The Employer’s 2024 Guide to Hiring New Employees in Wisconsin

Barbara C. Neff

Bringing on new employees can be an exciting time for a business, but it also comes with numerous one-time and ongoing responsibilities imposed by various federal and state laws. If you’re hiring employees in Wisconsin, here are several steps you should take to ensure that your hiring process covers all of the legal bases.

1. Register as an employer

If you haven’t already done so, you must register as an employer with the Internal Revenue Service (IRS) and the Wisconsin Department of Revenue (DOR) for tax purposes.

The first step is to obtain a federal employer identification number. You can apply for that using IRS Form SS-4, “Application for Employer Identification Number.”

Once you have your federal employer identification number, you can register online with the DOR. In most cases, you will receive an email with your new account number(s) within one or two business days.

Alternatively, you can download and complete Form BTR-101, “Application for Wisconsin Business Tax Registration,” and mail it to:

Wisconsin Department of Revenue
P.O. Box 8902
Madison, WI 53708-8902

You should allow 15 days for the processing of paper applications.

2. Verify employee eligibility

Every new employee must complete the U.S. Citizenship and Immigration Services’ Form I-9, “Employment Eligibility Verification.” The employee is required to fill out Section 1 of the form by their first day of employment. You’ll need to complete Section 2 by the end of the third business day after the employee begins work. Keep the form on file for three years after the date of hire or one year after the employment ends, whichever is later.

Wisconsin does not require employers to use the federal E-Verify system.

3. Submit a new hire report

The federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) and state law require all Wisconsin employers to report certain information on their newly hired employees to the State Directory of New Hires within 20 days. Reporting is also required for re-hired employees after a separation of 60 days or more, including individuals who remain on the payroll during the separation.

The PRWORA information is used to track down individuals who are delinquent on their child support obligations. In Wisconsin, the new hire information is also used in the administration of Social Security and public assistance programs, and to detect and prevent fraud within unemployment insurance and potential programs.

You can report your new hires online or with Form WT-4, “Employee’s Wisconsin Withholding Exemption Certificate/New Hire Reporting.” You can also report with IRS Form W-4, “Employee’s Withholding Certificate,” if it has the employee’s dates of birth and hire.

Mail reports to:

Wisconsin New Hire Reporting
P.O. Box 14431
Madison, WI 53708

Or fax them to (800) 277-8075.

4. Prepare to withhold state income taxes

You generally must withhold Wisconsin individual income taxes from wages paid to state residents (regardless of where the services were performed) or nonresidents for services performed if you:

  • Engage in business in Wisconsin,
  • Are licensed to do business in Wisconsin,
  • Transact business in Wisconsin,
  • Are organized under Wisconsin law, or
  • Are primarily engaged in business outside of Wisconsin and licensed to do business in Wisconsin or transact business in Wisconsin.

After you submit Form BTR-101, “Application for Wisconsin Business Tax Registration.,” the DOR will assign your filing frequency based on the information you provided. If your withholding liability changes, you may be notified of a change to your filing frequency for the next calendar year.

To determine the proper withholding amount, you’ll use the information on Form WT-4, “Employee’s Wisconsin Withholding Exemption Certificate/New Hire Reporting,” and the state’s withholding tables.

Quarterly, monthly, and semi-monthly filers must file an electronic deposit report (Form WT-6) even if no tax is withheld during the period covered. Filing options include:

For monthly or quarterly filers, reports are due on or before the last day of the month following the monthly or quarterly withholding period.

It’s a bit more complicated for semi-monthly filers. When the employee pay date is on or between the first and the 15th of the month, the amount of Wisconsin income tax you withheld from the wages paid is due on or before the last day of the month. When the employee pay date is on or between the 16th of the month and the last day of the month, the amount withheld from the wages paid is due on or before the 15th of the following month.

For example, if your employee is paid on Dec. 16, you’ll report withholding on the deposit report for the period ending Dec. 31. This deposit report is due Jan. 15.

