9 Vital Steps for Hiring New Employees in Mississippi

Barbara C. Neff

Hiring new employees for your Mississippi business is a big step forward, and it comes with a variety of compliance obligations under both federal law and Mississippi state law. Here’s how to get started.   

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 Mississippi Department of Revenue (DOR).

Apply for a federal employer identification number (FEIN) with IRS Form SS-4, “Application for Employer Identification Number.” After you’ve received your FEIN, you can register online with the Mississippi DOR.

Confirm employee eligibility

Federal law requires every new employee to complete the U.S. Citizenship and Immigration Services’ Form I-9, “Employment Eligibility Verification.” The employee must 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 it on file for three years after the date of hire or one year after the employment ends, whichever is later.

In addition, Mississippi law requires all employers to use the federal E-Verify system to confirm employment eligibility. Failure to comply can result in the termination of all state contracts and ineligibility for public contracts for a period of up to three years, the loss of your business licenses and permits, or a combination of both penalties.

Submit your new hire report

The federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) requires all employers to report certain information on their newly hired employees to a designated state agency—in this case, the Mississippi Department of Human Services. The information is used to locate parents who owe child support. While the department welcomes the reporting of independent contractors, it’s not required.

Mississippi employers must report within 15 days of a new employee’s hire date. Employers that submit reports magnetically or electronically are required to submit the reports in two monthly transmissions not more than 12 to 16 days apart. As long as an employee completes an IRS Form W-4, “Employee’s Withholding Certificate,” that employee must be reported—even if they only worked for a few hours.

Mississippi provides several options for new hire reporting:

  • Electronic Reports: This option is available 24/7 and will provide a printable confirmation of reports received.
  • Printed List: If your software is unable to export your new hire information in the required electronic format, you may be able to have the software create a printed list with your new hire data. The printed list should contain all of the required information on the New Hire Reporting Form (see below), use at least a 10-point font size, and have your name, FEIN, and address clearly displayed at the top of the report.
  • New Hire Reporting Form: You can download the form and submit it by mail or fax:

Mississippi State Directory of New Hires
P.O. Box 437
Norwell, MA 02061

Fax: (800) 937-8668

  • W-4 Form: If you choose this option, you must ensure that each W-4 is easily readable and has your name, FEIN, and address written at the top. 

Determine your Mississippi unemployment insurance tax liability

Mississippi law generally imposes unemployment insurance tax liability on an employer when:

  • It pays $1,500 in wages in a calendar quarter, or
  • At least one worker (it doesn’t have to be the same worker) performs services in some portion of a day in each of 20 different calendar weeks in a calendar year.

Once you’ve satisfied the liability requirement, register to pay unemployment taxes using the Mississippi Department of Employment Security’s online service.

The unemployment insurance tax rate for a start-up business is 1% for the first year of liability, 1.1% for the second year, and 1.2% for the third and subsequent years of liability until you’re eligible for a modified rate.

A modified rate is based on the unemployment benefits charged to your account divided by taxable wages you’ve paid (the individual experience rate), plus the general experience rate of the entire state unemployment program. The general experience rate includes items such as:

  • Benefits charges to employers that have closed their business or are bankrupt
  • Excess charges to employers whose tax rate exceeds the maximum tax rate
  • A solvency factor to ensure the unemployment trust fund remains able to pay unemployment benefits

Your tax rate will vary between 0.0 percent and 5.4 percent (not including the Workforce Investment and Training contribution rate that might be applicable for the rate year). The current taxable wage base is $14,000, meaning the tax rate applies only to an employee’s first $14,000 in wages.

