Unemp. Ins. Code, § 704.1

(a) Notwithstanding any other provision of this division, the director may terminate any elective coverage agreement under this article if he or she finds that any of the following conditions exist:

(1) The employing unit or self-employed individual is not normally and continuously engaged in a regular trade, business, or occupation.

(2) The employing unit or self-employed individual has discontinued the regular trade, business, or occupation.

(3) The regular trade, business, or occupation of the employing unit or self-employed individual is seasonal in its operations.

This paragraph shall not apply to any public entity.

(4) The major portion of the self-employed individual’s remuneration is not derived from his or her trade, business, or occupation.

(5) The self-employed individual reports a net profit of less than four thousand six hundred dollars ($4,600) on his or her Internal Revenue Service Schedule SE for a third consecutive year.

(6) The employing unit or self-employed individual has failed to make a return or report, or to pay contributions within the time required by this division and there is an unpaid amount of contributions owing by the employing unit or self-employed individual, except when the elective coverage agreement has been in effect for less than two complete calendar years.

(7) The employing unit or self-employed individual, or a representative thereof, is found by the director to have filed a false statement in order to be considered eligible for elective coverage.

(8) The employing unit or any officer or agent of or person having charge of the affairs of the employing unit, or the self-employed individual is convicted of any violation pursuant to Chapter 10 (commencing with Section 2101). For the purposes of this paragraph, a plea or verdict of guilty or a conviction following a plea of nolo contendere is deemed to be a conviction irrespective of whether an order granting probation or other order is made suspending the imposition of the sentence or whether sentence is imposed but execution thereof is suspended.

(b) The director shall give to the employing unit, or to the self-employed individual, a written notice pursuant to Section 1206 of the director’s termination of the elective coverage agreement under this section. The date of termination may be the end of the calendar quarter immediately preceding the existence of any condition specified in subdivision (a), or the end of any subsequent calendar quarter thereafter, as determined by the director.

Any termination of elective coverage shall not affect the liability of the employing unit or self-employed individual for any contributions due, owing, and unpaid to the department.

(c) Sections 1222, 1223, and 1224 shall apply to matters arising under this section.

(d) 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.