Cal. UIC § 3261

All employee contributions and income arising therefrom received or retained by an employer under an approved voluntary plan are trust funds that are not considered to be part of an employer’s assets. An employer shall either maintain a separate, specifically identifiable account for voluntary plan trust funds in a financial institution, or an employer may transmit voluntary plan trust funds, including any earned interest or income, directly to the admitted disability insurer. If an employer, with prior approval from the Director of Employment Development, invests voluntary plan trust funds in securities purchased through a commercial bank under Article 4 of Chapter 10 of Division 1 of the Financial Code, the securities account shall be separately identifiable from any other securities accounts maintained by the employer. In the event of commingling of voluntary plan trust funds, or the bankruptcy or insolvency of the employer, or the appointment of a receiver for the business of the employer, those voluntary plan trust funds are entitled to the same preference as are the claims of the state under Sections 1701 and 1702.