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When you hear “new hire reporting,” you may immediately think of the new hire census, how many new hires you’ve onboarded and what positions were filled. But new hire reporting is more than that; it is a federal requirement. Keep reading to learn more about new hire reporting, what it is, why it’s important and when to complete it.

What Is New Hire Reporting?

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, also known as welfare reform, requires employers to report basic information such as employee names, addresses and social security numbers of new and rehired employees within 20 days of hire to the state where the employee works. Organizations should check their state new hire requirements as some states, such as Alabama, require this reporting sooner.

Why Is New Hire Reporting Important?

The reporting process for both new and rehired employees is important for several reasons. First, through new hire reporting, financial support is provided for children and families, and unemployment insurance and worker’s compensation programs often save money.

  • Supports children and families. The Office of Child Support Enforcement, an office of the Administration for Children and Families (ACF), reports that approximately 30% of child support cases are from parents who do not live in the same state as their children. Therefore the data received through the new hire reporting program assists in locating these parents. This is then shared by ACF. Based on the information received, state child support agencies can establish paternity, a child support order, or enforce an existing order. ACF reports that the program collects more than $30 billion in child support each year, with 70% of those payments coming from employers through income withholding.
  • Saves money. Many states use employer taxes to fund both unemployment insurance and workers’ compensation programs. Utilizing the data obtained through new hire reporting, employers can ensure that unemployment and workers’ compensation benefits aren’t paid to working individuals. This data matching saves millions of dollars each year.

When to Do New Hire Reporting

Federal law mandates employers report new hires within 20 days of the date of hire. However, some states may require a shorter reporting time frame.

Newly Hired

A newly hired employee is someone who has never been employed by your organization. Note, these are employees who are full-time, part-time, temporary, per diem, basically all employees who will receive compensation from your organization.

Rehired

ACF defines a rehired employee as someone who has been separated from your organization for at least 60 consecutive days. A rehire could be an employee who was a part of a layoff and is returning to work within 60 days, or someone who voluntarily resigns.

What’s Required for New Hire Reporting?

Federal law requires you to collect and report basic demographics such as the employee’s name, social security number and date of hire. Check your state reporting requirements, as some require additional information.

Below is a list of commonly required items for new hire reporting.

Employee Name

The employee is an individual who works for your organization in exchange for wages or some other agreed-to compensation.

Employee Address

This is the contact address or residence of your employee.

Social Security Number

Issued by the Social Security Administration, a social security number is a numerical identifier provided to U.S. citizens and other residents to track income and other benefits (e.g Medicare). No two social security numbers are the same.

Date of Hire

This is the first date of employment, the date on which the employee works and is required to be compensated.

Employer’s Name

The employer’s name is the legal name of your organization as it appears on your certificate of incorporation.

Employer’s Address

The employer’s address is the address specified as the address associated with the organization’s federal employer identification number.

Federal Employer Identification Number (FEIN)

IRS defines the Federal Tax Identification Number, also known as an Employer Identification Number (EIN), as a nine-digit number used to identify a business entity. Organizations may obtain a free EIN immediately by visiting the IRS EIN Assistant program website and submitting an application.

Other taxpayer identification numbers are social security numbers (SSNs) and individual taxpayer identification numbers (ITINs).

How to Report New Hires

Federal law provides three ways for an employer to submit their new hire information: by mail, magnetic tapes, or electronically. In addition, many states have additional options such as fax, email, phone, or via a state website for transmissions.

Step 1: Choose a Method of Reporting

Decide on your organization’s method of reporting, whether it’s by mail, electronically, fax, etc. Reports should be sent to the State Directory of New Hires (SDNH). For federal employers, reports are sent to the National Directory of New Hires (NDNH).

Should your organization decide to send reports by magnetic tape or electronically, you must make two monthly transmissions not fewer than 12 days or more than 16 days apart.

Step 2: Collect the Data

In this step, you’ll need to gather the information needed to report, such as employee name, social security number and address. This information can be obtained from the employee’s W-4 form, as the data on this form is identical to federal reporting requirements. Keep in mind that some states may require additional information.

Step 3: Report

Lastly, you’ll create your report and submit it. Acceptable documents for reporting are Form W-4, a spreadsheet and/or a print page that contains all the required elements (e.g, employee name, SSN).

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Questions You’ve Asked Us About New Hire Reporting

There are a few states that require reporting of contractors; however, there is no federal mandate. 

Employers with employees in multiple states may utilize the Multistate Employer Registry, which allows employers to report new hires in any state.

Wendy is an HR professional with over 10 years of HR experience in education and health care, both in the private and non-profit sector. She is the owner of KHRServices, a full service HR management agency. She is also SHRM and HRCI certified, serves as a HRCI Ambassador, and voted 2021 Most Inclusive HR Influencer.

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