment fund completely?

Yes completely separate. SDI covers you if you can't work due to illness, injury, or pregnancy. UI covers you when you lose your job through no fault of your own. Different pools of money, different tax, though California EDD handles both.

I learned this the hard way when I went out on disability and thought it was the same as unemployment lol totally different process

so if i get fired for cause instead of laid off does that change who pays? like does california edd still charge the employer?

The employer still gets charged even if they fire you for cause in most situations. However if the discharge was for serious misconduct, California EDD may disqualify you from receiving benefits - which would protect the employer's experience rating from being charged.

This is really informative thank you. I had no idea there was such a complex system behind the scenes

I actually do have some questions about my specific claim that I can't find answers to online. Does Claimyr work for like general claim questions or just for specific issues?

It just connects you to a real California EDD agent so you can ask whatever you need. The agent can pull up your actual claim file and give you real answers about your specific situation.

ive been trying to reach edd for 2 weeks, gonna check this out

does it actually work?? i feel like ive heard of these things before and they never do anything

yeah that actually makes a lot of sense when you frame it that way

right like its kind of the cost of doing business, if youre gonna hire and fire people you contribute to the safety net for those people

Good point. People also sometimes ask why their California EDD benefit amount seems arbitrary - it's calculated as roughly 60-70% of your average weekly earnings up to a maximum cap, which is set each year by California EDD.

Wait there's a maximum? So if you were making a lot of money you don't get the full percentage?

Correct. For 2025 the maximum weekly benefit amount through California EDD is $450. So high earners get a much smaller percentage of their prior wages than lower earners do.

Traditional UI requires employer contributions, yes. California does have an elective coverage program where self-employed people can opt in and pay their own UI contributions to become eligible. However it's rarely used. What your friend may have received was a different program - worth them checking exactly what benefit type they were approved for through California EDD.

interesting ill tell them to double check. they might be confused about which program it actually was

yeah gig workers had a really confusing time with all the different benefit programs, make sure they know exactly what they signed up for with california edd

Very common misconception. And yes, the experience rating system creates real financial incentives for employers to contest claims. If you had a valid claim, I hope California EDD ruled in your favor.

They did eventually after adjudication. Took about 5 weeks but I got approved and received backpay for all the weeks.

5 weeks in adjudication ugh that's rough but glad it worked out

Yes. California EDD notifies the employer when a former employee files a claim. The employer then has an opportunity to respond and either confirm the separation details or contest the claim. This is part of the process that determines your eligibility.

omg i had no idea. my separation was kind of complicated and now im worried they're going to fight it

If your separation was a layoff or lack of work, you're likely fine. If there's any ambiguity about why you left, California EDD will investigate and make a determination. You'll have an opportunity to present your side as well.

same situation here, my company contested my claim and it went to adjudication but i still got approved. just make sure you have documentation of what happened

I feel you so hard. I was in the exact same situation. The only thing that actually worked for me was using Claimyr - claimyr.com - to get an actual human on the phone at California EDD. The hold times and disconnections through the regular number are brutal but this service actually got me connected. Check out https://youtu.be/JmuwXR7HA10 for a demo. Changed everything for me.

I will literally try anything at this point. 6 weeks of getting nowhere is destroying me financially

hang in there. the system is genuinely terrible but most claims do eventually get resolved. make sure you keep filing your weekly certifications even while waiting so you don't lose those weeks

California's UI trust fund has actually gone insolvent before during periods of high unemployment. When that happens the state borrows from the federal government through what's called Title XII advances. The fund gets replenished as employment recovers and employer tax rates get adjusted upward to repay the federal loans.

That's actually really interesting. So in a bad recession my benefits could theoretically be at risk?

In practice no - even during insolvency the state continues paying benefits using federal loans. Claimants don't typically see disruption to payments. The repayment burden falls on employers through higher tax rates over time.

These are actually two separate questions. Eligibility (whether you QUALIFY for benefits) is different from funding (who PAYS for the benefits). If you quit, California EDD will generally find you ineligible unless you had good cause to quit - like unsafe conditions, harassment, or other valid reasons. But even if you quit and get approved with good cause, it's still the employer-funded system that pays your benefits.

ohh ok so quitting affects eligibility not the funding mechanism itself. that makes sense

so even if you quit and somehow qualify, the money still comes from employer taxes? interesting

Thank you for confirming. I'm going to try this today.

ok i'm convinced gonna try it

Good luck. Just make sure you have your claim information handy so when you do get connected you can make the most of the call.

this actually really helps me feel better about collecting. I've had some family members make comments like I'm taking advantage of the system

Nope. Your employer paid UI taxes specifically so that if they ever let you go, you'd have a safety net. Collect what you're entitled to and focus on your job search.

100% agree with this. I struggled with this too but once I understood the funding mechanism I felt totally differently about it

Yes, unemployment benefits from California EDD are considered taxable income at the federal level. You can choose to have 10% federal tax withheld from your weekly payments, or you can pay it when you file your taxes. California is actually one of the few states that does NOT tax unemployment benefits at the state level, so you only worry about federal income tax.

oh interesting so state tax free but federal taxable. good to know before i do my taxes

I did not know California doesn't tax it at the state level. That's actually pretty good compared to other states.

Correct. The experience rating system is meant to incentivize stable employment practices. In my HR experience it definitely affects planning - nobody wants their UI tax rate to jump because of a big layoff.

yeah it makes sense as a policy even if the practical effect is limited. at least employers have some skin in the game

Same! This community is so helpful. Way more useful than the actual California EDD website which is impossible to navigate.

the website is honestly terrible for plain English explanations. forums like this are where you actually learn how the system works

someone should compile all this into a guide lol

agreed the edd materials assume you already know a lot of background context that most people don't have

Exactly. And then when something goes wrong with your claim, like adjudication or a denial, you have no context for what's happening or what your rights are. I wish they did a better job of education upfront.

first time filer here and this thread has been more helpful than anything on the actual edd website