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REMOTE EMPLOYEES

Hiring a remote employee in California

Your company is in another state and one employee lives and works from home in California. Which state's taxes apply, unemployment, paid leave and California's employer rules, each with its official source.

Facts checked on October 5, 2026 against the official sources listed at the end of this page. For employers. General information, not legal or tax advice: confirm a rule with the agency before you rely on it.

California at a glance

Income tax
California withholding
Reciprocity
With Arizona
Unemployment
$7,000 wage base, 3.4% new employer
Paid leave
State Disability Insurance (Disability Insurance and Paid Family Leave)
New hire report
Within 20 days

Which state's taxes apply

Work state
California taxes wages for work done in California. Withhold California income tax on the employee's wages.Source: EDD, Payroll Taxes Resources (opens in a new tab), checked October 5, 2026
Withholding form
Form DE 4Source: EDD, California Employer's Guide 2026 (DE 44) (PDF) (opens in a new tab), checked October 5, 2026
Reciprocity
If your office is in Arizona: California residents working there are withheld for California, with Form WEC.Source: Arizona Department of Revenue, 2026 Form WEC Employee Withholding Exemption Certificate instructions (PDF) (opens in a new tab), checked October 5, 2026
Convenience rules
If your company is in Delaware, New York or Pennsylvania, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in California for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026; PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
Office days in your company's state
That state's day limit, if it has one, decides whether it withholds on those days: see its page, or the helper below.
An employee from another state working in California
California sets no day count before a nonresident's wages for work there are withheld.Source: California EDD, DE 44 California Employer's Guide (Rev. 52 (4-26), PDF) (opens in a new tab), checked October 6, 2026

Where to withhold: two states

Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.

Your company is in
Employee lives and works from home in
Days a year at your office
Assigned to an employer office in New YorkMatters only in the states with a convenience rule (Connecticut, Delaware, New Jersey, New York and Pennsylvania), and only with office days there.

Income tax withholding

  • California: all wages.

No New York withholding: the employee does no work in New York.

Unemployment

California: the employee works from home there, so the work is localized in California.

Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.

Unemployment

The employee works from home in California, so the work is localized in California: pay California unemployment tax, not your company state's.

Agency
Employment Development Department (EDD)Source: EDD, Payroll Taxes Resources (opens in a new tab), checked October 5, 2026
Wage base
$7,000 Fixed by lawSource: EDD, 2026 California Tax Rates and Wage Limits (opens in a new tab), checked October 5, 2026
New employer rate
3.4% 3.4% for two to three years, plus the separate 0.1% Employment Training Tax (3.5% in all on the first $7,000) Surcharges not includedSource: EDD, California Employer's Guide 2026 (DE 44 Rev. 52 (4-26)) (PDF) (opens in a new tab), checked October 5, 2026

Open the account: California payroll tax registration

Register before the first payroll: the steps are on California payroll tax registration.

California employer rules

Employment law applies where the employee works, so these follow the employee into California.

Final pay
Fired: Immediately, at the time of discharge Quit: Within 72 hours; at the time of quitting if the employee gave at least 72 hours' noticeSource: California Labor Code §§201 and 202 (opens in a new tab), checked October 6, 2026
Pay frequency
Twice a month on regular paydays set in advance; weekly, biweekly or semimonthly payrolls comply if paid within 7 calendar days after the period ends. FLSA-exempt executive, administrative and professional salaries may be paid monthly.Source: California Labor Code §204 (opens in a new tab), checked October 6, 2026
Pay notice
Written notice at hire (Labor Code §2810.5): pay rate, payday and related details; changes in writing within 7 calendar days unless shown on the wage statement. Not required for overtime-exempt, public or qualifying union employees.Source: California Labor Code §2810.5 (as amended by AB 636, effective Jan. 1, 2024) (opens in a new tab), checked October 5, 2026
New hire reporting
Within 20 days of the start date.Source: EDD, New Hire Reporting (opens in a new tab), checked October 5, 2026
E-Verify
No state mandate. Employers may not use E-Verify on current employees or on applicants before an offer, except as federal law or federal funding requires; penalty up to $10,000 per violation.Source: California Labor Code §2814 (opens in a new tab), checked October 5, 2026
Sick leave
Paid sick leave required, from the first employee.Source: California Labor Code §§245.5, 246 (as amended by SB 616, effective Jan. 1, 2024) (opens in a new tab), checked October 5, 2026

When the employee moves

Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.

Registering your business in California, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.

More on California

WORKLIO HCM

Payroll for employees who work from home in another state

Worklio HCM withholds by home and work state, reciprocity included, and handles city and county taxes. We help open state withholding and unemployment accounts when you hire somewhere new, and our registration service can register your employer tax accounts for you. Taxes are calculated, deposited and filed in every state and locality, and when an agency notice arrives, you upload it and our tax team resolves it. State paid leave contributions are withheld, too.

Remote employees in other states

Sources

The agency page or document behind each fact, as checked.

General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.

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