CEDR Two Minute Trainer: New Hire Reporting

This month’s two minute trainer addresses an old, yet often overlooked, requirement: reporting all new hires to your state. The new hire reporting process is mandated by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). Unfortunately, here at CEDR we find that many small employers are not aware they must report all new hires – and states may impose penalties upon employers for noncompliance.

Why Do You Need to Report Your New Hires?

The federal and state governments use new hire information for several purposes. Principle uses include:

• Child Support: One of the primary functions of the reporting process is to help child support agencies issue income withholding orders quickly, so that families dependent on these payments can reasonably count on income as ordered by the court. Neglected reporting can result in children not getting necessary care and services in a timely fashion, as the federal government attributes tens of millions of dollars in collections to the use of new hire data.
• State Benefit Information: New hire reporting is used by states to identify and protect against erroneous benefit payments. The process also helps states identify invalid or fraudulent claims for benefits and assistance programs, including workers compensation, unemployment, welfare, food stamps, and Medicaid.

Now that we’ve given you a variety of good reasons why the new hire reporting process exists and must be followed, we will cover the “who, what, when, where, and how” of reporting new hires, rehires, and reactivated employees. We will also provide you with a link to state-by-state guidance.

Reporting Basics: Who, What, When, Where, and How

When employees are hired or rehired, all employers, regardless of size, are required to submit W-4 information such as:

• Employee name and address
• Social security number
• Date of hire
• Employer name and address
• Employer identification number

This information needs to be reported within 20 days of hire/rehire. There is no requirement to report if your company does not have any new hire activity. However, note that some states have established even more stringent reporting rules, with shorter timelines. Additionally, some states require employers to submit information on independent contractors as well as regular employees.

The permitted methods for reporting new hires can also differ from state to state. Some states require reporting by electronic magnetic media, while others may allow reporting by fax, Internet, and/or e-mail. We’ve provided some information and links in the next section to help you check on your State’s reporting requirements.

State-Specific Reporting Requirements

Stricter new hire reporting requirements have been instituted in some states:

Additional classes of new hires must also be reported in some states:

You can look into state new hire reporting details, forms, and contact information using the following state map link: www.acf.hhs.gov/programs/css/states-new-hire-reporting-websites

Employers that operate in more than one state may report to each state in which employees work or can file a registration form to select one state with which to report all new hires:

• Forms are available at www.acf.hhs.gov/sites/default/files/programs/css/mse_form.pdf and can be sent to the Department of Health and Human Services, Office of Child Support Enforcement, Multi-State Employer registration, P.O. Box 509, Randallstown, MD 21133
• To register for electronic reporting with the Multistate Employer Registry you may use the following link: https://ocsp.acf.hhs.gov/OCSE/

Additional information, including format requirements, agency addresses, and phone numbers, can be accessed at the following link (scroll down to “State New Hire Reporting Requirements matrix):  http://www.acf.hhs.gov/programs/css/resource/state-new-hire-reporting-contacts-and-program-requirements

So What Are the Penalties for Non-Compliance?

To penalize employers who do not comply with new hire reporting requirements, states have been given the ability to fine employers and to institute other non-monetary civil sanctions.  State fines are becoming more and more commonplace as child support obligations gain federal attention and state budgetary restrictions grow.  Employers who fail to report may be fined up to $25.00 per new hire – and in situations where it is determined that the employer and employee actually conspired to avoid new hire reporting, fines can reach up to $500.00 per employee not reported.  So there are a variety of good reasons to follow the law and report your new hires properly.

That’s the 2 Minute Trainer for Today!  Now, go have a productive, harmonious, lawsuit-free day!