This Act requires individual states to provide time-limited assistance to welfare recipients in exchange for work, essentially forcing many people off the welfare roles. The key issue impacting the payroll manager is that each state must now maintain an employer new hire tracking system that rolls up into a Federal Case Registry and National Directory of New Hires. This information is then used to track parents across state lines who are delinquent in making child support payments.
Employers must report new hires (e.g., any person who is paid wages and is hired to work more than 30 days, including part-time employees) to their state of residence within 20 days of each hire, or at the time of the first regular payroll after the date of hire, whichever is later. The report must be made with a W-4 or equivalent form, which must include the name, address, and social security number of the employee, as well as the name, address and federal tax identification number of the employer.
States can assess penalties for non-compliance at their option, charging $25 for failing to submit new hire information, and up to $500 if it can be proven that there is a conspiracy between the employer and an employee to avoid reporting this information to the government.