EDD audit process for California employers.

The Four Stages of EDD Audit

Stage 1Notice
Stage 2Examination
Stage 3Determination
Stage 4Appeal

EDD audit stages.
Stage Focus2
Notice DE 231 Audit notice + DE 9 schedule
Examination Payroll records, contractor analysis
Determination Notice of Assessment
Appeal Petition for Reassessment

Quick Reference

Jump to stage: notice, examination, determination, or appeal.

1. Notice and Entrance Interview

EDD sends audit notice; entrance interview covers scope.

If this is you: Received EDD audit notice. File Power of Attorney. Review scope. Begin records compilation.

Notice Strategy

  1. File Power of Attorney.
  2. Review audit scope.
  3. Compile payroll records.
  4. Identify contractor relationships.
  5. Engage counsel.

2. Records Examination

EDD auditor reviews payroll records, 1099s, contractor agreements, and tax returns.

If this is you: Auditor examining records. Focus on worker classification. Every 1099 contractor potentially reclassified to employee.

3. Determination and Notice of Assessment

EDD issues Notice of Assessment with proposed deficiency, penalties, and interest.

If this is you: Assessment received. 30-day Petition for Reassessment window begins. Time-critical.

4. Petition for Reassessment

File Petition for Reassessment within 30 days.

If this is you: Petition filed. CUIAB (California Unemployment Insurance Appeals Board) hearing follows. Formal adjudication of worker classification and other disputed issues.

EDD audit notice received? Book consultation.

EDD Audit Document Lookup

EDD audit documents.
Document Purpose
DE 231 Audit notice and schedule
DE 9 Quarterly payroll return
Form DE 48 Power of Attorney
Notice of Assessment EDD audit findings
Petition for Reassessment Appeal vehicle
CUIAB Appeals Board
CUIC §621 Worker classification
AB 5 / AB 2257 Independent contractor rules

EDD Audit Statute

  • 3-year assessment statute.
  • Extended to 8 years for substantial understatement.
  • Unlimited for fraud.
  • 30-day Petition for Reassessment.

EDD Audit Patterns

EDD audit patterns. Source: Brotman Law practice.
Industry / Situation Audit Risk
1099-heavy businesses High
Cash-intensive Elevated
Industry-targeted (construction, gig) High
EDD lead system referral Elevated

EDD Audit Escalation

Notice to Examination

1-6 months.

Examination to Assessment

1-3 months.

Assessment to CUIAB

6-18 months appeal.

First 48 Hours After EDD Audit Notice

  1. File DE 48 Power of Attorney.
  2. Review notice scope.
  3. Compile payroll records.
  4. Identify 1099 contractor relationships.
  5. Engage counsel.

★Brotman Law handles EDD audits for California employers. Based in San Diego.

The ROI Question

EDD worker classification assessments frequently reach six figures. Professional defense typically produces material reductions.

EDD Payroll Tax Audit on the Way?

California EDD audits typically focus on worker classification — whether your independent contractors should have been treated as employees. The stakes go beyond back payroll taxes: penalties, interest, and potential personal liability for responsible parties. If you’ve received an audit notice or you’re in the middle of one, the response strategy matters.

Discuss My EDD Payroll Audit →    Or call: (619) 378-3138

When to Engage

  • EDD audit notice.
  • 1099 contractor concerns.
  • Prior EDD assessment.
  • Multi-year audit.

EDD audit?

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Or see how we handle EDD audit defense →

The audit usually announces itself with a notice packet that includes the EDD Pre-Audit Questionnaire — the auditor’s first fact-gathering move, and worth counsel review before it goes back.