Here is the part about out-of-state contractors needing to pay tax on income if the purchaser of the service receives the benefit of the service in California. This does not apply to wages to an employee described in the earlier post above as tax on those are only determined from where the services are performed.
A nonresident may have California sourced income or apportionable business income if receiving income from sales or services sourced to California. Such income includes:
Sales of services to the extent that the purchaser of the service receives the benefit of the service in California.