You needn’t report the wages of:

  • The spouse or parent(s) of a sole proprietor
  • Parents of business partners if the partnership is composed solely of the children of the same parents
  • Children under the age of 21 of the sole proprietor or a partnership composed solely of the child’s parents

Quarterly wage reports and taxes are due as follows:

1st Quarter: April 30
2nd Quarter: July 31
3rd Quarter: October 31
4th Quarter: January 31

You can pay online by e-check or mail the payment to:

Mississippi Department of Employment Security
Tax Department
P.O. Box 22781
Jackson, MS 39225-2781

If you file online but don’t pay online, you’ll receive a debit memo indicating payment was not made at the time of report filing. If you don’t wish to file online, you can also mail your reports to the above address.

Interest on late payments is calculated at 1% per month on any portion of a month in which the payment is past due and will accrue until all taxes, penalties, and interest are paid.

Penalties are charged in addition to interest. A penalty for late filing is charged beginning 30 days after the due date of the report, equal to an additional 10% of tax due. After 60 days, or when a warrant for collection is issued, an additional 10% penalty is charged. Total penalties generally will not exceed 20% for any calendar quarter.

NOTE: The Mississippi Department of Employment Security has a voluntary New Hire reporting program intended to reduce overpayments of unemployment compensation by detecting and preventing benefit payments to workers who have returned to work. The program isn’t part of the new hire reporting requirement covered in Step 3 (above). The department generally doesn’t receive information from the State Directory of New Hires until weeks after the claimant has started working; this program is designed to help provide the Department of Employment Security with the information earlier.

To complete the New Hire Reporting card, you’ll need to furnish only your business name, and the name, Social Security number, and date of hire for each new employee. You can return the completed form by email to [email protected] or mail it to:

Mississippi Department of Employment Security
1911 Arcadia Street
Hattiesburg, MS 39401

Participation in this program doesn’t relieve you of the responsibility to continue reporting to the State Directory of New Hires.

Understand your Mississippi withholding responsibilities

You must withhold Mississippi state income taxes from each employee’s pay if you:

  • Engage in business, are licensed to do business, or transact business in Mississippi,
  • Pay wages to a Mississippi resident (regardless of where the services are performed), or
  • Pay wages to a non-resident (persons domiciled outside of Mississippi ) for services performed in Mississippi.

Every employee must provide you with a completed and signed Form 89-350, “Mississippi Employee’s Withholding Exemption Certificate.” You use these forms and the tax tables to determine how much state income tax to withhold from each employee’s paycheck.​

You should register for a withholding account using the Taxpayer Access Point (TAP).  Withholding returns are due on the 15th day of the month following the period. You must file a zero return even if no tax is due to avoid receiving a delinquent notice for failure to file.

Withholding tax returns are filed monthly or quarterly, depending on the average amount of tax you withhold each month. Generally, every employer with an average liability of $300 or more per month must file a monthly tax return. Employers with smaller tax liabilities may file quarterly returns. The DOR will notify you of your filing status.

​Employers that issue 25 or more W-2s are required to submit those electronically to the DOR.

Failure to file or pay the withholding tax can result in interest and penalties. Interest is 1% per month from the time the tax is due until it is paid, with no limit on the amount of interest that may be charged.

The penalty for failure to pay is 10% of the amount of tax due. The penalty for failure to file is $5 per statement, with a minimum of $250, and up to a maximum of $10,000 for each reporting account. If you intentionally disregard filing requirements, the penalty is $25 per return, with a minimum of $250 and a maximum of $50,000 for each reporting account.

Prepare for your federal payroll tax obligations

Employers generally must also withhold federal income tax from each employee’s pay. Collect IRS Form W-4, “Employee’s Withholding Certificate,” from each new hire, on or before the day they start work. The form is used to determine how much of their pay to 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. The form provides proof that your federal income tax withholding matches the employee’s instructions and must be available for inspection if the IRS ever requests it. 

You also must withhold employees’ share of Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). FICA is a federal tax that both employers and employees pay. It includes two taxes: Medicare tax and Social Security tax. The 2023 tax rates for both employees and employers are 6.2% of the first $160,200 of an employee’s earnings for Social Security (for a total of 12.4%) and 1.45% of all wages for Medicare (2.9% total).

