EDD Attorney for Employers

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.