California PEO Law FAQs
Does California require PEOs to register with the state?
There is no general PEO licensing program in California. However, a PEO paying wages in California must register with the Employment Development Department (EDD), obtain an employer account number within 15 days of becoming liable, and handle UI, ETT, SDI and PIT withholding across its account structure.
What is California's unemployment insurance (SUI) taxable wage base?
California's SUI taxable wage base is $7,000 per employee per calendar year. New employers are assigned a 3.4% UI rate for two to three years, and the Employment Training Tax (ETT) adds 0.1% on the same $7,000 limit.
Is workers' compensation mandatory in California?
Yes. Workers' compensation insurance is mandatory for all California employers. California is a competitive market: SCIF competes with private carriers. Carriers must hold a certificate of authority, and the client employer must be listed as an additional insured, or the employer risks penalties under Labor Code section 3700.
What is the minimum wage in California?
California's minimum wage is $16.50 per hour for 2026, increasing to $16.90 for the 2027 rate year. Some cities and counties have higher local minimum wages.
Does California require paid family leave?
Yes. California's Paid Family Leave (PFL) program is funded through the State Disability Insurance (SDI) system. The 2026 SDI withholding rate is 1.3% on all wages with no cap, and the same SDI remittance funds both disability and paid family leave insurance.
Does California require paid sick leave?
Yes. California requires paid sick leave for employees under the Healthy Workplaces, Healthy Families Act. Employers must provide a minimum amount of paid sick leave or paid time off each year.