New Hire Reporting: Requirements for Employers

Aid to Families with Dependent Children (AFDC) had been in place for more than 60 years and needed to be updated. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, also known as welfare reform, abolished AFDC and incorporated its objectives along with other features. One of the major benefits of PRWORA is that it gives states more power to manage and implement welfare programs with the help of new hire reporting requirements.

 

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Overview of the new hire reporting requirements of PRWORA

Under PRWORA, all employers are required to report new hire employees, and that information is loaded into a National Directory of New Hires. The report requires the employee’s name, address, Social Security number and hiring date, while the employer needs to input their information, including their Federal Employer Identification Number.

 

By eliminating the AFDC, states get a Temporary Assistance to Needy Families Block Grant that assists with child support programs, legal immigrant benefits, food stamps and other social services. States can use that money to also promote job preparation, which reduces dependency.

 

National Directory of New Hires

One of the reasons new hire reporting is part of welfare reform has to do with PRWORA contributing to the NDNH. The Office of Child Support Enforcement uses the information in that database to match against child support cases in the Federal Case Registry. As a national database, the NDNH allows case managers and legal entities to cross-reference nearly one-third of all noncustodial parents who don’t reside in the same state as their children and ensure they fulfill their child support obligations under the law.

 

Collecting Social Security and all other information from newly hired workers helps because it provides a common key for federal, state and local agencies to use. If your new hire doesn’t have a Social Security number, they need to download and complete Form SS-5 to get that information because the process can’t go forward without one.

 

Many assume that quarterly wage data can be used instead of the NDNH. The problem with quarterly wage data is that there’s usually a six-month delay between the time the data is submitted and when it’s available. That means the quarterly data can be outdated by as much as 10 months. The NDNH makes it easier to locate delinquent noncustodial parents through the Federal Parent Locator Service and allows for speedier child support enforcement.

 

How does new hire reporting benefit employers?

The reporting process for new hires includes completing the W-4 form upon hiring, and in some states, there may be other requirements. Many employers state that it has a negligible impact on their HR onboarding process because there are different submission methods to choose from. In fact, employers receive a few benefits from this process.

 

Worker’s compensation fraud costs more than $7 billion annually and employers, employees and even customers pay for it. Premiums and prices need to increase to compensate for the absent employee. This affects a business’s ability to give raises and pay bonuses to active employees.

 

Types of employees that need to be reported

When it comes to filling out the necessary HR documents, it’s important to understand the types of employees that need to be reported:

  • In the case of a temp agency, if the agency is paying someone’s wages, then they have to include that person in their new hire reporting. If that same person has not worked for the agency for 60 days or more, they need to fill out a new W-4, making them a new hire. If the agency only refers individuals to employers, that employee is not considered a new hire to the agency and is the responsibility of the employer.
  • Independent contractors may be included under certain circumstances, depending on the state. For example, if an independent contractor is contracted to earn more than a specific wage or salary, they can be included, as per the state rules.
  • Labor organizations that directly hire their own employees must file their new hires. However, if they simply act as a referrer, like an agency, that employee is not a new hire for them.
  • If an employee quits before the report is due, the new hire report must be submitted because the agreement to work and earn did exist.
  • Employees who were separated from an employer and were rehired after not working for that employer for 60 or more consecutive days are considered a new hire. If that employee was not formally removed from the company’s records, they are not considered a new hire.

Completing Income and Withholding Order

One more thing an employer must do is to submit the Income and Withholding Order. If the court has ruled that an IWO is necessary, employers have to comply. Payments can be submitted as a single lump sum or as a percentage deduction. The payments must be sent to the state disbursement unit or tribal payee, as those are the only authorized options. If there are any other options, the IWO must be rejected by the employers. The remittance ID is one of the most important pieces that must be included in the form.

 

Withholding limits depend on arrearage. For example, if the noncustodial parent has a second family but has been in arrears for less than 12 weeks, the withholding limit is 50%. However, if the noncustodial parent is single and has been in arrears for more than 12 weeks, the maximum withholding is 65%.

 

How multistate employers handle new hire information

Larger companies that have offices in different states have a couple of reporting options. They can choose to report each employee in their respective state or select one state and submit all information there. If they choose just one state, they must be registered as a multistate employer and need to submit new hires twice a month, which is about every two weeks.

 

Reporting new hires

Reporting new hires depends on the state. In most cases, businesses have about 20 days to report new employees and can do so via several methods, including online, fax and postal mail. In some cases, independent contractors that fit certain criteria must be included or considered optional reports.

 

State-specific new hire reporting requirements

Here’s a list of reporting requirements in all states and territories, including the District of Columbia, Puerto Rico, Guam and the Virgin Islands.

