Records commonly involved
- Payroll registers and quarterly filings.
- General ledgers and bank statements.
- Worker payment records and Forms W-2 or 1099.
- Contracts, invoices and business records related to services performed.
- Prior EDD notices and correspondence.
Worker classification can be fact intensive
Whether a worker is treated as an employee or independent contractor can depend on California law and the actual working relationship. The underlying facts and records matter more than the label used by the parties.
Coordinate payroll and income tax reporting
Payroll examinations can affect more than one filing system. Business income tax returns, payroll filings, contractor reports and accounting records should be reviewed for consistency.
Respond to the actual audit request
Organize records by period and request rather than sending an unstructured archive. Maintain copies of everything provided and track deadlines.
Frequently asked questions
What does an EDD audit examine?
An EDD audit may examine payroll tax reporting, wages, worker classification and related employer records.
Should I organize contractor records too?
Yes, when contractor payments or worker classification are part of the audit period or request.
Can an EDD issue affect income tax returns?
Potentially. Changes to wage or contractor treatment can have consequences beyond the payroll account, depending on the facts.