Q: What is PRWORA? The Employer’s Guide to New Hire Paperwork

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. 

PRWORA Compliance

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:

1. Employee’s name
2. Employee’s address
3. Social Security number (SSN)
4. Date of hire (the date the employee first performs services for pay)
5. Employer’s name
6. Employer’s address
7. 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. 

Related

Everything You Need to Know About Hiring Employees for Your Small Business

Hiring and Growth

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:

• Arizona
• California
• Colorado
• Connecticut 
• Delaware
• Florida
• Guam
• Iowa
• Maine
• Massachusetts
• Minnesota
• Nebraska
• New Hampshire
• New Jersey
• Ohio
• Texas
• Utah
• Virginia
• West Virginia

Again, each state or territory will have its own rules about reporting requirements. 

PRWORA Enforcement

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. 

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 Optional:Employee DOB	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 Optional:Employee DOB	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 Optional: Employee DOB	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