by Chamber staff

A new law, effective January 1, 2001, requires businesses and government entities that are required to file a federal form 1099-MISC for services performed by an independent contractor to report specific information to EDD.

This information must be filed with EDD within 20 days of either entering into a contract with an independent contractor for $600 or more, or making payments totaling $600 or more to an independent contractor in any calendar year, which ever is earlier. 

It is not necessary for businesses to report the following types of entities: corporations, general partnerships or limited liability companies. In general, businesses are required to report independent contractors that are sole-proprietors.

This new law (Senate Bill 542, Burton) is in addition to the current new hire reporting requirements for employers. These laws are intended to assist child support enforcement agencies identify parents who are delinquent in their child support payments.

For more information on the independent contractor reporting requirements, or for copies of the new reporting form (Report of Independent Contractors DE542), visit the Employment Development Department's website at www.edd.ca.gov/txicr.htm. For additional questions, emails can be sent to: taxcomm@edd.ca.gov or by calling (916) 657-0529.