Deep Dive into Payroll Complexities: New Hire Reporting

Do you remember your first day at your job? While you were admiring your new swag and meeting your team, your employer was reporting your information to the state you work in. Don’t worry, it wasn’t just you–it happens to all newly-hired employees. It’s a process called New Hire Reporting and most payroll companies offer it as a service.  

What is New Hire Reporting? 

New Hire Reporting is a legal requirement imposed on employers by federal and state regulators. It involves the timely reporting of specific information like employee's full name, address, Social Security number, and the date of hire. The employer must provide their business name, address, and federal employer identification number (FEIN). While that is the minimum amount of information to provide, some states may require additional details, such as the employee's date of birth, benefits offered, or wage-related information. Additionally, some states require reporting for contractors, while others don’t.

What happens to all of that information?

The information is reported to designated government agencies, usually the state's labor, employment or workforce agency. This reporting assists in various government initiatives, such as enforcing child support orders, preventing fraudulent activities, and identifying individuals who are receiving public assistance while also employed. Let’s take a look into each of these initiatives. 

Child Support Enforcement: By promptly reporting new hires, employers help state child support agencies locate non-custodial parents who owe child support. This information allows the agencies to take appropriate action, such as withholding income or enforcing payment obligations to benefit children and families.

Preventing Fraudulent Activities: New Hire Reporting plays a crucial role in preventing and detecting fraudulent activities related to public assistance programs. By comparing the reported new hire information with the agency recipient records, government agencies can identify individuals who may be fraudulently receiving public benefits while also being employed. This helps to preserve the integrity of welfare programs and ensure assistance is provided to those who qualify.

Workforce Planning: New Hire Reporting data is valuable for collecting labor market information and analyzing workforce trends. It provides insights into employment patterns, job creation, and economic indicators. This data assists policymakers, economists, and researchers in making informed decisions regarding labor market strategies, training programs, and resource allocation. 

How does Payroll come into play?

Payroll providers are uniquely positioned to report an employee's full name, address, Social Security number and any of the information mentioned above. Regardless of the specific requirements of the state in which the business operates, the payroll system should contain that information. In most cases, the payroll system will also have a copy of the W-4 or state withholding form which can be used in a pinch to report new hires manually.  

New Hire Reporting is a vital practice that supports various government initiatives and programs. Following these regulations is required and failure to comply may result in penalties and fines for employers. It’s another way that payroll can be complex and drain time and resources from small businesses and employers. That’s why Check reports newly-hired employees (with the exception of contractors) for each of our partners. It’s just one more example of how Check is making building a payroll business seamless.