The California Employment Training Tax

Knoji reviews products and up-and-coming brands we think you'll love. In certain cases, we may receive a commission from brands mentioned in our guides. Learn more.
Untrained workers can end up with no choice but to work a job that will be their stopping point, or take an unwanted job. California employers pay the Employment Training Tax so they can give trained workers better contracts.

Making Californians fit for the jobs they have the ability to do good work in is a goal the state legislature made a commitment to in 1982, the year it passed the Employment Training Tax. The Employment Development Department gives out funds to employers in one of their listed industries the employer can use to train their workers.

Opportunity to do a new job and make progress in a career makes it possible for the Californians to take charge of their work lives. They can stay in a secure career. No worries about unemployment.

Counts for A Lot

California employers each pay a part of the training fund. Both new ones and those businesses that have succeeded. The payroll tax is an employer paid tax. But, the shares of the funding cost are small. Each business with a payroll has to pay 0.1 percent of the first $7,000 it pays to each employee. The maximum tax amount is $7 on each employee.

They pay out of the till to build up a full fund each year. Payments are made when the state unemployment insurance account has a positive balance. Those employers that have a negative balance do not have to pay, though they have to pay higher unemployment insurance amounts.

A Work Incentive In Selected Fields

The employers pay in to improve the workforce in their field. The California government supports the skill improvements to make its businesses more competitive. But, the fund was not meant to support all the work fields in California. Manufacturing companies, restaurants, and auto repair shops are three kinds of businesses that do pay in to the fund to support workforce improvements.

Family workers are not among those workers whose wages count.

Due Wages

The tax is charged on the money paid for productive work. Wages are the main pay that gets taxed. Bonuses and commissions also count in the total taxed. Tips over $20 a month are part of a tipped worker's earned pay. The employer pays the Employment Training Tax.

Only some fringe benefits count. Work transportation expenses and meals increase the taxable amount. Free gym uses and bus passes do not depend on the work effort and are not added to work pay to simply cover work costs on the job. These fringe benefits do not count.

Stock options are not taxed.

No Job Refusals

Employers make the investment to grow their enterprise. With trained workers, they can change their plans to accomplish goals that take better work. Either jobs are made into better ones or a new one is opened up. The trained workers that improved their skills in employer approved training can count on open opportunities.


California Employment Development Department, California Employers Guide 2011 (Internet, January 2011).