NEW MEXICO

NEW HIRE REPORTING - EMPLOYER OUTREACH AND COMPLIANCE ANALYSIS USING STATE QUARTERLY WAGE (QW) DATA

Goals:

• Increase child support collections.
• Maximize employer compliance with new hire reporting laws by targeting employers who appear to not report new hires as required.
• Benefit the state's child support program by increasing the number of new hire reports submitted by employers. Increase automated income withholding orders, paternity locates, and paternity establishments for the child support agency. Reduce fraud in Unemployment Insurance, Worker's Compensation, and welfare benefits.
• Provide state child support officials with useful reports that contain in-depth analyses of employer compliance with new hire reporting.
• Target effective outreach to employer groups and associations based on industry, size class or geographic location.
• Increase the understanding of the factors that affect employer compliance with the new hire reporting law through analysis of employer responses to notices.

Description: Inspired by the Federal Office of Child Support Enforcement's (OCSE) Employer Participation Project (EPP) and the results obtained from these data, the New Mexico Directory of New Hires, using a contract, began to use quarterly wage data provided by the State Employment Security Agency, the New Mexico Department of Labor (NM DoL), to identify employers who may not be reporting employees to the state's new hire directory.

The New Mexico New Hire Directory (NM NHD) performs an in-depth analysis of employer compliance with the state new hire reporting laws. Quarterly wage data received from NM DoL is imported into a database that contains all previous quarterly wage data. The data files include a list of employers reported to have hired new employees during that quarter but who have not recently reported new employees to the NM NHD report. Groups of employers are then targeted to receive new hire reporting information or are contacted by phone to discuss their compliance status.

The factors which affect employer compliance with the new hire reporting law are discovered through an analysis of employer responses. For instance, the first compliance notification revealed that some employers were reporting new hires under one FEIN, and reporting employees for quarterly wage reporting under a different FEIN. In response to this information, NM NHD updated its customer service instructions to inform employers to use the same FEIN to report new hires as they use to report quarterly wage data.

The reports created were:

1. Employer Compliance Overview. This report has the following information:

• Employer Compliance Percentage. The percent of the state's employers with new hires that reported them with the correct FEIN.
• New Hire Volume Compliance Percentage. The percent of assumed new hire reports that were reported by the employer under the correct FEIN. (As found in HIRES, New Mexico's new hire reporting database).
• Employer Compliance by Size Class. An analysis of the relationship of employer size (number of employees) and compliance.

2. Employer Compliance by Industry. This report contains information that shows how specific industries report new hires. Industry associations and employer groups representing industries with lower than average compliance percentages are targeted with new hire reporting outreach efforts.

3. Employer Compliance Overview by County. A display of new hire reporting compliance statistics for each county enables outreach to be targeted by county.

Advantages of Using In-State QW Data in Tandem with OCSE EPP Data

• Received approximately 3 months (or one quarter) earlier than OCSE EPP data, enabling rapid contact to employers who appear not to be reporting.
• Generates in-depth reports that reflect the compliance characteristics of the entire employer community in the state.
• Contains all employers who report wages to the state during the quarter, not just employers who appeared not to report one or more "possible new hire." This provides state officials with a complete picture of the state's level of compliance with the new hire reporting law.
• Provides the information needed to avoid contacting employers who appear to be reporting under an incorrect FEIN, as long as the employer is a registered multi-state employer.

The project created four key components:

1. Rapport between NM NHD and NM DoL. A data sharing agreement was established and access provided to quarterly wage data for the State of New Mexico.

2. Compliance Database. A compliance database was custom-designed to receive the state quarterly wage data and to provide analysis reports and information about employers who appear not to be reporting new hires as required.

3. Non-compliant Employer Procedures. A process for targeting employers who appear not to be reporting new hires was developed. The process includes establishing the employer selection criteria and mailing a new hire reporting informational packet to those employers selected. The mailing packet includes information on the employer's compliance status and a description of timesaving reporting methods.

4. Customer Service and Management Database. A database was created to:

• Display important employer compliance information that customer service can use when responding to employer inquiries.
• Provide a knowledge- capture screen which allows customer service staff to log employers' responses to the mailing.
• Allow new hire management staff to track and report specific employers discovered to be compliant before the mailing was received.

• Provide Management reports including:

  • volume of new hire reports submitted by targeted employers
  • number of targeted employers responding with reports
  • number of phone calls and other inquires received from employers in response to the mailing
  • reports based on employer responses that provide insight on issues that affect employer compliance with the new hire reporting law.

Results:

1. Approximately 3,616 New Mexico employers were provided with new hire reporting status.

2. Since June 2002, 44,083 new hire reports were received. This is nearly 13% of all the new hire reports received in New Mexico during 2002.

3. The additional 44,083 reports resulted in the generation of approximately 699 income withholdings due to new hire matches.

4. These income withholdings brought in approximately $143,112 in collections for New Mexico.

5. New Mexico received over $10,400 in state dollars due to the retained collections brought in through this project.

6. There was a significant increase in the number of first-time employers who reported new hires after the compliance mailing was sent. This population learned about the program through their contacts with other businesses, employer associations, and business associations that serve employers.

7. New hire reports can also be used to reduce unemployment insurance fraud, TANF fraud and worker's compensation fraud.

Location: Statewide

Funding: Regular IV-D funding was used.

Replication Advice: Have a comprehensive understanding of how quarterly wage data is used for determining employer compliance with new hire reporting requirements. This understanding will provide your program with the skills necessary to execute a compliance program.

Develop a method and schedule for obtaining regular, secure, timely quarterly wage data transmissions.

Understand the different ways of viewing "employer compliance," including by size class; industry; and geographic location. By looking at employer compliance information using these and possibly other methods, your program can clearly identify factors that affect employer compliance.

Talk with other states that have performed compliance activities to learn why employers may not report or comply with the new hire reporting law.

Ensure that you have the proper resources needed to implement this project. Resources include analysts, programmers, functional databases, data handling procedures, customer service training and analysis reports.

Designate a Program Manager to coordinate activities, collect and disseminate information based on the results of your efforts.

Contacts:

Don Levering, New Mexico CSED Program Bureau Chief

(505) 827-7242

Donald.levering@state.nm.us

Gina Carpener, New Mexico New Hires Directory Program Manager

(505) 995-8230 x 111

gcapener@policy-studies.com