Under California's Unemployment Insurance Code, what is the current State Unemployment Tax (SUT) rate range for new employers?
Correct Answer
C) 3.4% for all new employers
New employers in California are assigned a standard SUT rate of 3.4% for the first few years until they establish an experience rating based on their unemployment claims history.
Why This Is the Correct Answer
California assigns all new employers a standard SUT rate of 3.4% on the first $7,000 of each employee's wages. This flat rate applies for the first two to three years until the employer builds an experience rating based on its history of unemployment claims. The 3.4% rate is fixed for new employers — it is not a range.
Why the Other Options Are Wrong
Option A: 2.7% to 8.2%
2.7% to 8.2% describes the range of experience-rated SUT rates for established employers — not the flat rate assigned to new employers. New employers do not yet have claims history, so they cannot be experience-rated.
Option B: 0.5% to 2.5%
0.5% to 2.5% is too low and does not correspond to any standard California SUT rate structure. This range might be confused with ETT (Employment Training Tax), which is a separate, much smaller employer tax.
Option D: 1.5% to 6.2%
1.5% to 6.2% does not correspond to any established California SUT rate schedule. This range may be confused with federal FUTA rates or a combination of payroll tax components.
Memory Technique
New employers get '3.4% — no more, no less.' They haven't earned an experience rating yet, so California gives them a flat 3.4% to start. Think of it as the 'introductory rate' for new businesses.
More California Questions
A contractor is bidding on a public works project in Los Angeles County with a contract value of $2,000,000. The prevailing wage determination shows carpenter wages at $45.50 per hour. What additional amount must be paid for health and welfare benefits?
A construction company has 15 employees working on a project. One employee suffers a work-related injury. Under California law, what is the primary difference between Cal/OSHA and federal OSHA jurisdiction?
A contractor employs 8 workers and pays total wages of $480,000 annually. If the Unemployment Insurance (UI) tax rate is 3.4% on the first $7,000 of each employee's wages, what is the total annual UI tax owed?
Under Cal/OSHA regulations, what is required when a construction site has a trench excavation deeper than 5 feet?
A public works project requires certified payroll records. The prevailing wage for an electrician is $52.75 per hour with $18.50 in fringe benefits. If an electrician works 8 hours, what is the total prevailing wage obligation?
On a prevailing wage project, a carpenter's regular rate is $28/hour, but the prevailing wage is $35/hour with $8/hour in benefits. What must the contractor pay if the carpenter already receives $6/hour in benefits?
A California contractor has quarterly payroll of $85,000. What is the State Disability Insurance (SDI) withholding amount if the current SDI rate is 0.9% and the wage base limit is $153,164 annually?
Under California law, which statement about business entity liability is CORRECT?
XYZ Contracting LLC has 8 employees in California. An employee is injured on the job and requires medical treatment costing $15,000. The company has no workers' compensation insurance. What is XYZ's potential liability?
A general contractor subcontracts electrical work to an LLC. The electrician works exclusively for this contractor, uses the contractor's materials, and follows the contractor's daily schedule. Under AB5, this relationship is likely:
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
Under California Revenue and Taxation Code, what is the current Personal Income Tax (PIT) withholding rate range for the highest income bracket?
Next Question
XYZ Contracting hires a tile installer who works exclusively for them, uses company tools, follows company schedules, and receives training. Under AB5, this worker would most likely be classified as: