Hiring Your First Employee in California (2026)
The California-specific steps for a first W-2 hire, layered on top of the federal checklist. Every figure links to the state agency or official source we checked.
Minimum wage
$16.90/hour statewide in 2026. Many cities and counties set a higher local minimum, so check yours.
State unemployment tax (SUTA)
New employers are assigned a 3.4% UI rate for two to three years, on the first $7,000 of each employee's wages. EDD also lists a 0.1% Employment Training Tax (ETT) on the same $7,000. Your rate notice shows whether it applies to you.
Income tax withholding registration
California's EDD runs both unemployment insurance and state income tax withholding, so a single employer registration covers both. Employees can file the state Form DE 4 for withholding allowances.
New-hire reporting
Report within 20 days of the hire date to the EDD (form DE 34 or e-Services for Business).
Workers' compensation
Required for every employer with one or more employees, including part-time workers.
Paid sick leave, family leave & disability
Paid sick leave: employees accrue at least 1 hour per 30 hours worked, and you must allow use of at least 40 hours or 5 days a year, whichever is more. Employees can start using it after 90 days. State Disability Insurance (SDI), which also funds Paid Family Leave, is withheld from employees at 1.3% in 2026 with no wage cap. It's an employee deduction, not an employer cost.
Required posters
The Department of Industrial Relations lists the required workplace postings, and EDD lists its required notices and pamphlets, including the ones you must hand to new employees. Federal posters apply too; the DOL FirstStep Poster Advisor shows which ones. Official posters are free.
Worked example: one full-time employee at $18/hour
This uses the same assumptions as our employee cost calculator: $18/hour, 40 hours a week, 52 weeks, 2026 federal rates, and California's new-employer SUTA rate. Workers' comp is a placeholder; your insurer's rate for the job class will differ.
| Wages: $18 × 40 h × 52 weeks | $37,440.00 |
| Social Security (6.2%) | $2,321.28 |
| Medicare (1.45%) | $542.88 |
| FUTA (0.6% of first $7,000) | $42.00 |
| CA unemployment: 3.4% of first $7,000 | $238.00 |
| Employment Training Tax (ETT), 0.1% of the first $7,000 | $7.00 |
| Workers' comp, illustrative $1.00 per $100 of payroll | $374.40 |
| Total before benefits | $40,965.56 |
That's 1.09× wages, or about $19.69 per hour paid, before benefits, paid leave, and payroll software. $18/hour is above California's 2026 minimum wage.
FAQ
What is the California SUTA rate for new employers in 2026?
New employers are assigned a 3.4% UI rate for two to three years, on the first $7,000 of each employee's wages. EDD also lists a 0.1% Employment Training Tax (ETT) on the same $7,000. Your rate notice shows whether it applies to you.
Is workers' comp required for my first employee in California?
Required for every employer with one or more employees, including part-time workers.