(a) Any individual who is an employer under this division or any two or more individuals who have so qualified may file with the director a written election that their services shall be deemed to be services performed by individuals in employment for an employer for all the purposes of this division. Upon the approval of the election by the director, the services of those individuals shall be deemed to constitute employment for an employer for all of the purposes of this division. Regardless of their actual earnings, for the purposes of computing benefit rights and contributions under this division, they shall be deemed to have received the following remuneration for each calendar quarter:
(1) For purposes of unemployment insurance, the highest amount of wages required to be entitled to the maximum benefit amount provided in Section 1280.
(2) For purposes of disability insurance, the highest amount of wages required to be entitled to the maximum benefit amount provided in Section 2655.
(A) For disability insurance contributions on or after July 1, 1994, the quarterly contribution shall be the product of one-fourth of the amount of net profit, but not less than one thousand one hundred fifty dollars ($1,150) except when subparagraph (B) applies, reported on or before April 15 of the preceding year as declared on the Internal Revenue Service Schedule SE filed by an individual who is an employer under this division and the contribution rate established pursuant to Section 984.5, except as provided by Section 985. On January 1, 1995, quarterly income credits for the period from July 1, 1993, to June 30, 1994, inclusive, shall be changed to one-fourth of the amount of the net profit or four thousand six hundred dollars ($4,600), whichever is greater, reported on or before April 15, 1993, as declared on the Internal Revenue Service Schedule SE for the 1992 taxable year filed by each individual having an elective coverage agreement in effect for that period or any portion thereof. If no Internal Revenue Service Schedule SE was filed, the individual shall be assigned a quarterly income credit of one thousand one hundred fifty dollars ($1,150). Quarterly income credits for this period shall not exceed seven thousand nine hundred forty-two dollars ($7,942). If any quarterly income credit for the period from July 1, 1993, to June 30, 1994, inclusive, was reduced prior to January 1, 1995, the amended income credit shall be reduced proportionately. Benefits payable for periods of disability commencing on or after January 1, 1995, shall be based on Section 2655. For purposes of this division, income credits shall be included in the term “wages.”
(B) The self-employed individual shall not pay contributions for periods of any disability, including periods for which some services are performed while disabled. The self-employed individual shall file a quarterly report of wages and certify as to the period of disability in order to maintain eligibility for elective disability insurance coverage and benefits. During periods of disability, the self-employed individual shall reduce his or her quarterly contributions by dividing the quarterly contribution amount by 91 to compute the daily contribution amount, and the daily contribution amount shall be multiplied by the number of days disabled to compute the amount by which the quarterly contributions shall be reduced. The department shall reduce income credits utilizing the same calculation method.
(b) Any individual who is an employer under this division or any two or more individuals who have so qualified may file with the director a written election that their services shall be deemed to be services performed by individuals in employment for an employer for the purposes of Part 2 (commencing with Section 2601) only. Upon the approval of the election by the director, the services of those individuals shall be deemed to constitute employment for an employer for the purposes of Part 2 (commencing with Section 2601) only. Regardless of their actual earnings, for the purposes of computing disability benefit rights and worker contributions, they shall be deemed to have received remuneration for each calendar quarter the highest amount of wages required to be entitled to the maximum benefit award provided in Section 2655. For contributions on or after July 1, 1994, the quarterly contribution shall be the product of one-fourth of the amount of net profit, but not less than one thousand one hundred fifty dollars ($1,150), except when subparagraph (B) of paragraph (2) of subdivision (a) applies, reported on or before April 15 of the preceding year as declared on the Internal Revenue Service Schedule SE filed by an individual who is an employer under this division and the contribution rate established pursuant to Section 984.5, except as provided by Section 985. The quarterly contribution shall be reduced as set forth in subparagraph (B) of paragraph (2) of subdivision (a) if a disability occurred during the quarter for which payment is being made. On January 1, 1995, quarterly income credits for the period from July 1, 1993, to June 30, 1994, inclusive, shall be changed to one-fourth of the amount of the net profit or four thousand six hundred dollars ($4,600), whichever is greater, reported on or before April 15, 1993, as declared on the Internal Revenue Service Schedule SE for the 1992 taxable year filed by each individual having an elective coverage agreement in effect for that period or any portion thereof. If no Internal Revenue Service Schedule SE was filed, the individual shall be assigned a quarterly income credit of one thousand one hundred fifty dollars ($1,150). Quarterly income credits for this period shall not exceed seven thousand nine hundred forty-two dollars ($7,942). If quarterly income credits were reduced prior to January 1, 1995, the amended income credits shall be reduced proportionately. Benefits payable for periods of disability commencing on or after January 1, 1995, shall be based on Section 2655. For purposes of this division, income credits shall be included in the term “wages.”
(c) (1) Any individual applying for or continuing elective coverage under this section shall be requested to sign an annual statement authorizing the department to verify the net profit declared on his or her Internal Revenue Service Schedule SE. Failure of the individual to sign a statement authorizing the department to verify income shall result in the individual being assigned an annual income level of four thousand six hundred dollars ($4,600) for contribution and benefit purposes.
(2) Any individual applying for elective coverage shall submit a copy of his or her Internal Revenue Service Schedule SE filed on or before April 15 of the preceding year with his or her application for elective coverage in order to establish first-year contributions and benefits in excess of the minimum required to qualify for elective coverage.
(d) Any self-employed individual continuing elective coverage who fails to file an Internal Revenue Service Schedule SE by April 15 of each calendar year is required to remit contributions based upon the last year the self-employed individual filed an Internal Revenue Service Schedule SE.
(e) Any self-employed individual who has not yet filed an Internal Revenue Service Schedule SE shall be assigned an annual income level of four thousand six hundred dollars ($4,600) for contribution and benefit purposes.
(f) Contributions required under this division are payable on and after the date stated in the approval of the director. The director may levy assessments under this division for any amount due when an elective coverage agreement has been in effect for less than two complete calendar years. Chapter 7 (commencing with Section 1701), relating to the collection of amount due, shall apply to this section.
(g) No benefits shall be paid to any individual based upon remuneration deemed to have been received pursuant to this section unless all contributions due with respect to all remuneration deemed to have been received by the individual pursuant to this section have been paid to the department.
(h) No benefits shall be paid to any individual based on elective coverage income credits in his or her base period if his or her elective coverage agreement has been terminated under paragraph (6) of subdivision (a) of Section 704.1.
(i) Notwithstanding subdivision (b) of Section 2627, no benefits shall be paid to any individual covered under this section, with respect to periods of disability commencing on or after January 1, 1994, until he or she has been unemployed and disabled for a waiting period of seven consecutive days during each disability benefit period.
(j) Notwithstanding Section 2653, with respect to periods of disability commencing on or after January 1, 1994, the maximum amount of benefits payable to an individual covered under this section during any one disability benefit period shall be 39 times his or her weekly benefit amount, but in no case shall the total amount of benefits payable be more than the total wages credited to the individual during his or her disability base period. If the benefit is not a multiple of one dollar ($1), it shall be computed to the next higher multiple of one dollar ($1).
(k) For purposes of this section, Internal Revenue Service Schedule SE is defined as Internal Revenue Service Form 1040 Schedule SE, or in the case of statutory employees under the Internal Revenue Code, it shall be defined as Internal Revenue Service Form 1040 Schedule C, or the California Income Tax Return, when accompanied by Internal Revenue Service Form W-2.
(Amended by Stats. 2005, Ch. 152, Sec. 6. Effective January 1, 2006.)