Monthly, quarterly, and semi-monthly filers must also file Form WT-7, “Employers Annual Reconciliation of Wisconsin Income Tax Withheld.” It’s due on Jan. 31 after the prior year and also must be filed electronically. Annual filers are only required to file Form WT-7; they don’t need to file any deposit reports.

The DOR may grant a one-month extension to file the deposit report, the annual reconciliation, and supporting statements and returns if you can show good cause. You may request an extension by:

  1. Completing the Request Extension to File in My Tax Account,
  2. Emailing [email protected]​, or
  3. Writing to:

MS 3-80
Wisconsin Department of Revenue
Tax Operations Business
P.O. Box 8902
Madison, WI 53708-8902

Extension requests must be received by the original due date of the deposit report or return.

5. Know your federal payroll tax obligations

In addition to Wisconsin individual income taxes, you generally must withhold federal individual income tax from an employee’s paycheck. You should collect IRS Form W-4, “Employee’s Withholding Certificate,” from each new hire on the day they start work. Like Wisconsin’s Form WT-4, the form is used to determine how much of an employee’s pay you should withhold for federal income taxes. Make sure your employees complete it properly.

You aren’t required to submit Form W-4 to the IRS, but you must keep a copy on file for at least four years. It provides verification that you’re withholding federal income tax according to the employee’s instructions. It must be available for IRS inspection upon request. 

You must also withhold each employee’s share of Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). FICA is a federal tax that employers and employees split.

The 2024 tax rates for both employees and employers are 6.2% of the first $168,600 of an employee’s earnings for Social Security (for a total tax of 12.4%) and 1.45% of all wages for Medicare (a total of 2.9%).

You also may be required to withhold the Additional Medicare Tax, which is 0.9% of an individual’s wages paid in excess of $200,000 in a calendar year.

You must deposit federal income tax withheld and both the employer and employee portions of Social Security and Medicare taxes. You should determine which schedule you’re required to use—monthly or weekly—before the beginning of each calendar year.

You’ll also need to pay federal unemployment taxes (FUTA) if you:

  • Paid wages of $1,500 or more to employees in any calendar quarter during the current or previous tax year, or
  • Had one or more employees for at least some part of a day in any 20 or more different weeks in the previous year or 20 or more different weeks in the current tax year, counting all full-time, part-time, and temporary employees.

The tax due is 6% of the first $7,000 of an employee’s wages during the year.

Deposits for the federal unemployment tax are required for the quarter within which the tax due exceeds $500. Deposits must be made by the end of the month following the end of the quarter.

You’ll want to stay on top of your reporting, as well as on your deposits, on all of these. You do that on IRS Form 940, “Employer’s Annual Federal Unemployment Tax Return,” and IRS Form 941, “Employer’s Quarterly Federal Tax Return.”

Form 940 is due by Jan. 31, but if you deposit all FUTA tax when due, you have until Feb. 10 to file.

File your initial Form 941 for the quarter in which you first paid wages subject to Social Security and Medicare taxes or subject to federal income tax withholding. The form is due by the last day of the month that follows the end of the quarter.

If you made timely deposits in full payment of your taxes for the quarter, you can file Form 941 by the 10th day of the second month that follows the end of the quarter. For example, you may file it by May 10 for the 1st quarter (as opposed to April 30 if you didn’t).

Going forward, you must file Form 941 every quarter (every three months), regardless of whether you have any taxes to report—unless you’re a seasonal employer or are filing your final return.

You must also file IRS Form W-2, “Wage and Tax Statement,” to report each employee’s annual wages, deductions, and tax withholding to the IRS and furnish a copy to each employee by the last day of January each year. Form W-2 shows the amounts of income, Social Security, and Medicare taxes you withheld in the prior year. You’re also required to send copies to the Social Security Administration and the Wisconsin DOR.

