SUMMARY
New reporting guidelines affecting all California employers become effective July 1, 1998. Under these guidelines, all employers are required to report new employees to the New Employee Registry (NER) program of the Employment Development Department (EDD). Within twenty (20) days of the start-of-work date, certain required information concerning all newly hired employees must be reported.
KEY PROVISIONS
Introduction. One of the goals of the Welfare Reform Act (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) passed by Congress was the improvement of child welfare through greater child support enforcement. Children of child support debtors often become welfare recipients because a parent fails to provide required financial support. The federal government expanded new employee reporting nationwide to locate more child support debtors. California passed legislation (AB 67) to comply with the federal mandate which required expansion of the NER program by July 1, 1998. The NER is a centralized, confidential system that will receive required information on all new hires in the State of California. Prior to July 1, 1998, California law required employers, who did business in specific industries, to report any employees who had been newly hired or rehired after April 1, 1993. The targeted industries were required to report these employees within thirty (30) days of the date of hire. There were reporting exemptions for workers under 18 years of age, workers paid less than $300.00 per month and for employers with fewer than five (5) employees. There are no reporting exemptions under the new requirements effective July 1, 1998.
Reporting Requirements. Effective July 1, 1998, all California employers are required to report certain information on newly hired employees who work in California to the NER no later than twenty (20) days after the start-of-work date, which is the first date services are performed for wages.
Who to Report. All employees newly hired, rehired or returned to work from a furlough, separation, leave of absence without pay or termination must be reported. An individual is considered a new hire on the first day he/she performs services for wages. An individual is considered a rehire if the employer/employee relationship has ended and the individual returning to work is required to submit a W-4 form to the employer.
What to Report.
The following employee information must be reported:- First name, middle initial and last name
- Social security number
- Home address
- Start-of-work date
The following employer information must be included with the employee information that is reported to the NER:
- Business name and address
- California employer account number
- Federal employer identification number
- Contact person's name and telephone number
When to Report. Information on newly hired or rehired employees must be reported as soon as possible but no later than twenty (20) days after the individual's start-of-work date. If an employer chooses to report via electronic or magnetic media, two monthly transmissions must be submitted which are not less than twelve (12) nor more than sixteen (16) days apart. No magnetic media file should be submitted if there have been no new hires.
How to Report. An employer may choose any of the following to report the information to the NER: Report of New Employee(s), Form DE 34; a copy of the employee's W-4 form provided the employee's start-of-work date and the employer's California employer account number are indicated on the W-4; an alternate equivalent form; or magnetic media. Before an organization can report on magnetic media, it must first complete a Magnetic Media Filing Registration, Form 164, and submit a test file. Employers with a monthly average of fifty (50) or more new hires may find it more cost effective to report by magnetic media.
Reporting by Multi-State Employers. An employer that hires employees in more than one state may elect to report, via magnetic media, all new hires to one state in which the employer has employees. Multi-state filers who elect to file in one state must submit written notification to the federal program's Secretary of the Department of Health and Human Services. The State of California encourages multi-state employers to report California employees to the EDD's NER program.
Penalties. For each failure to report a newly hired or rehired employee, unless the failure is due to good cause, the EDD may assess a penalty of $24.00, or $490.00 if the failure is the result of conspiracy between the employer and the employee not to supply the required report or to supply a false or incomplete report.
CONCLUSION
Reporting information on new hires to the NER may help to reduce public assistance payments funded by state and federal taxes. Reporting should increase child support collections by cross-matching the reported data against child support information in order to locate debtor parents, establish child support orders or enforce existing child support orders. Furthermore, such reporting may assist in stopping or preventing fraudulent unemployment and workers' compensation payments through the timely detection of ineligible claimants. Therefore, the new reporting requirements may benefit employers as well as the public at large.
ASAPTM is published by Littler Mendelson in order to review the latest developments in employment law. ASAPTM is designed to provide accurate and informative information and should not be considered legal advice. ) 1998-1999 Littler Mendelson. All rights reserved.