New Hire Reporting

The Personal Responsibility and Work Opportunity Reconciliation Act -- another welfare reform law -- contains provisions for strengthening a Federal Child Support Program that collects child support payments for children in single-parent families.

The government locates non-custodial parents, establishes paternity and sets up child support orders.

A key element of the program affecting employers is that all states and territories now have a program that receives and processes information about newly hired employees. The New-Hire reporting program collects information so that child support orders can be more effectively enforced whether parents live in the same state or in another jurisdiction.

An employee's basic information on the W-4 form is used by the child support agency to track non-custodial parents. Information is transmitted from the local New Hire Directory and to the National Directory of New Hires, a component of the Federal Parent Locator Service (FPLS), operated by the Federal Office and Child Support Enforcement. The FPLS does weekly, biweekly and monthly name/Social Security number matches.

With New-Hire information form other states and territories, Child Support Enforcement agencies establish paternity, establish a child support order or enforce existing orders. Agencies with Workers’ Compensation Programs also have access to the New-Hire information to detect and prevent erroneous benefit payments. Agencies also conduct matches between the New-Hire database and other programs to prevent unlawful or erroneous receipt or public assistance payments.

New Hire reports contain the same information that is on a W-4 form:

You can arrange to simply fax a W-4 (with a cover-sheet -- ATTN: Barbara Cepeda) -- call 475-3325 to get an OK. 

Ideally, the AG's office could collect the W-4 data on-line. We are told this is coming... 

To help you better understand New-Hire reporting, you need to be aware of some key terminology. The term "employer" is the same as that described for income tax purposes including any government entity or labor organization. "Employee" is a person who has income tax withheld from wages earned. "Date of hire" is the first day services are performed for wages.

What is New-Hire reporting and whast is done with the information you send in?
New Hire reporting is a process by which employers report to the Child Support Enforcement (CSE) or Family Division of the Attorney General’s Office on newly-hired employees soon after the employee’s date of hire. The CSE matches New-Hire reports against their child support records to locate parents, establish a child support order, or enforce an existing order.

Why have a National Directory of New Hires -- Does the ACLU* know about this?
More than 30 percent of child support cases involve non-custodial parents who do not live in the same jurisdiction as their children. By matching New-Hire data with child support data at the national level, the Federal Office of Child Support Enforcement is able to assist local agencies in locating non-custodial parents living in other jurisdictions.  *Anti Christian Litigation Union?

What does the taxpayer get out of the New Hire reporting system?
The U.S. Department of Health and Human Services estimates that the New-Hire program has increased national child support collections by billions of dollars. The program has significantly increased child support collections, cut welfare expenditures, and saved millions of dollars in Medicaid, Food Stamps and phony unemployment insurance claims.

Isn’t this information currently available through the quarterly wage reporting we do under SWICA, the State Wage Information Collection Agency?
Yes, but some non-custodial parents change jobs frequently, so SWICA data is outdated before the child support office gets it. Too often, employees who are located through quarterly data have simply moved along, relocated or they are no longer working.  Or they have "off the books" jobs and get paid in untaxed cash. That means wage withholding cannot be put in motion. With New Hire reporting, the data is available much faster than it ever was with the largely-ignored and unenforced SWICA system -- like I-9 forms...there was no real enforcement! Employers in Guam can file SWICA data on-line at:

https://www.guamtax.com/eservice/swica.html;jsessionid=SB52qkC29ICVt_muc8zUlmpRKg6v++zttjRBDBZckgk= 

Is this reporting process just another paperwork burden for employers?
Most of the information you submit is already collected when a new employee completes a W-4 form. Although the reporting process is an additional requirement, employers report either no or "minor" cost to their operations.

How will employers benefit from New Hire reporting?
Quick access to New-Hire data allows child support agencies to cross-match data against active files and reduce welfare fraud.  Jurisdictions that have New Hire reporting, such as Tennessee, Texas and Virginia, reported benefit savings in the millions of our tax dollars.

