07 Aug Reporting New Hires to the Government
When a business hires employees, it must generally report certain details about the new staff members to a state agency within a short period of time.
The agency compares the information with child support files in that state, and then passes it on to the National Directory of New Hires (NDNH), where it is compared with child support files from other states. This agency is part of the Federal Office of Child Support Enforcement. The purpose is to keep track of parents who are expected to pay court-ordered child support.
Here are the basic details of your company’s responsibilities:
What to Report?
The list below, provided by the Department of Health and Human Services, lists the information employers must collect in order to meet federal requirements. These are the same details received when an employee fills out a W-4, although some states may ask for more:
- Employer Name: Name associated with the Federal Employer Identification Number (FEIN)
- Employer Address: Address associated with the FEIN entity that employs the individual
- Federal Employer ID Number: Nine-digit number assigned to the employer by the IRS
- Employee Name: Full name associated with that employee’s Social Security number
- Employee Address: Current residential address of the new employee
- Employee SSN: Nine-digit Social Security number assigned to the employee by the Social Security Administration
How to Report?
Because the information required by the federal government is also listed on W-4 forms, some employers fulfill the state requirement by simply sending copies of the W-4s to the state agency.
Most states have pre-designed forms, although employers generally have the option of creating their own, as long as the necessary elements are included. This way, employers can develop a method of collection that works with their existing software.
State rules vary but employers can generally send data by:
- Interactive phone systems, or
- Other electronic or magnetic media.
When to Report?
To some degree, the answer depends on the method of reporting. In general, however, the information must be transmitted within 20 days of the hire date to meet federal requirements. (If you have a high volume of new hires, check with your state agency to find out the requirements.)
Where to Report?
If you are a single-state employer, you obviously report new hires to the state where you do business.
But if you have employees in more than one state, you are subject to multi-state employer rules. In this case, you have two options:
- You can report new hires to New Hire Reporting Offices in the various states in which the employees work.
- Choose one state and report all new hires to that state’s New Hire Reporting Office (although payroll service providers are prohibited from choosing this option).
If you’re a multi-state employer and you choose to report to only one state, you must send the data electronically or magnetically. You must also notify the Federal Department of Health and Human Services of your choice.
The Price of Not Complying
Many states impose a penalty on employers who fail to report new hires on a timely basis. For example, the state of New York may assess a penalty of $20, multiplied by the number of employees not reported, assuming the failure to report was a simple mistake, rather then an attempt to deceive. California can assess a penalty of $24 per employee not reported.
The reporting process can be time-consuming and complex for some businesses. A professional payroll service firm can handle this chore for your company as part of its service.
Payroll Partners is committed to helping clients stay informed about payroll and human resource news, developments and current events. This article is intended to provide readers with general information on human resources matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular human resources practice. All efforts have been made to assure the accuracy of the information. Payroll Partners does not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular human resources practice. If you are seeking human resources advice, you are encouraged to consult a human resources professional.