In 1996, congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). It was a major piece of welfare reform legislation and had wide effects on how states manage social welfare programs. This is particularly important for business owners in terms of their new hire reporting requirements. Businesses must report personal identification information about newly hired employees in accordance with federal rules, plus additional reporting requirements which differ from state to state.
Though it may seem a little daunting, PRWORA reporting is actually straightforward. By the end of this article, you’ll have an understanding of new hire reporting, and you’ll have the link you need to report in your state.
Let’s get started.
An overview of PRWORA
Though PRWORA is federal legislation, the bill was designed to give states more control over social welfare programs. So long as states comply with a set of federal regulations, they can design additional requirements and limitations into their own system.
For our purposes here, the bill was passed to do two essential things:
- Ensure that people owed child support payments receive them quickly and efficiently, which can include such measures as wage garnishment and wage assignments.
- Reduce the risk of fraudulent government benefit payments.
Through reporting, federal and state governments are able to find anyone who is employed, but not paying child support. Reporting goes through the state to the National Directory of New Hires (NDNH), which is what the Federal Parent Locator Service (FPLS) relies upon to find parents who aren’t paying child support.
Businesses that participate in new reporting are also ensuring that a new hire does not continue to receive unemployment and other government benefits they’re no longer entitled to. PRWORA is especially effective for tracking new hires who have children or receive benefits in another state.
To comply, you need to report to your state’s State Directory of New Hires (SDNH). It may be its own department or part of a larger division—typically the Department of Health and Human Services or the Department of Labor. The state will share information with the NDNH, which then cross-references new hire information with other state reporting centers.
Employers or their payroll service provider will be asked to submit a report within a set number of days after the individual is hired. The number of days varies by state, but won’t be more than 20 calendar days. The employer is required to report at least these seven pieces of information for each new hire or rehire:
- Employee’s name
- Employee’s address
- Social Security number (SSN)
- Date of hire (the date the employee first performs services for pay)
- Employer’s name
- Employer’s address
- Federal Employer Identification Number (FEIN)
Most states require additional information about employees and sometimes employers. This could be the employee’s date of birth or information about the employer’s point of contact. Many states ask employers to share optional information as well.
Each state also has its own rules about where employers can file new hire reporting. Most states have easy-to-use online services where companies can create a profile for future use. Most states also have mail and fax options as well. See the table below for a detailed description of each state’s new hire reporting program and reporting requirements.
Multistate employers can report via the Office of Child Support Enforcement’s Child Support Portal. This is a faster way to conduct reporting. State laws about reporting information still apply.
What happens to the reported data?
When states get new hire data, they cross-reference it with child support orders. When a non-compliant parent is found, child support payments are automatically pulled from their paycheck. It works like other forms of income withholding, such as wage garnishment.
When a new hire is found to have public assistance, the state government will remove the individual from the assistance program. Typically, nothing further is required from the employer, but there are some cases where the state will attempt to recuperate erroneous assistance payments. States do this through income withholding.
Is PRWORA good for business?
Yes! Complying with reporting requirements reduces the chance of fraudulent worker’s compensation and unemployment payment. On the macro level, your tax dollars are working more efficiently. On the micro-level, you’re preventing other businesses from suffering the direct and indirect costs of paying out a worker’s comp claim. And those businesses are protecting you.
What’s more, is that employers see low or no impact on their bottom line. In most states, reporting is easy and takes little time, as the information needed from the employee is part of the W-4 form.
Reporting processes are continually improving. And, as reporting ultimately helps children live more financially secure lives, most employers experience intangible rewards as well.
Which employers need to comply with PRWORA?
If you plan to pay a wage to a new hire, you will be considered an employer and should report your new hire. Employers include:
- Temp agencies that pay a wage to an individual. The individual only needs to be reported once so long as there are no breaks in employment longer than 60 consecutive days.
- Labor organizations of any kind and hiring halls that have individuals who work directly for the organization.
- All federal agencies.
Who is considered a new hire with PRWORA?
A new hire isn’t just a person coming to work for you for the first time. You should also report any employee who returns to work and has to complete a new W-4. Also, if your new hire quits before your reporting deadline, you still have to report them if they earned wages.
While federal law does not require you to report independent contractors, the following states (and one territory) do:
- New Hampshire
- New Jersey
- West Virginia
Again, each state or territory will have its own rules about reporting requirements.
Every quarter, the federal government sends each state agency a list of employers that are not complying with reporting requirements. The state then has the option about how to proceed with enforcement, which can include:
- A letter informing the employer of their requirements with information on how to report.
- A civil fine of up to $25 per unreported new hire.
- A civil fine of up to $500 per unreported new hire when the employer and employee conspired not to report.
New-Hire Reporting Requirements By State
Gathered below is a quick overview of each state’s reporting requirements with a link to the state’s new hire reporting center.