6. Understand your state unemployment insurance tax responsibilities

Generally, you’re required to pay unemployment insurance “contributions” in Wisconsin after you have:

  • Paid wages of $1,500 or more in a quarter in any calendar year, or
  • Employed one or more individuals for some part of a day in 20 or more weeks in any calendar year. The weeks needn’t be consecutive, and part-time employees must be included in the employee count.

Coverage is retroactive to Jan. 1 the year you become liable. State unemployment insurance taxes are in addition to the federal unemployment tax. 

Reporting requirements

For every quarter, you must file a wage report and contribution report (or tax payment). Reports are due as follows:

  • Jan. 1 – March 31: April 30
  • April 1 – June 30: July 31
  • July 1 – Sept. 30: October 31
  • Oct. 1 – Dec. 31: Jan. 31

You can report online or, if you have fewer than 25 employees, with Form UC-7823-E, “Quarterly Wage Report.”

Employers with a first quarter tax liability of $1,000 or more can elect to defer paying up to 60% of the total liability to future quarters. You must file the election electronically between Feb. 15 and April 30 of the year you’d like to take the deferral. A new election must be filed each year that you wish to defer your first quarter tax liability. Tax and wage reports must be filed electronically for all calendar quarters of the year elected for deferral.

Excluded wages

You generally must report all wages paid, but some wages may be excluded. For example, a sole proprietor isn’t required to report the wages of the proprietor’s father, mother, spouse, or children who are under the age of 18 (this doesn’t apply to a corporation and only applies to a partnership if the employee has the same type of relationship with all of the partners—for example, in a two-person partnership where the partners are both parents of the employee).

Small employers can elect to exclude the wages of all principal corporate officers as long as they have a direct or indirect ownership interest in the corporation (meaning they own or control at least 25% of the business). But these excluded officers won’t be eligible to receive unemployment benefits. Annual taxable payroll must be less than $500,000 for the calendar year preceding the year of the election.

The corporation must file Form UCT 7937, “Election to Exclude All Principal Officers,” by March 31 of the year it’s requesting to elect out of coverage. For new employers, the form is due when the first quarterly report is due.

Certain employers may elect to be designated as “seasonal employers,” which could result in a lower tax rate. Seasonal employees may not be eligible to collect uninsurance benefits, but wages would still be reported, and taxes would continue to be paid on these wages. As a seasonal employer, you would also pay an additional 2% solvency tax on all of your taxable payroll to a limit of the maximum rate in effect for the calendar year.

Rate determination

New employers are assigned a standard fixed rate for the first three calendar years. For 2024, the new employer rate for non-construction employers is 3.05% for small employers with taxable payroll under $500,000 or 3.25% for large firms with taxable payroll over $500,000. The taxable wage base is $14,000, meaning you pay the tax only on the first $14,000 of an employee’s earnings. 

After the first three calendar years, you’ll be assigned an annually determined “experience” rate based on the activity in your account. Your account balance increases with each tax payment and declines with every unemployment benefit payment made to one of your former employees.

Your experience rate is determined by:

1. Calculating your “reserve percentage” (your account balance as of June 30 divided by your fiscal year taxable payroll as of June 30).

2. Applying the reserve percentage to the rate schedule, which shows a basic rate, a solvency rate, and a total rate.

  • The basic rate portion of each tax payment is credited to your account balance.
  • The solvency rate portion of each tax payment is credited to a shared risk account called the balancing account.
  • Your total rate is the sum of your basic and solvency rates and is the rate shown on your quarterly tax report.

The total rate applies for all quarters for the following calendar year. You’ll normally receive your rate notice in mid-October for the following calendar year. For 2024, the highest rate is 12%. The rate schedules can change from year to year, though, depending on the overall condition of Wisconsin’s Unemployment Reserve Fund.

