California Employee Retention Credit: State COVID Orders & Eligibility
California ERC eligibility guide covering Governor Newsom's COVID-19 shutdown orders and documentation needed for IRS audit defense.
California businesses faced some of the nation's strictest and longest-lasting COVID-19 restrictions under Governor Gavin Newsom's executive orders. From the March 19, 2020 statewide stay-at-home order through the June 2021 full reopening, California employers experienced significant operational disruptions that may qualify them for the Employee Retention Credit.
California's Major COVID-19 Government Orders
Governor Newsom issued over 60 COVID-19 related executive orders that affected California businesses. The most significant for ERC eligibility include Executive Order N-33-20 (the statewide stay-at-home order issued March 19, 2020), the Blueprint for a Safer Economy tier system (August 2020), and the Regional Stay-at-Home Order (December 2020).
- Executive Order N-33-20 (March 19, 2020): Mandatory statewide stay-at-home order requiring closure of non-essential businesses
- Blueprint for a Safer Economy (August 2020): Four-tier county system with capacity restrictions ranging from 25% to complete closure
- Regional Stay-at-Home Order (December 2020): Triggered when ICU capacity fell below 15%, closing many businesses in affected regions
Tip: Document which tier your county was in during each quarter you claimed ERC.
Industries Most Affected in California
California's diverse economy meant COVID restrictions affected businesses differently across industries.
- Hospitality and Tourism: Hotels, restaurants, bars faced extended closures and capacity restrictions
- Entertainment and Events: Film production, live entertainment, sports venues were shut down or severely restricted
- Personal Services: Salons, spas, gyms faced multiple closure periods and capacity limits
- Retail: Non-essential retail experienced closures then 25-50% capacity restrictions
Documentation for California ERC Audits
Successfully defending a California ERC claim requires comprehensive documentation connecting specific government orders to your business operations.
- Government Order Documentation: Copies of Executive Order N-33-20, Blueprint tier assignments for your county by date
- Operational Impact Evidence: Internal communications about COVID restrictions, revised floor plans showing capacity limits
- Financial Records: Gross receipts by quarter compared to 2019 baseline, payroll records
Warning: General claims that 'California was locked down' are insufficient for audit defense.
Key Takeaways
- California's COVID restrictions spanned March 2020 through June 2021 with the Blueprint tier system creating varying impacts by county
- Executive Order N-33-20 and subsequent tier-based restrictions are the primary government orders supporting California ERC claims
- Documentation must connect specific orders to your business operations
Frequently Asked Questions
Which California executive orders qualify my business for ERC?
The primary qualifying orders include Executive Order N-33-20 (statewide stay-at-home order), the Blueprint for a Safer Economy tier restrictions, and local county health orders.
How do I document which Blueprint tier my California county was in?
The California Department of Public Health published weekly tier assignments for all 58 counties. This historical data is publicly available.
Can California restaurants claim ERC for the entire 2020-2021 period?
Not automatically. The credit must be prorated to the specific periods when government orders were in effect for your location.
Related Resources
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