Are you a Gustomer? Our partner CorpNet will take care of registering your employees in the proper state. See here for more details.
|State with Reporting Link||Reporting Timeframe||Additional Reporting Data||Reporting options|
|Alabama||7 days||Whether the employee was newly hired or recalled to work||Sate website. Employers with fewer than 5 employees can send hard copies|
|Alaska||20 days||SEIN, health insurance||Online, mail, fax|
|Arizona||20 days||State of hire||Mail, phone, fax|
|Arkansas||20 days||Optional:Employee DOB,Employer phone and fax number||Online, fax, mail, payroll|
|California||20 days||Employer phone number and contact person, California EDD payroll tax account number||Online, mail, fax|
|Colorado||20 days||None||Online, mail, fax|
|Connecticut||20 days||None||Online, mail, fax|
|Delaware||20 days||Optional:Employee DOB and gender,if the employee left before filing,point of contact name, phone, fax, email||Online, mail, fax, electronic transmission|
|District of Columbia||20 days||None||Online, mail, fax, electronic transmission|
|Florida||20 days||Reemployment assistance, identification number (if applicable)||Online (additional information may be required), mail, fax, phone|
|Georgia||10 days||State of hire||Online, mail, fax, electronic|
|Guam||20 days||Optional:Employee occupation, starting wage, wage frequency,health insurance availability,employer email, phone, fax, and contact person||Email, mail, fax, personal delivery from employer|
|Hawaii||20 days||Optional:Employee DOB,state of hire,SEIN||Phone, fax, mail|
|Idaho||20 days||Idaho unemployment insurance account number,contact name and phone||Online, mail, fax|
|Illinois||20 days||None||Online, electronic reporting, mail, fax|
|Indiana||20 days||None||Online, mail, fax, payroll services|
|Iowa||15 days||Health insurance availability,date employee qualifies for health insurance coverage,address where withholding or garnishment orders can be sent||Online, mail, fax|
|Kansas||20 days||Optional:Employee DOB,state of hire,health insurance availability for dependents,employer phone, fax, and email||Online, mail, fax|
|Kentucky||20 days||SEIN||Online, electronic, mail, fax|
|Louisiana||20 days||SEIN||Online, mail, fax, payroll services|
|Maine||7 days||None||Online, mail, fax|
|Maryland||20 days||State of Maryland Unemployment Insurance Number (SUI),employee gender|
|Online, electronic, mail, fax|
|Massachusetts||14 days||None||Online, bulk filing, electronic file transfer|
|Michigan||20 days||Optional:Employee DOB, drivers licensestate of hireemployer phone, fax, email, contact name,SEIN||Online, mail, fax, payroll services|
|Minnesota||20 days||Optional:Employee DOBEmployer information||Online, mail, fax, payroll services|
|Mississippi||15 days||Employee DOB, gender, salary, payment frequency, health insurance availabilitySEIN||Online, mail, fax|
|Missouri||20 days||Optional:Employee DOB, state of hire, health insurance availability, employment type,employer payroll address||Online, mail, fax|
|Montana||20 days||Optional:State of hireemployee phone, DOB, health insurance availability,employer phone, fax||Online, mail, fax, file transfer system, phone|
|Nebraska||20 days||Optional:Employee DOB,state of hiredependent health insurance availability||Online, mail, fax, payroll services|
|Nevada||20 days||Optional:Employee DOB,state of hire||Online, mail, fax|
|New Hampshire||20 days||NHES employer account number,work statetype of hire||Online, mail, fax, FTP transmission|
|New Jersey||20 days||None||Online, electronic, mail, fax|
|New Mexico||20 days||None||Online, mail, fax, payroll services, new hire mobile app|
|New York||20 days||Health insurance availability||Online, electronic transmission, mail fax|
|North Carolina||20 days||SEIN|
|Online, electronic transmission, mail fax, new hire data entry software|
|North Dakota||20 days||Health insurance availability||Online, mail, fax, payroll services|
|Ohio||20 days||For Independent Contractors:Date payment begins,length of contract|
Optional:Employer income tax credit status, second address,additional new hire information
|Online, mail, fax, payroll services|
|Oklahoma||20 days||State of hire,occupation,Oklahoma employer account number (OESC)health insurance availability for dependents||Online, mail, fax|
|Oregon||20 days||None||Online, mail, fax|
|Pennsylvania||20 days||Employer contact person name and phone,employee DOB||Online, mail, fax, secure FTP|
|Puerto Rico||20 days||SEIN,Employee DOB,health insurance availability||Online, mail, fax|
|Rhode Island||15 days||State of hire|
Optional:Employee DOB,health insurance availability, date health insurance beganemployer contact name, phone, email
|Online, mail, fax|
|South Carolina||20 days||Optional:Employee DOB,employer phone||Online, mail, fax|
|South Dakota||20 days||None||Online, mail, fax, phone|
|Tennessee||20 days||State of hire||Online, mail, fax, electronic transmission|
|Texas||20 calendar days||Payroll services address||Online, mail, fax|
|Utah||20 days||State of hire|
|Online, fax, phone|
|Vermont||10 days||None||Online, mail, fax|
|Virginia||20 days||Optional:Employee DOB,health insurance availability,employer contact name, phone, email, fax||Online, mail, fax, electronic transmission|
|Virgin Islands||20 days||Health insurance availability,employee’s first day of work,employer contact name, phone, fax,Virgin Islands Emergency Security Agency number||Online, mail, fax|
|Washington||20 days||None||Online, mail, fax, phone|
|West Virginia||14 days||None||Online, mail, fax, electronic transmission, mobile app|
|Wisconsin||20 days||First day of work,payroll services address|
Optional:state of hire,employer contact name, phone, email, fax
|Online, mail, fax, payroll services|
|Wyoming||20 days||State of hire,first day of work|
Optional:Employee DOB,employer contact name, phone
|Online, mail, fax, payroll services, encrypted email|