The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, known as welfare reform, requires all employers to report certain information on their newly hired employees to a designated state agency.
All of us in the child support enforcement community thank you for helping to build the strong partnership that exists today between employers and child support programs across the country. The real beneficiaries are, of course, the millions of children whose lives are made more secure because their parents are paying child support through income withholding. The New Hire Reporting Program is essential to this effort and, together with income withholding, has resulted in tens of millions of increased support dollars for children. Your cooperation makes a difference in children's lives, and we thank you again for your commitment.
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New Hire reporting is a process by which you, as an employer, report information on newly hired employees to a designated state agency shortly after the date of hire. As an employer, you play a key role in this important program by reporting all your newly hired employees to your state.
Federal law states that an "employer" for New Hire reporting purposes is the same as for federal income tax purposes (as defined by Section 3401(d) of the Internal Revenue Code of 1986) and includes any governmental entity or labor organization. At a minimum, in any case where an employer is required to have an employee complete a W-4 form, the employer must meet the New Hire reporting requirements.
The "date of hire" is the day an individual first performs services for wages.
The law defines a "newly hired employee" as
It is estimated that more than 30 percent of child support cases involve parents who do not live in the same state as their children. By matching this New Hire data with child support case participant information at the national level, the Office of Child Support Enforcement assists states in locating parents who are living in other states. Upon receipt of New Hire information from other states, state child support agencies can take the necessary steps to establish paternity, establish a child support order, or enforce an existing order.
A major focus of PRWORA is parents' responsibility to support their children. It contains strict work requirements for custodial parents receiving public assistance and increases the effectiveness of the child support program by including New Hire reporting programs in each state. The federal government attributes tens of millions of dollars in collections to the use of New Hire data.
The majority of the information you submit is already collected when your employee completes a W4 form. Although the reporting process is an additional requirement, the majority of employers participating in state-established programs report "no" or a "minor" cost impact on their operations. To ease the process, states are working closely with their employers, offering them a variety of reporting methods.
A potential benefit to employers is the reduction and prevention of fraudulent unemployment and workers' compensation payments. Timely receipt of New Hire data allows each state to cross-match this data against its active workers' compensation and unemployment insurance claimant files to either stop or recover erroneous payments. States have saved millions of dollars of erroneous unemployment insurance payments because of these cross-matches.
Quarterly wage data are often outdated when the child support office receives it. There can be as much as a six-month lag between the time the data is submitted and when it is available to the child support office. With New Hire reporting, data are available within a significantly shorter time period. Because data are more current, noncustodial parents can be located more quickly, allowing child support orders to be established and/or enforced more quickly.
States match New Hire reports against their child support records to locate parents, establish a child support order, or enforce an existing order. In addition to matching within a state, states transmit the New Hire reports to the National Directory of New Hires.
State agencies operating employment security (unemployment insurance) and workers' compensation programs have access to their state New Hire information to detect and prevent erroneous benefit payments.
In addition, each state can conduct matches between its own New Hire database and other state programs to prevent unlawful or erroneous receipt of public assistance, including welfare, food stamps and Medicaid payments.
Security and privacy of New Hire data are important issues for all those involved in this nationwide program. Federal law requires all states to establish safeguards for confidential information handled by the state agency.
All state data is transmitted over secure and dedicated lines to the National Directory of New Hire (NDNH). Federal law also requires that the Secretary of Health and Human Services (HHS) establish and implement safeguards to protect the integrity and security of information in the NDNH, and restrict access to and use of the information to authorized persons and for authorized purposes.