You also may be required to withhold the Additional Medicare Tax. Employers must withhold the 0.9% tax from 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 Social Security and Medicare taxes. The IRS deposit schedules are either monthly or weekly, and you must determine which schedule you’re required to use before the beginning of each calendar year.

In addition, you’ll 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 amount due is 6% of the first $7,000 of an employee’s wages during the year.

You should also stay on top of your IRS Form 941, “Employer’s Quarterly Federal Tax Return,” and IRS Form 940, “Employer’s Annual Federal Unemployment Tax Return.” Deposits for the federal unemployment tax are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter. Form 940 is due by January 31, but, if you deposited all FUTA tax when due, you have until February 10 to file.

File your initial Form 941 for the quarter in which you first paid wages that are 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 timely deposited all taxes when due, you have 10 additional calendar days to file the return. For example, you have until May 10 to file it for the first quarter (as opposed to April 30 if you didn’t timely deposit all taxes due).

Going forward, you must file for every quarter, regardless of whether you have any taxes to report, unless you’re a seasonal employer or are filing your final return.

You must also furnish a completed wage and tax statement (Form W-2, “Wage and Tax Statement,” or Form 1099-NEC, “Nonemployee Compensation”) to each employee by the last day of January each year. Send a copy to the Mississippi DOR, too. 

Arrange workers’ compensation coverage

Under Mississippi law, employers with five or more regularly employed workers must have workers’ compensation insurance coverage—even if all five aren’t employed at the same time. Employers with a qualifying drug-free workplace are eligible for a 5% premium discount.

Employers can apply to obtain an exemption from purchasing workers’ compensation coverage through the commercial insurance market if they can demonstrate the financial ability to pay their claims. Group self-insurance, where employers with common interests pay “premiums” to a “risk pool” in return for workers’ compensation coverage, is another option.

Every self-insured employer must file an Annual Assessment Report Form(s) for Insurance Companies & Self-Insurers with the Mississippi Workers’ Compensation Commission on or before March 1 of each year. The form reports the gross claims for compensation and medical services and supplies paid during the preceding one-year period ending on Dec. 31.

Display the required employment law posters

Mississippi employers are required to display a number of posters related to federal and state employment laws in a conspicuous location in the workplace. Applicable federal posters may include the following:

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

Mississippi requires only the following posters:

Familiarize yourself with applicable employment laws

Employers are subject to a wide range of employment-related laws that affect the employment relationship and provide Mississippi employees with certain protections. For example, you may be legally required to provide employees time off.

Potentially relevant federal laws include:

Unlike many other states, Mississippi offers few employee protections beyond those required by federal law. For example, the state has no minimum wage law, so the federal minimum wage of $7.25 per hour applies.

In 2022, Mississippi passed a new Equal Pay for Equal Work Act, but it only protects workers against sex discrimination in pay and otherwise offers narrower protections than the federal law. (It is important to note that compliance with a more lenient state law doesn’t shield you from liability for failing to comply with stricter federal requirements.) The Mississippi version also provides broad defenses to employers that aren’t available under the federal Equal Pay Act.

Mississippi doesn’t have a general anti-discrimination employment law or a governmental agency to handle complaints about employment discrimination that mirrors the federal Equal Employment Opportunity Commission. It doesn’t require time off to vote or for parental, vacation, or sick leave. It also doesn’t require that employers provide meal breaks or rest periods. Mississippi does, however, require that time off be provided for jury duty leave

On the other hand, you can’t condition employment on a requirement that employees abstain from smoking or using other tobacco products in non-work areas during non-work hours. You also can’t establish, maintain, or enforce any policy or rule that has the effect of prohibiting a person from transporting or storing a firearm in a locked vehicle in any parking lot, parking garage, or other designated parking area. And you can’t prohibit firearms in the workplace.

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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