How soon must you submit a report after hiring someone?
Federal law gives each jurisdiction the discretion to establish the time-frames for reporting new hires -- 20 days is the maximum. Employers who transmit reports magnetically or electronically, must report by two monthly transmissions, if necessary. The transmissions may not be made less than 12 days nor more than 16 days apart. You must adhere to the reporting timeframe of the state or territory you report to.

What must be reported and what form should you use?
Each New-Hire report must contain the six data elements from the W-4 form: Employee name, address and Social Security number; Employer name, address and Federal Employer Identification Number (EIN) Reports can be made either on the W-4 form or, at your option, an equivalent form. Although most states or territories plan to require only these six basic data elements, some need additional data.

If you layoff and then re-hire an employee, or an employee returns after a leave of absence, do you need to send in another New-Hire report?
An easy rule of thumb will help you remember when to report a New-Hire: If the employee returning to work is required to complete a new W-4 form, then you must report them as a New-Hire. If the returning employee had not been formally terminated or removed from payroll records, there is no need to report them as a New-Hire.

We are a temporary employment agency, must we report as a New-Hire each person placed by our agency?
If your agency is paying wages to the employee, you must submit a New-Hire report. The employee needs to be reported only once -- unless there is a break in service from your temp agency and a new W-4 form is required. If you simply refer people for employment and you do not pay wages, New-Hire reports are not necessary because the employer who actually pays the person will be required to report the New-Hire information.

Do I need to submit a New-Hire report for independent contractors and subcontractors?
Federal rules say that if the work being performed is based on a contract rather than an employer/employee relationship, you are not required to submit a New-Hire report. In that case, the contractor is responsible for reporting their employees.

Do you need to do a New-Hire report on someone who quits before you are due to report?
Yes. Because the employer/employee relationship existed and wages were earned, a New-Hire report must be submitted. Even though the employment period was short, the information you send in could be the key to locating a delinquent, non-custodial parent.

Where and how do you send the information?
New-Hire reports should be sent to the Family Division of the Attorney General’s Office in the jurisdiction where the employee works. Federal law identifies three methods for submitting New-Hire information: first class mail, magnetic tape, or electronic transmissions. For employer convenience, some CSEs offer additional options such as fax and Internet transmissions. If you have employees in more than one state or territory, contact the Family Division in Attorney General’s Office for additional information.

How is New-Hire data be safeguarded once it is submitted?
Security and privacy of New-Hire data are important issues. Federal law requires safeguards for confidential information handled by the government. All data is transmitted over secure and dedicated lines to the National Directory of New Hires. Federal law also requires that Department of Health and Human Service set up safeguards to protect the integrity and security of information in the Directory and to restrict access to and use of the information to authorized persons and purposes.

Are there penalties for employers who do not report New-Hires?
States and territories have the option of imposing civil monetary penalties for non-compliance. Federal law says that if states and territories impose a penalty on employers for failure to report, the fine may not exceed $25 per newly-hired employee that the employer may fail to report. If there is a conspiracy between the employer and the employee not to report the hire, there may be a penalty of up to $500 per newly-hired employee that the employer fails to report. States and territories may also impose non-monetary civil penalties.

What if I have more questions?
The Family Division of the Attorney General’s office where you do business will provide you with complete information and instructions regarding all aspects of the local New-Hire program and your responsibilities as an employer.

For additional information in Guam, contact Deputy Attorney General Barbara Cepeda  -- www.guamcse.net or www.guamattorneygeneral.com -- the Family Division of the Attorney General’s Office. Fax number: 475-3203. Voice lines are: 475-3324/61/62/63 -- be prepared for a long wait for the voice lines to be answered because this division is chronically short-staffed.

This publication was adapted from materials published by the National Directory of New Hires, the Federal Parent Locator Service, the Federal Office and Child Support Enforcement, and the U.S. Department of Health and Human Services.

Revised May 5, 2008