Business owners know that hiring a new employee usually involves a lot more than just signing a job offer. There’s onboarding, training, and a number of documents to be completed, including the I-9, W-4, and various company-specific forms. In addition, there are some reporting requirements required by federal law for all new and rehired employees. Generally, the information should be reported within 20 days of hire, though different states may have their own requirements.

New hire reporting is a critical component of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), and employers play an important role in this program which has a major focus on parents’ responsibility to support their children. With an estimated 30% of child support cases involving parents residing in different states from their children, the National Directory of New Hires (NDNH) makes it possible for state child support agencies to take the necessary steps in establishing or enforcing child support orders. According to the federal Department of Health and Human Services (HHS), millions of dollars in collections are attributed to the use of New Hire data.

In addition, state agencies overseeing unemployment insurance and workers’ compensation programs can access new hire information to detect and prevent erroneous benefit payments. States can also use this data to prevent fraudulent or erroneous receipts of public assistance, including welfare, food stamps, and Medicaid payments.

So, what’s required?

Federal law mandates that employers collect the name, address, social security number, and date of hire for each new employee. This information, along with the employer’s name, address, and Federal Employer Identification Number (FEIN) should be submitted to a designated State Directory of New Hires (SDNH) each time a hire is made. The SDNH then forwards the report to the NDNH.

As previously mentioned, each state may have its own deadlines and requirements which dictate the types of data, deadlines, and methods of transmission for reporting. Single-state employers who hire and employ people in only one state will obviously report their data to the state in which they do business. However, for multi-state employers, things can get a little more complicated. These employers have the option to report each employee to the respective state in which they will be working, or designate one state where all hires will be reported. This second option requires the employer to register with HHS.

Although it may seem like an extra burden to ask new employees to provide the required information, most, if not all, of the required data can be found on other, already required forms. Furthermore, using an electronic onboarding system can make the process easy and efficient for both employee and employer to gather and submit data. As part of our comprehensive HR services, Valor Payroll Solutions can help your business integrate these digital solutions into your processes to reduce your stress and take your Human Resources to the next level. Contact us today and let us show you how we can help.