EDD Attorney for Employers

Our California EDD attorneys for employers help defend EDD audits, investigations, and penalties.

Author: Douglas Wade, Attorney

Email  |  Call (800) 484-4610

Who can help with EDD problems? When an employer faces an EDD audit, an attorney specializing in employment law can help guide them through the process. Nakase Wade EDD attorneys can assist companies and employers get the best outcome for EDD audits. The lawyers of Nakase Wade are experienced in defending companies from EDD audits and will fight aggressively to protect our client’s interests.

In this article, our EDD audit attorney will discuss the following:

What is the purpose of EDD Audit?

The purpose of an EDD audit is to find inconsistencies and determine if the employer has fully paid the owed payroll taxes under California law. The EDD is a taxing agency responsible for collecting employment taxes, and enforcement of employment tax laws. Employers should not go against the EDD without an audit attorney to defend the company.

The EDD is one of the biggest departments in California that serves many millions of citizens in California. The agency provides a number of services, including the following:

  • Conducting audits
  • Collecting payroll taxes
  • Maintaining employment records for workers in California
  • Administering Unemployment Insurance and State Disability Insurance
  • Administering federally sponsored workforce development programs and connecting those seeking jobs with potential employers
  • Collecting, analyzing, and publishing information about the labor market

What is an EDD audit?

An EDD audit is a payroll tax audit to verifies compliance with the California Unemployment Insurance Code (CUIC), payments made to employees are properly reported, payments made to employees are properly reported, ensures workers are properly classified, and protects workers’ rights to receive benefits. If your company received a notice of audit from the EDD, please contact our EDD audit lawyer to defend your company.

The purpose of an EDD audit is to make sure that an employer is classifying his or her workers properly and to see if the employer is paying the correct amount of employment taxes. In essence, the EDD uses audits as a way to ensure companies are paying their payroll taxes and that employees are getting the benefits to which they are entitled. A number of payroll tax issues arise when a worker who an employer identifies as an independent contractor files for unemployment insurance. As for a payroll tax audit, any kind of California company may be selected for this type of audit. It is therefore essential that an employer hires an EDD audit attorney that protects companies.

During an EDD audit, the EDD will investigate whether an employer controls a worker’s mode, manner, means, and method of working for the company. It may be difficult for companies to understand what these terms mean without the assistance of an EDD audit attorney. According to the California Supreme Court, strong evidence of an employment relationship is the right to fire at will and without cause. Also, it is often the case that the worker can demonstrate that he or she has their own business. If this is the case, then the EDD will generally rule that the individual was not an employee, but a contractor.

Following an EDD audit, the agency may determine that the employer correctly classified workers and gave them the pay that the employer reported. However, if the evidence proves otherwise, then the employer may face back taxes that he or she owes, which includes interest and penalties. An EDD audit will go back to the most recent twelve calendar quarters (or three years). That said, if an employer did not file any returns in that period, the audit could reference a longer period of time. An EDD audit attorney can employers fight to limit the audit to within three years.

How does an employer fight an EDD audit?

The first step you should take is to contact an EDD attorney. The EDD is far more aggressive when it conducts audits than the IRS. An audit conducted by the EDD determines whether a company has paid the correct amount of taxes. Usually, an EDD audit occurs when the California Employment Development Department launches an investigation into a business’ California payroll tax records to determine if the business has misclassified a worker as an independent contractor instead of an employee.

If an employer disagrees with the results of an EDD audit, he or she can fight the audit by hiring an EDD audit lawyer to file an appeal. This appeal is known as filing a petition for re-determination, and an individual will have their case reviewed by an Administration Law Judge. At the hearing, the judge will look at the evidence and figure out if the employer was in charge of the worker’s mode, manner, means, and method of carrying out their work or if they passed the ABC test. Typically, this hearing is held in person, but it may also be conducted over video conference. This hearing is the employer’s big chance to challenge the results of the audit without paying the tax and looking for a refund.

What can a company expects at an EDD audit hearing?

At the EDD audit hearing, an Administrative Law Judge will ask the employer questions, review documents, and decide on your appeal. It is important to have an EDD audit attorney for employers for the hearing. During the hearing, the Administrative Law Judge will explain the procedures and the issues under review.

To prepare for an EDD hearing, an EDD audit attorney will assist employers in collecting their evidence and preparing themselves to testify. An employer in this situation must offer additional evidence and question the EDD auditor. The judge at the hearing will review documents, ask questions, and make a judgment. If an employer disagrees with the results of this hearing, then they can appeal the ruling to the California Unemployment Insurance Appeals Board.

For instance, if the issue is centered on the classification of a worker, then an employer should review how the state of California differentiates contractors and employees, as well as the exceptions that fall under the ABC test. This task has been proven difficult for employers without the help of an EDD audit attorney.

