Congress required states to organize a directory to help prevent fraud in state benefit programs and enforce child support obligations. By comparing the social security numbers reported to the State Directory of New Hires with the records from state benefit programs, state officials can verify eligibility for the various benefit programs, such as unemployment benefits , workers' compensation benefits and food stamps. Furthermore, state officials compare employer reported social security numbers to the social security numbers of those against whom a child support order has been entered to enhance enforcement of child support obligations. If the state agency discovers a match in social security numbers, it may direct the employer to withhold any support owed from the employee's income.
Employers must send the required report to the appropriate State Directory of New Hires within 20 days after the date on which a new employee is hired. New York also requires the employer to forward a copy of the employee's W-4 form or its equivalent directly to the State Directory of New Hires. Other states may require different forms. Employers face monetary penalties for failing to report new hires as required under the appropriate state laws.
If an employer hires an employee to work in more than one state, the employer may choose the state to which it will report. The employer, however, must be aware of the laws in all states in which newly hired employees will work. For example, if an employer hires a group of employees to work in both Connecticut and New York, the employer may choose to report to either state's Directory of New Hires. Even if the employer chose to report to Connecticut, New York law requires the employer to notify in writing the Secretary of the Federal Department of Health and Human Services which state has been designated to receive the reports. If instead the employer reported to New York, Connecticut law requires the employer to notify in writing Connecticut's Labor Commissioner as to which state it has designated to receive reports.
Employers must become familiar with the applicable law of every state in which they have facilities to ensure proper compliance with the new reporting requirements. For questions concerning the application of the laws, you should seek legal counsel.
The author is grateful to Jennifer Boll, summer associate, for her tremendous assistance in drafting this article.