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New Hire Reporting: Are You In Compliance?

 

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) is a federal law that requires employers to report specific information on new hires and rehired employees to the state. Generally, all new employees and rehires who are required to complete a Form W-4 must be reported. This includes full-time, part-time, seasonal, temporary and rehired employees. For new hire reporting purposes, these employees are collectively referred to as "new hires."

Why Is New Hire Reporting Needed?

New hire reporting makes it easier for the state to collect child support from noncustodial parents, especially those who change jobs frequently or have moved.

Also, new hire reporting reduces fraudulent claims for unemployment benefits and workers' compensation, as the data can be cross-matched. When the employer submits new hire information to the designated state agency, the data is also sent to the National Directory of New Hires. This allows the state to detect whether an unemployment claimant is working, to stop payments they are not eligible for, and to recover overpayments.

What Information Should I Report?

According to PRWORA, employers must report seven data elements to the designated state agency:

  1. Employee name.
  2. Employee address.
  3. Employee Social Security Number.
  4. Employee date of hire or rehire.
  5. Employer Federal Identification Number.
  6. Employer name.
  7. Employer address.

Be sure to check with your state to see if additional information is required. For instance, employers in New York must also report whether dependent health benefits are offered to the employee and, if so, the employee's eligibility date for receiving those benefits.

What Is the Deadline?

PRWORA — which sets the minimum timeframe for reporting new hires — says employers must report new hires within 20 days of the date of hire. However, the law also gives states the option of mandating a shorter timeframe.

If you have never reported any of your new hires, start by reporting those hired within the last 180 days. Then, continue by reporting new hires by no later than 20 days after the date of hire.

Also, if you've been withholding child support for an employee and he or she leaves the company, make sure you report the termination to the agency that issued the withholding order.

How Do I Report New Hires?

New hires should be reported to the agency that administers the state's new hire reporting program. You can access your agency's website and reporting instructions via the Office of Child Support Enforcement website.

Any Penalties I Should Know About?

Federal law permits states to fine employers up to $25 for each new hire they fail to report. If the employer and employee engaged in a conspiracy to not report, the employer can be fined up to $500 per new hire.

 

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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