Our EDD audit lawyer highlights few tips to keep in mind before an EDD audit hearing:

  • Do not be late to the hearing
  • Prepare thoroughly
  • Be prepared to ask questions to the auditor
  • Answer any questions in a professional manner
  • Make an impactful closing statement

No employer likes to deal with the stress of an EDD audit, but with an experienced tax and EDD lawyer on his or her side, the process can be as painless as possible. If an employer does not pay the employment taxes owed, then the EDD could make the officers and stockholders personally responsible. To avoid this consequence, it is essential to get the legal help one needs to navigate the audit and any subsequent appeal. Nakase Wade EDD lawyers can help an employer find the proper witnesses and evidence that will result in a positive outcome to a payroll tax dispute.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

Comp Day Explained - Eligibility, Benefits, and How to Calculate It Correctly

Comp Day Explained: Eligibility, Benefits, and How to Calculate It Correctly

Comp day lets eligible employees take time off instead of receiving overtime pay, offering flexibility in work schedules. This article explains how comp time is calculated, who qualifies, and the differences between comp time and overtime rules.
Work Permit California - Requirements, Age Limits, and Job Restrictions for Minors

Work Permit California: Requirements, Age Limits, and Job Restrictions for Minors

Minors in California need a work permit to get jobs, with specific restrictions based on age, role, and school status. This article outlines age requirements, job limitations, working hours, and exceptions to the state’s work permit rules for minors.
Split Shift Meaning Explained - How It Works, Benefits, Laws, and Real-World Examples

Split Shift Meaning Explained: How It Works, Benefits, Laws, and Real-World Examples

Split shifts divide a workday into separate periods with a long unpaid break, boosting flexibility and reducing staffing costs. This schedule helps businesses meet demand during peak hours while supporting employee well-being and complying with labor laws.
Is California an At-Will State - 4 Key Exceptions You Need to Know

Is California an At-Will State? 4 Key Exceptions You Need to Know

California permits at-will employment, but specific exceptions restrict when employers may legally terminate an employee without explanation. Contracts, public policy, fraud, and fairness-based exceptions can provide legal grounds for challenging terminations.
California Pay Data Reporting - 2025 Deadline, New MENA Category, and Updated Filing Requirements

California Pay Data Reporting: 2025 Deadline, New MENA Category, and Updated Filing Requirements

The 2025 deadline for California pay data reporting brings updated requirements, including MENA classification and new employer obligations. Covered employers must submit demographic wage data by job role, gender, race, and pay band or face financial penalties.
Family Leave California - Paid Family Leave Benefits, Eligibility, and Updates for 2025

Family Leave California: Paid Family Leave Benefits, Eligibility, and Updates for 2025

California’s Paid Family Leave program provides up to eight weeks of partial wage coverage for caregiving and bonding with children. Eligibility criteria and compensation limits have changed for 2025, administered through the State Disability Insurance (SDI) system.
California Child Labor Laws - Key Rules About Work Permits, Hours, and Restrictions for Minors

California Child Labor Laws: Key Rules About Work Permits, Hours, and Restrictions for Minors

California sets strict rules on work permits, hours, and job types allowed for minors under its child labor laws. State and federal rules also limit dangerous tasks and require school attendance for working minors.
California Minimum Wage Increase 2025 - New Rates for State, Fast Food, Healthcare, and Localities

California Minimum Wage Increase 2025: New Rates for State, Fast Food, Healthcare, and Localities

California’s 2025 minimum wage increase sets new statewide, fast food, healthcare, and local rates employers must comply with. Exempt and industry-specific employees face new salary thresholds, impacting wage standards across sectors and jurisdictions.
Background Check California - Laws, What Shows Up, and How to Clear Your Record

Background Check California: Laws, What Shows Up, and How to Clear Your Record

California background checks show criminal history, credit data, education records, and other public details under strict screening laws. Options such as expungement, pardons, and record sealing may remove damaging entries from your personal background file.
How Many Hours Can a Minor Work in California - A Complete Guide to Labor Laws and Restrictions

How Many Hours Can a Minor Work in California? A Complete Guide to Labor Laws and Restrictions

Minors working in California must follow strict hour limits based on age, school attendance, and job category. Employers who violate labor rules risk significant fines and possible criminal consequences.
California Overtime Law - Rules Exemptions Pay Rates and Worker Rights Explained

California Overtime Law: Rules, Exemptions, Pay Rates, and Worker Rights Explained

California overtime law requires non-exempt workers to receive extra pay for working beyond daily and weekly hour limits. Certain employees, including independent contractors and exempt workers, do not qualify for overtime based on legal standards.
How to Calculate Overtime in California - Daily, Weekly, and Double Time Pay Explained

How to Calculate Overtime in California: Daily, Weekly, and Double Time Pay Explained

California overtime laws require daily and weekly overtime pay for nonexempt workers, including salaried, commissioned, and piece-rate employees. This guide outlines calculating overtime, daily double time, regular pay rates, and employer responsibilities without addressing alternative workweek schedules.
What is Comp Time for PTO - A Complete Guide for Employers and Employees

What is Comp Time for PTO? A Complete Guide for Employers and Employees

Employers and employees can use comp time for PTO if it is applied legally with clear policies in place. Comp time rules differ between public and private sectors, affecting when it can substitute for overtime pay.
No Tax on Overtime in California 2025 Policy Updates, Exemption Timeline, and What Workers Should Expect.

