Independent Contractor Reporting

State laws require companies to complete a “New Hire Report” which is primarily used for child support enforcement, compliance with unemployment compensation and workers’ compensation programs. If you use a payroll company such as Gusto or ADP, the onboarding for traditional employees will include this reporting. A little known fact is that New Hire Reporting also applies to independent contractors. This blog gives the basics of understanding the rules and gives you resources for compliance.

State-Specific Requirements

The requirements for reporting new hires, especially independent contractors, can vary significantly from one state to another. Here’s a general overview of what you should consider:

1. Mandatory Reporting: Most states mandate that you report new hires within a specific timeframe, typically within 10 to 20 days of the worker’s start date. Be sure to adhere to these deadlines.
2. Required Information: States generally require details such as the independent contractor’s name, Social Security Number or Employer Identification Number, address, and your business’s name and address.
3. Methods of Reporting: States offer various methods for submitting new hire information, including online reporting, mail, fax, or electronic filing. It’s vital to choose the method that aligns with your business’s needs and the specific requirements of the state.
4. Penalties for Non-compliance: States impose penalties for failing to comply with new hire reporting. These penalties can include fines, charges per day of non-compliance, or even criminal consequences in severe cases.
5. Notification of Independent Contractor Status: Some states may require you to explicitly specify that a new hire is an independent contractor, not an employee. This could entail additional documentation or the use of a specific code in your reporting.
6. State-Specific Nuances: Each state has its unique regulations and guidelines. Some states have their reporting forms that may require specific information beyond federal requirements.

Resources:

A helpful resource is this state by state guide provided by the Office of Child Support Enforcement.

Classifying a worker as an independent contractor when they should be an employee is a common mistake. See our blog post that includes some helpful information about this and other payroll mistakes to avoid.

Staying Compliant

To ensure full compliance with new hire reporting for independent contractors, consult with an attorney or your Human Resources department well-versed in the employment laws of the respective state. Staying informed and taking proactive measures is vital. Failing to comply with these requirements can result in penalties, so it’s crucial to navigate these complex regulatory landscapes with care.

In conclusion, understanding state-specific new hire reporting requirements for independent contractors is an essential part of operating your business legally and responsibly. Stay informed, stay compliant, and reach out to your legal counsel for any questions or guidance you might need in this complex regulatory landscape.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Please consult with an attorney for advice specific to your situation.