Supporting Statement For
OMB Clearance
January 18, 2007
Prepared by:
U.S. Department of Health and Human Services
Administration for Children and Families
Office of Child Support Enforcement
370 L'Enfant Promenade S.W.
Washington, DC 20447
Section Page
A. JUSTIFICATION 1
1. Circumstances Necessitating Data Collection 2
2. How, By Whom, and For What Purpose Information Is to be Used 4
3. Utilization of Information Technology 6
4. Efforts to Avoid Duplication 6
5. Efforts to Minimize Impact on Small Entities 6
6. Consequences if Data Collection Is Not Conducted 7
7. Special Circumstances 7
8. Publication of Public Notice 8
9. Provision of Payment or Gift to Respondents 8
10. Assurances of Confidentiality 8
11. Questions of a Sensitive Nature 8
12. Estimates of Respondents’ Hour Burden and Costs 8
13. Estimate of Annual Cost Burden to Respondents 12
14. Estimate of Annualized Cost to the Federal Government 12
15. Change in Burden 13
16. Plans for Analysis and Publication 13
17. Display of Expiration Date 13
18. Exception to the “Certification for Paperwork Reduction Act Submissions” 13
B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS 14
APPENDICES
APPENDIX A: Record Layouts and Field Descriptions for Input to and Output from the National Directory of New Hires
APPENDIX B: Multistate Employer Notification Form for New Hire Reporting
SUPPORTING STATEMENT:
PART A – JUSTIFICATION
Part A of the Supporting Statement for this information collection, the National Directory of New Hires, addresses the 18 points outlined in Part A of 5 CFR 1320.
A. Justification
1. Circumstances Necessitating Data Collection
Section 453(i)(1) of the Social Security Act (the Act) mandates the operation of the National Directory of New Hires (NDNH) by the Office of Child Support Enforcement (OCSE) as follows:
“(i) NATIONAL DIRECTORY OF NEW HIRES.--
“(1) IN GENERAL.--In order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall, not later than October 1, 1997, establish and maintain in the Federal Parent Locator Service an automated directory to be known as the National Directory of New Hires, which shall contain the information supplied pursuant to section 453A(g)(2).”
1.1 New Hire Information
Section 453A(b)(1)(A) of the Social Security Act requires employers to furnish to the State Directory of New Hires (SDNH) a report on all newly-hired employees that contains the employee's name, address, and Social Security number, as well as the employer's name, address, and Federal Employer Identification Number. Section 453A(c) states that employers shall submit new hire reports on a W-4 Form or an equivalent form to be defined by the employer. Section 453A(g)(2)(A) requires the SDNH to transmit new hire data to the NDNH within three business days of the data being entered in the SDNH.
In addition, some States may opt to report additional data elements, although they are not required by Federal law. These optional elements are the employee’s date of birth, date of hire, and state of hire. Employers also have the option of reporting a secondary employer address for wage withholding purposes, and an employer foreign address, if applicable.
An employer with employees in two or more States, a multistate employer, has the option to report all new hires to one State, provided that the multistate employer reports magnetically or electronically and that the multistate employer notifies the Secretary of Health and Human Services of its chosen State (see section 453A(b)(1)(B)).
Section 453A(b)(1)(C) requires Federal Government employers to report new hires directly to the NDNH.
The section of the Act (453A(d)) mandating the employers' obligation to report new hire data to the State agencies reads as follows:
“CIVIL MONEY PENALTIES ON NONCOMPLYING EMPLOYERS.--The State shall have the option to set a State civil money penalty which shall be less than--
“(1) $25; or
“(2) $500 if, under State law, the failure is the result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report.”
1.2 Quarterly Wage and Unemployment Compensation Claims Information
The Act requires quarterly wage and unemployment compensation reporting to the NDNH. Section 453A(g)(2)(B) of the Act requires the SDNH to furnish to the NDNH, on a quarterly basis, data concerning the wages and unemployment compensation paid to individuals. Section 3304(a)(16) of the Internal Revenue Code of 1986, as amended by section 316(g) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, states that wage and unemployment compensation information contained in the records of the State agency administering that program shall be furnished to the Secretary of Health and Human Services in accordance with regulations promulgated by the Secretary for the purposes of the NDNH established under section 453(i) of the Act. In addition, section 303(h)(1)(A) of the Act requires the State agency charged with the administration of the unemployment compensation program to disclose quarterly, to the Secretary of Health and Human Services, wage and claim information contained in the records of such agency. Finally, 45 CFR 303.108 gives the required data elements and the definitions thereof for Quarterly Wage and Unemployment Compensation Claims reporting. OCSE requires that a State submit quarterly wage and unemployment compensation data to the Secretary of Health and Human Services only once per quarter.