 

State

Reporting time from hire date

Data Submitted

Alabama

7 days

Standard data. Organizations with five or more employees must submit through the state site. Otherwise, use the internet.

Alaska

20 days

Standard data via online/mail/fax

Arizona

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors.

Arkansas

20 days

Standard data and transmission via online/mail/fax

California

20 days

Standard data and transmission via online/mail/fax, including EDD number. Includes independent contractors making $600 or more.

Colorado

20 days

Standard data and transmission via online/mail/fax

Connecticut

20 days

Standard data and transmission via online/mail/fax

Delaware

20 days

Standard data and transmission via online/mail/fax. Independent government contractors are required; otherwise, it’s optional.

District of Columbia

20 days

Standard data and transmission via online/mail/fax

Florida

20 days

Standard data plus additional information and transmission via online/mail/fax

Georgia

10 days

Standard data and transmission via online/mail/fax

Guam

20 days

Standard data and email/fax/mail/personal delivery. Includes independent contractors

Hawaii

20 days

Standard data, phone/fax/mail

Idaho

20 days

Standard data and transmission via online/mail/fax

Illinois

20 days

Standard data and transmission via online/mail/fax

Indiana

20 days

Standard data and transmission via online/mail/fax

Iowa

15 days

Standard data and transmission via online/mail/fax. Includes independent contractors

Kansas

20 days

Standard data and transmission via online/mail/fax

Kentucky

20 days

Standard data and transmission via online/mail/fax

Louisiana

20 days

Standard data and transmission via online/mail/fax

Maine

7 days

Standard data and transmission via online/mail/fax. Includes independent contractors

Maine

20 days

Standard data and transmission via online/mail/fax

Maryland

20 days

Standard data and transmission via online/mail/fax

Massachusetts

14 days

Standard data and transmission via online/mail/fax Includes independent contractors

Michigan

20 days

Standard data and transmission via online/mail/fax plus payroll services

Minnesota

20 days

Standard data and transmission via online/mail/fax plus payroll. Includes independent contractors for some government agencies.

Mississippi

15 days

Standard data and transmission via online/mail/fax

Missouri

20 days

Standard data and transmission via online/mail/fax

Montana

20 days

Standard data and transmission via online/mail/fax

Nebraska

20 days

Standard data and transmission via online/mail/fax plus payroll. Includes independent contractors.

Nevada

20 days

Standard data and transmission via online/mail/fax

New Hampshire

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors making $2,500 or more.

New Jersey

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors.

New Mexico

20 days

Standard data and transmission via online/mail/fax plus app

New York

20 days

Standard data and transmission via online/mail/fax

North Carolina

20 days

Standard data and transmission via online/mail/fax

North Dakota

20 days

Standard data and transmission via online/mail/fax

Ohio

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors making $2,500 or more.

Oklahoma

20 days

Standard data and transmission via online/mail/fax

Oregon

20 days

Standard data and transmission via online/mail/fax

Pennsylvania

20 days

Standard data and website/FTP/mail/fax

Puerto Rico

20 days

Standard data and transmission via online/mail/fax

Rhode Island

14 days

Standard data and transmission via online/mail/fax

South Carolina

20 days

Standard data and transmission via online/mail/fax. Independent contractors optional

South Dakota

20 days

Standard data and transmission via online/mail/fax

Tennessee

20 days

Standard data and transmission via online/mail/fax

Texas

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors.

Utah

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors.

Vermont

10 days

Standard data and transmission via online/mail/fax

Virgin Islands

20 days

Standard data and transmission via online/mail/fax

Virginia

20 days

Standard data and transmission via online/mail/fax. Includes independent contractors.

Washington

20 days

Standard data and transmission via online/mail/fax

West Virginia

14 days

Standard data and transmission via online/mail/fax. Includes independent contractors making $2,500 or more.

Wisconsin

10 days

Standard data and transmission via online/mail/fax

Wyoming

20 days

States can submit the standard information via the online portal, payroll services, encrypted email or other means

 

New hire reporting requirements FAQs

 

Is new hire reporting mandatory?

Yes. Federal law states that all organizations, private, public and federal, must submit new hire reports within 20 days.

 

What is new hire reporting used for?

New hire reporting is mainly used to facilitate and accelerate the collection of child support from the noncustodial parent, regardless of the state in which they reside.

 

What forms should a new hire fill out?

At the very least, new hire paperwork needs to include a W-4 form, or a W-9 for independent contractors, and an I-9 employment eligibility verification form. Each company has a paperwork checklist for new hires with all of the necessary state and federal forms.

 

Is there a penalty for not reporting new hires?

Each state determines the fine. Federal law says that organizations can be fined up to $25 per unreported employee. However, states can fine companies up to $500 per unreported employee.

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