Frequently Asked Questions

Federal law requires employers to report newly hired employees to a state directory of new hires. Child support agencies match these reports against their cases to locate parents and start income withholding. The rule is at 42 U.S.C. 653a, and the federal Office of Child Support Services (OCSS) within ACF publishes employer guidance.

Who must report. The term employer follows the Internal Revenue Code definition and includes governmental entities and labor organizations. A newly hired employee is someone who has not worked for the employer before, or who returns after being separated for at least 60 consecutive days. Federal agencies report to the National Directory of New Hires instead of a state directory.

What to report. Each report must include the employee's name, address and Social Security number, the date the employee first performed services for pay, and the employer's name, address and federal employer identification number. Reports are made on a W-4 form or an equivalent form, and many states accept electronic files. States may require more data elements.

Deadlines. States set their own deadline, but it cannot be later than 20 days after the hire date. Employers that report electronically may instead send two monthly transmissions, if needed, between 12 and 16 days apart. OCSS guidance notes that a report is still due for an employee who quits before the report deadline, because wages were earned. If a new employee has no Social Security number yet, the employer has 20 calendar days from the date the employee receives one.

Multistate employers. An employer with employees in two or more states can report each employee to the state where the employee works, or report each new hire to one state where it has employees. The second option requires registering with HHS as a multistate employer, naming the chosen state, and reporting electronically.

Penalties. States may set a civil money penalty of up to $25 per failure to report a newly hired employee, or up to $500 if the failure results from a conspiracy between the employer and the employee to skip the report or file a false one. States must enter employer reports into the directory within 5 business days of receipt.

How it connects to withholding. After a new hire record matches a child support case, the state can send an income withholding order to the employer. The FAQ on child support income withholding orders covers the employer's next step once a withholding order arrives. Recent program changes are covered in the Learn Laws® news items on the federal case registry and the child support deregulation proposal. HR teams that build onboarding checklists can pair this step with compliance training.

When a child support order is in place, a state child support agency or court can order an employer to withhold support from an employee's pay. The employer receives the federal Income Withholding for Support (IWO) form. The rules come from 42 U.S.C. 666(b) and 45 CFR 303.100, with limits set by the Consumer Credit Protection Act at 15 U.S.C. 1673.

What the notice tells the employer. Under 45 CFR 303.100(e), the IWO states the amount to withhold and that the total withheld, including any fee, may not exceed the federal limits. It also states that the employer must send the amount to the State Disbursement Unit within 7 business days of the date the employee is paid and report the date of withholding. The withholding is binding until further notice from the state. An employer may combine payments for several employees in one payment if it identifies each employee's share.

Withholding limits. For support orders, 15 U.S.C. 1673(b)(2) caps garnishment at 50 percent of disposable earnings if the employee supports another spouse or dependent child, and 60 percent if not. Those limits rise to 55 and 65 percent when the support covers a period more than 12 weeks before the workweek. States may set lower limits, and the employee's work state controls the maximum amount, timing of payments and employer fee.

Priority. Child support withholding has priority over other legal process under state law against the same income. OCSS guidance says child support comes before other garnishments except an IRS tax levy entered before the support order was established.

Employer liability. An employer that fails to withhold as the notice directs is liable for the amount it should have withheld. Federal law requires states to fine an employer that discharges, refuses to employ or disciplines an employee because of withholding. An employer that complies with a notice that is regular on its face is not subject to civil liability for that conduct.

Terminations. The employer must notify the state promptly when the employee leaves, and provide the last known address and the new employer's name and address if known. The IWO form includes a section for this notice.

Related duties. Withholding often starts after a new hire report, and the IWO may include cash medical support. Health coverage orders use a separate form, the National Medical Support Notice. Related FAQs cover new hire reporting and the National Medical Support Notice. Program updates appear in the Learn Laws® news item on the child support deregulation proposal and the news item on OCSE employment services. Compliance training covers order processing for payroll staff.

A National Medical Support Notice (NMSN) is the federal form that child support agencies use to order an employer to enroll an employee's child in employer group health coverage. Cash medical support is ordered on the income withholding form instead. The rules are at 45 CFR 303.32 and, for group health plans, section 609 of ERISA at 29 U.S.C. 1169.

When the notice arrives. Under 45 CFR 303.32(c)(2), the state agency must send the NMSN to the employer within two business days after it enters a new hire record for an employee who owes support in a child support case. The notice replaces any earlier medical support notice for the same employee and children.

Two parts. Part A is the Notice to Withhold for Health Care Coverage, which directs the employer to withhold employee contributions. Part B is the Medical Support Notice to the Plan Administrator.

Employer steps. OCSS guidance lays out the process:

• Check whether any of the four conditions on the Employer Response form apply that prevent the employer from honoring the notice. Some may not be known until the plan reviews the notice.
• If one applies, return the Employer Response to the issuing agency within 20 business days.
• If none applies, send Part B to the plan administrator within 20 business days after the date of the notice.
• After the plan confirms enrollment, withhold the employee contributions and send them to the plan.

Plan administrator duties. An appropriately completed NMSN is treated as a qualified medical child support order. Within 40 business days after the date of the notice, the plan administrator must tell the state agency whether coverage is available and, if so, whether the child is covered and the coverage start date (29 U.S.C. 1169). If enrollment must wait for a waiting period, the administrator processes it when the period ends.

Withholding limits. Consumer Credit Protection Act limits still apply. If cash support plus premiums would exceed the maximum, the employer follows the priority rules of the state where the employee works, and may need to tell the agency that the children cannot be added.

Contests and terminations. An employee may contest the withholding based on a mistake of fact, but the employer must start withholding until it receives notice that the contest is resolved. The employer must notify the state promptly when the employment ends, the same way it does for income withholding.

Related topics. The FAQ on child support income withholding orders covers the wage side of a support order. Program changes are covered in the Learn Laws® news item on the child support deregulation proposal. Benefits teams that handle protected health information should also review whether HIPAA training is mandatory.