NCSL Legisbrief: New Hire Reporting to Collect Child Support
February 2000
Volume 8, Number 7
By Stephanie Walton
Several states passed laws in the early 1990s requiring employers to report
their newly hired employees to the state child support agency. The initial
success of those programs suggested that this could become a powerful tool in
child support enforcement.
As a result, the 1996 federal welfare reform act required all states and
jurisdictions to pass laws directing employers to send in a notice of all new
employees to the state new hire directory. Employers must submit the information
to the state no later than 20 days from the date of hire. At a minimum, the
state is required to collect the information reported on federal W-4 tax forms.
In conjunction with the state new hire directories, the law directed the federal
Office of Child Support Enforcement to establish a National Directory of New
Hires.
The new hire reporting process is relatively simple. The employer sends a
record of recently hired employees to the state new hire directory. The employee
information is entered into a database and compared with a state registry of
open child support cases. If there is a "match" that indicates a new employee is
delinquent in child support payments, the agency can start such enforcement
procedures as issuing an automatic income withholding order. The state also is
required to send new hire information to the national new hire directory. The
same comparison is made with the national case registry to find interstate
"matches." Information in the state new hire directory is also available to the
state employment security agency and workers' compensation program to detect
fraud in workers' compensation and unemployment insurance programs.
State Actions
State new hire reporting programs vary in two primary aspects: the length of
time employers are given to report new hires and the kinds of data states
collect. Forty-five states have given employers the maximum of 20 days from the
date of hire to report. Other state time frames range from seven days in Alabama
and Maine to 15 days in Iowa and Mississippi. In addition to the basic data
collected from W-4 tax forms, common state requirements include the date of
hire, date of birth and employer contact information. Many states give employers
the option to report additional information ranging from medical insurance
availability to the salary of the employee.
Employers also are given several means to transmit the information to the
directory. States such as Nebraska and Tennessee have systems allowing employers
to report information electronically -- on data tapes or over the Internet. This
reduces the amount of time workers spend entering data and reduces errors in the
directory. Other employers use mail or fax to report their new hire information.
States generally have allowed employers a wide range of reporting methods in
order to increase employer compliance with the requirements. Most states report
good results from their new hire directories. Texas officials say that since
July 1999, the child support agency located two noncustodial parents who had
changed jobs six times in the previous three months. As a result of new hire
reporting, the agency can now implement wage withholding orders before a parent
switches jobs.
Employer cooperation is essential to the success of the new hire programs.
Most employers have willingly complied with the requirements. Many employers
value a program that helps their employees get needed child support. Employers
are concerned, however, about some states' additional data requirements.
Information as simple as a birth date can be difficult to report if an employee
does not know his birth date and does not have access to a birth certificate.
Although state agencies see new hire reporting as a useful tool for child
support enforcement, some employers see additional reporting requirements as
excessive.
As states share their success stories from their new hire reporting programs,
other industries and government agencies increasingly have become interested in
the data. The national new hire directory contains private details about almost
everyone employed in the United States. Although the consequences could be
serious if unauthorized people were able to gain access to the information,
elaborate security precautions safeguard it at the state and national level.
Some state officials are more concerned that the information might be made
available to a larger number of government agencies for a variety of purposes --
such as a current federal proposal to find student loan defaulters or that
private businesses may try to gain access to the database. Private child support
enforcement companies currently are lobbying Congress for access to the
information in the new hire directory and the national case registry. Naturally,
some lawmakers worry that allowing broader access to the information could lead
to violations of individuals' privacy. In spite of their concerns, most
lawmakers agree that the benefits of new hire reporting outweigh the potential
pitfalls. State child support programs have experienced substantial increases in
the amount of support collected on behalf of the children in their caseloads.
New hire reporting is likely to remain an important tool in the process of
ensuring adequate financial support for all children.
Selected References
"Action Transmittal 99-05." Office of Child Support Enforcement,
Administration for Children and Families, U.S. Department of Health and Human
Services, available at the Web site below.
Office of Child Support Enforcement, Administration for Children and
Families, U.S. Department of Health and Human Services, http://www.acf.dhhs.gov/programs/cse/newhire/index.html
New Hire Reporting Results
Arizona-Arizona had 45,083 matches (3.7 percent of total new hires
reported) in FY 99, which resulted in collections of just over $13 million. In
three months of comparisons with the national directory, Arizona located 11,218
matches.
Idaho-In the first four months of operation, Idaho child support
collections more than doubled.
Iowa-Iowa has had 20,000 matches to date with the national directory and
has collected $365,297.
Minnesota-In FY '99, Minnesota had 39,078 matches with its state
directory, and collections increased by $11.6 million (3 percent). Minnesota is
averaging 166 matches per day with the national directory.
Nebraska-Nebraska had 20,333 matches (4.36 percent of total new hires
reported) in FY '98, and 22,116 matches (3.12 percent of total new hires
reported) in FY '99.
New Jersey-Collections in New Jersey increased by $1.6 million per month
due to more timely income withholding, a 28 percent increase over the previous
fiscal year. In FY '98, the state had 70,578 matches (5.51 percent of new hires
reported).
New York-When New York began new hire reporting in 1996, it had 17,500
matches in the first two months and estimated collections of $14 million.
Texas-Texas processed 2,481 income withholding orders due to new hire
information from the national directory in three months.
Virginia-Virginia is averaging 100,000 matches per year with their state
new hire directory, resulting in collections of $7.5 million, and 180,000
matches per year with the national directory, for collections of $13
million.
National -In the national directory, 2.8 million matches were found in FY
'99, more than double the 1.2 million matches in FY '98.
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