De 459 Form PDF Details

Who qualifies for the SDI exclusion

Not all corporate officers are eligible to exclude themselves from SDI coverage. To file this exclusion statement, you must meet one of the following conditions under the California Unemployment Insurance Code:

Corporate officers who share ownership with unrelated shareholders do not qualify and remain subject to standard SDI withholding on their wages. Only private corporations are covered by Section 637.1 of the CUIC. Public companies and other entity types follow different SDI rules.

How SDI and PFL exclusion affects your payroll

When the Employment Development Department approves your exclusion statement, wages the corporation pays to the qualifying officer are removed from SDI withholding. This affects both the employee-side payroll deduction and the employer's reporting obligation for those wages. As a result, the excluded officer does not accrue SDI benefit rights or Paid Family Leave credits based on the corporate wages. If the officer also works for a separate employer, those wages remain fully subject to SDI rules under normal California payroll law.

Filing requirements and effective period

File the exclusion statement before the end of the first calendar quarter in which you want the exclusion to apply. Enter your Employer Account Number and Federal Employer Identification Number (FEIN) accurately in the fields provided. If you file late, the exclusion takes effect in the following quarter. Maintain thorough payroll records and confirm your shareholder structure each year. If the ownership structure changes at any point, submit a cancellation or an updated filing with the EDD promptly to keep your payroll records compliant.

QuestionAnswer
Form NameDe 459 Form
Form Length2 pages
Fillable?No
Fillable fields0
Avg. time to fill out30 sec
Other namesSSN, LTR, EDD, ETT