Why is new hire reporting required in California?

New and expanding businesses in California are no doubt aware of the numerous requirements and processes that go into hiring a new employee, contractor or seasonal worker. In California, the number one goal is to create a safe, fair and accessible job market so that businesses and their employees can flourish. But understandably, many small businesses and start-up companies can get frustrated at all the hoops they have to jump through. While excessive reporting and paperwork requirements can require significant administrative time, it does help to know that some of these requirements have a noble purpose behind them.

For example, everyone knows that they have to report new hires, including even independent contractors who may not ever be full-time or continuing employees. But most people may not be aware of the reason for this requirement. These new hire reports are extremely important to California child support recipients, as this wage and hiring reporting may be the only way that needy and deserving families are getting the financial support they are owed. California child support agencies check the new hire registries daily to see whether parents who owe child support are receiving income.

People who owe child support in California are required to have this amount withheld from their paychecks on a regular basis to ensure compliance and encourage consistent payment to their children who rely on this amount for the basic necessities of life. Without the new hire registries, it would be more difficult to enforce and require parents to pay their past due child support.

The fine for forgetting to report new hires is relatively small, at $24 per incident. The purpose of the reporting law is not to punish businesses, but to help needy Californians, as well as the taxpayers whose money goes to support them. Business planning and compliance with regulations can be time-consuming, but it is a necessary, and sometimes helpful, part of doing business in California.

Source: State of California Employment Development Department, “New Hire Reporting,” accessed Feb. 23, 2015