Question

If an employee works in several different states during the year, the employer must determine which state covers the worker for unemployment compensation purposes. How is this determination made? Additionally, can an employee working in two or more states be categorized as being localized only in one state? Explain

Have you ever worked in two different states prior to filing for unemployment? What were your experiences? Explain.

Answer 1

In present case, I have experience of working in state of texas and California and I will explain here how to determine the unemployment insurance while moving from one to another state. Hence , below mentioned provisions will be applicable as California as later state.

UNEMPLOYMENT INSURANCE (UI), EMPLOYMENT TRAINING TAX (ETT), AND STATE DISABILITY INSURANCE* (SDI)

When an employee performs services in California as well as in one or more other states, the state that has jurisdiction for coverage of that employee’s services is determined by the application of four tests (refer to sections 602 and 603 of the California Unemployment Insurance Code [CUIC] below). These tests are applied to determine whether the employee’s services are subject to employment taxes in California or some other state. An employee must perform some service in California before the tests can be applied to determine whether all the employee’s services can be allocated to California.

Sections 602 and 603 of the California Unemployment Insurance Code (CUIC)

Sections 602 and 603 of the CUIC, similar to the provisions of other states’ laws, provide for the application of four tests to determine if services of employees are considered subject to California law for UI, ETT, and SDI. These uniform provisions prevent overlapping coverage when an employee performs services in more than one state for a single employer. Pursuant to section 930.1 of the CUIC, employers may be granted a credit of previously reported UI taxable wages from another state for California UI reporting purposes. Application of a test must result in reporting wages to California or another state, or that test does not apply. An individual’s services outside of California cannot become subject to California law unless some portion of the services are rendered in this state. These four tests are applied to each employee, not the employer, in descending order:

(1) Localization

An employee’s services are “localized” in California, and, therefore, considered subject to California employment taxes if all or most of the employee’s services are performed in California with only incidental services performed elsewhere (for example, where the out-of-state service is temporary or transient in nature or consists of isolated transactions). Where the service performed outside of California is either permanent, substantial, or unrelated, it cannot be treated as localized in California.

Base of Operations

If test (1) does not apply in any state, services are considered subject to California employment taxes if some of the services are performed in California and the employee’s one and only “base of operations” for all of his or her services is in California.

“Base of operations” is defined as a more or less permanent place from which the employee starts work and customarily returns to receive employer’s instructions, to receive communications from customers or others, to replenish stocks or supplies, to repair equipment, or to perform other functions relating to the rendition of services.

(3) Place of Direction and Control

If tests (1) and (2) do not apply in any state, an employee’s services are considered subject to California employment taxes if some of the services are performed in California and the “place from which the employer exercises basic and general direction and control” over all the employee’s services is in California.

(4) Residence of Employee

If tests (1), (2), and (3) do not apply in any state, an employee’s services are considered subject to California employment taxes if some services are performed in California and the employee’s “residence” is in California. Residence means having a more or less permanent place of abode. It is more than a mere transient stopover but does not require the intent necessary to establish a permanent residence in the domiciliary sense.