You can make an extra “voluntary contribution” every year, which is credited directly to your June 30 account balance to reduce your rate for the following year by one rate bracket on the rate schedule. You may submit a voluntary contribution to obtain a lower rate for the upcoming year only from mid-October through November each year. These payments must be received by Nov. 30.

7. Obtain workers’ compensation coverage

Wisconsin law requires most employers to insure their liability for employees’ work-related injuries and illnesses with workers’ compensation insurance carriers authorized to do business in Wisconsin. Alternatively, you can self-insure if you obtain the approval of the Department of Workforce Development. The department requires employers to demonstrate a “very sound financial condition” to be self-insured. An employer exempted from insuring with a carrier assumes the responsibility for its own worker’s compensation risk and payment. These employers are generally quite large, though.

You must have worker’s compensation coverage if any of your businesses:

  • Employ three or more full-time or part-time employees. You must get insurance on the day you employ the third person.
  • Employ one or more full-time or part-time employees to whom you have paid combined gross wages of $500 or more in any calendar quarter for work done at one or more locations in Wisconsin. You must have insurance by the 10th day of the first month of the following calendar quarter.

Be careful if you use independent contractors—they can trigger the workers’ compensation requirement even though you don’t consider them employees. In Wisconsin, a worker must satisfy a nine-part test to qualify as an independent contractor rather than an employee. The person must:

  1. Maintain a separate business.
  2. Obtain a federal employer identification number or have filed business or self-employment income tax returns with the IRS based on the work or service in the previous year.
  3. Operate under specific contracts.
  4. Be responsible for operating expenses under the contracts.
  5. Be responsible for satisfactory performance of the work under the contracts.
  6. Be paid per contract, per job, by commission, or by competitive bid.
  7. Be subject to profit or loss in performing the work under the contracts.
  8. Have recurring business liabilities and obligations.
  9. Be in a position to succeed or fail if business expenses exceed income.

To be considered an independent contractor and not an employee, an individual must meet and maintain all of these conditions.

Out-of-state employers must have worker’s compensation insurance if they have employees working in Wisconsin. The policy must be with an insurance company licensed to write in Wisconsin and endorsed to name Wisconsin as a covered state.

Unlike some states, Wisconsin considers family members working for an employer to be employees. Sole proprietors, partners, and members of LLCs are exempt from workers’ compensation coverage but may elect to cover themselves.

A corporate officer is generally considered an employee. But, in a closely held corporation with no more than ten stockholders, one or two officers can exclude themselves from coverage.  An officer who elects to exclude themselves is still an employee, and their wages are included to determine whether the corporation has three or more employees or has paid gross combined wages of $500 or more in a calendar quarter.

If a closely held corporation has one or two corporate officers and no other employees or officers, a worker’s compensation policy isn’t required as long as each officer elects not to be subject to the workers’ compensation law.

The cost of insurance will vary depending on how hazardous the jobs in your business classification are, based on past experience in your industry and your gross payroll. It will, for example, cost more to insure blasters than to insure barbers. Wisconsin has about 540 separate job classifications for premium purposes—note that it’s the employer’s business that’s classified and not the specific job. The Wisconsin Compensation Rating Bureau sets the premium rate for each class.

8. Display legally required labor law posters

Employers must post a variety of federal and state employment-related posters in a conspicuous location in the workplace. The posters generally inform employees of their rights and the employer’s responsibilities.

Federally mandated posters may include:

The U.S. Department of Labor has an online “poster advisor” to help employers determine which posters they need to display.

Wisconsin employers may also be required to post:

9. Follow the Laws

Employers are subject to a wide range of federal and state employment-related laws, including the following:

Failure to comply with these laws can lead to costly fines, penalties, lawsuits, and reputational damage.

**

Following the steps outlined above will help you to stay on the right side of the law and avoid administrative headaches, or worse, down the road.

Barbara C. Neff has been writing about a variety of legal and other topics since 2001. She has a law degree and a master's degree in journalism.

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