No Tax on Overtime in California: 2025 Policy Updates, Exemption Timeline, and What Workers Should Expect

California may introduce a 2025 overtime tax exemption, but no confirmed start date or final state legislation exists yet. Workers and employers await Sacramento’s decision on removing state taxes from overtime earnings under the proposed changes.
Minimum Wage in California 2025 State and City Rates Explained

Minimum Wage in California 2025: State and City Rates Explained

The minimum wage in California will rise to $16.50 per hour in 2025, with some local rates set even higher. Employers must follow state, city, and industry-specific wage regulations carefully to remain compliant and avoid penalties.
California Fast Food Minimum Wage 2025 Statewide and Local Updates

California Fast Food Minimum Wage 2025: Statewide and Local Updates

The California fast food minimum wage will rise to $20 per hour in April 2025, affecting many workers statewide. Local minimum wage rates also vary across California cities, with some surpassing the new state baseline.
How old do you have to be to work Age limits explained

How old do you have to be to work? Age limits explained

Minimum age requirements for work depend on federal, state, and job-specific rules that focus on young workers' safety and rights. Teens can start working at 14, but restrictions remain in place until 18, depending on the specific type of job.
Workplace Culture and Hostile Work Environments in California Your Rights and Legal Options

Workplace Culture and Hostile Work Environments in California: Your Rights and Legal Options

Employees facing hostile workplaces in California have legal protections to address harassment, discrimination, and toxic work environments. Protect your rights, report misconduct, and pursue action through California's Civil Rights Department or with legal support.
What Is a Pay Stub and Why It Matters for Employees and Employers

What Is a Pay Stub and Why It Matters for Employees and Employers

Pay stubs detail wages, deductions, and taxes, helping employees track earnings and employers comply with state payroll regulations. They support loan applications, reduce payroll disputes, and are required or regulated in many states across the U.S.
What Are the Proper Steps to Fire Someone in California

What Are the Proper Steps to Fire Someone in California?

Terminating an employee in California requires following legal guidelines, maintaining professionalism, and ensuring proper documentation. This guide outlines lawful termination reasons, key procedural steps, and best practices to reduce legal and financial risks.
How Long Does a Misdemeanor Stay on Your Record in California

How Long Does a Misdemeanor Stay on Your Record in California?

A misdemeanor conviction in California stays on public record indefinitely but may be eligible for expungement under specific conditions. Background checks typically show misdemeanor convictions for seven years, but expungement can remove them from most employment screenings.
How do I prepare a script for firing someone

How Do I Prepare a Script for Firing Someone?

Learn the professional steps for firing an employee, from preparing a script to handling emotional reactions. Understand the proper procedures, reasons, and communication techniques to ensure a smooth and respectful termination.
What is involved in a PAGA lawsuit

What Is Involved in a PAGA Lawsuit?

PAGA lawsuits allow employees to file claims for labor code violations on behalf of themselves and others in California. Employers can face significant penalties, prompting many to settle to avoid costly judgments.
What are the rules for 10-minute breaks

What Are the Rules for 10-Minute Breaks?

California law mandates two paid 10-minute breaks and a 30-minute unpaid meal break for an eight-hour shift. Employers who fail to provide required breaks may face penalties, and employees can seek legal action for compensation.
Can I work six hours without a lunch break

Can I Work Six Hours Without a Lunch Break?

California law requires a 30-minute meal break for shifts over five hours, but employees can waive it if working exactly six hours. Employers must comply with strict labor laws, ensuring uninterrupted meal breaks and legal protections for workers.
What can I do if my employer didn't pay me on payday

What Can I Do If My Employer Didn’t Pay Me on Payday?

Employers in California must pay workers on time, or they may face penalties of up to 30 days' wages for delays. Employees can file wage claims, seek legal assistance, or report violations to the California Labor Commissioner's Office for unpaid wages.
What qualifies as a hostile work environment in California

What Qualifies as a Hostile Work Environment in California?

Employees in California facing severe or persistent harassment based on protected traits may have legal options under state and federal laws. Filing a complaint with the California Civil Rights Department or consulting an employment attorney can help protect workplace rights and seek compensation.
When is a doctor's note for work required in California

When Is a Doctor’s Note for Work Required in California?

California employers generally cannot demand a doctor's note for sick leave, but exceptions exist under specific laws and circumstances. Legal conflicts persist, and employers may require medical documentation for disability accommodations, FMLA leave, or other valid reasons.
What does California law say about final paycheck rules

What Does California Law Say About Final Paycheck Rules?

California law mandates that final paychecks be provided promptly, with termination pay due immediately and resignation pay within 72 hours. Employers must include all owed wages, expenses, and accrued benefits, with penalties for late or incomplete payments.
Can an employer deny a doctor's note

Can an Employer Deny a Doctor’s Note?

An employer may deny a doctor's note if the absence does not qualify for legal protections under disability or family leave laws. Employers must evaluate medical documentation, employee statements, and applicable laws before considering disciplinary action.

Free Consultation