Federal agencies must also report quarterly wage information, under section 453(n) of the Act, as follows:
“(n) Federal Government reporting
Each department, agency, and instrumentality of the United States shall on a quarterly basis report to the Federal Parent Locator Service the name and Social Security number of each employee and the wages paid to the employee during the previous quarter, except that such a report shall not be filed with respect to an employee of a department, agency, or instrumentality performing intelligence or counterintelligence functions, if the head of such department, agency, or instrumentality has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.”
1.3 Multistate Employer Notification Form
Section 453A(b)(1)(B) of the Act provides multistate employers with an exception for reporting to the SDNH that is intended to simplify the reporting of new hires. A multistate employer is defined as an employer who has employees in two or more States and who transmits reports magnetically or electronically. Multistate employers have the option to report all new hires to a single State, chosen by the employer, in which the employer has employees. To exercise this option, multistate employers are required to designate one State for reporting new hires and to notify the Secretary of Health and Human Services in writing as to the employer’s chosen State. This notification from multistate employers is mandated as follows (§453A(b)(1)(B)):
“(B) MULTISTATE EMPLOYERS.—An employer that has employees who are employed in 2 or more States and that transmits reports magnetically or electronically may comply with subparagraph (A) by designating 1 State in which such employer has employees to which the employer will transmit the report described in subparagraph (A), and transmitting such report to such State. Any employer that transmits reports pursuant to this subparagraph shall notify the Secretary in writing as to which State such employer designates for the purpose of sending reports.”
2. How, By Whom, and For What Purpose Information Is to be Used
2.1 How the Information is to be Used
The purpose of the NDNH is to serve as a repository of information on newly hired employees, and on the earnings and unemployment compensation claims data of employees, to provide the necessary information to locate individuals for child support purposes, as well as for other specified purposes in Title IV-D of the Act. In addition to using the data collected to match new hire reports against their own child support records, States transmit this data to the NDNH, as required by section 453(j)(2) of the Act, where it is matched against the Federal Case Registry of Child Support Orders. Matched information is sent to the appropriate State.
2.2 By Whom the Information Is to be Used
Disclosure of data from the NDNH is limited as follows:
Section 453(i)(3) provides the Secretary of the Treasury with access to information in the NDNH for the specified purposes of administering and enforcing tax compliance.
Section 453(j)(3) directs the Secretary, to the extent and with the frequency that he/she determines necessary, to conduct data comparisons among different components of the FPLS (Federal Parent Locator Service) to facilitate the administration of the Title IV-A and IV-D programs and to disclose information to IV-A and IV-D State agencies.
Section 453(j)(4) provides the Commissioner of Social Security with access to all information in the NDNH.
Section 453(j)(5) gives the Secretary of Health and Human Services the discretion to provide researchers with access to the NDNH data (reported by employers pursuant to §453A(b)) for research purposes that would contribute to the IV-A (Temporary Assistance for Needy Families) or IV-D (Child Support Enforcement) programs. Any data provided to researchers would not include personal identifiers.
Section 453(j)(6) provides the Secretary of Education with access to information in the NDNH for the purpose of matching individuals who are borrowers of loans made under Title IV of the Higher Education Act of 1965 that are in default or owe an obligation to refund an overpayment of a grant awarded under such title.
Section 453(j)(7) provides the Secretary of Housing and Urban Development with access to information in the NDNH for the purpose of verifying the employment and income of individuals who are participating in certain Federal housing programs.
Section 453(j)(8) provides the State Workforce Agencies (SWA) with access to information in the NDNH for the purpose of administering the unemployment compensation program.
Section 453(j)(9) provides the Secretary of the Treasury with access to information in the NDNH for the purpose of collecting Federal (nontax) debts.
Section 453(j)(10) provides access to information in the NDNH to State agencies responsible for the administration of the food stamp program for purposes of administering a food stamp program.
2.3 For What Purpose the Information Is to be Used
The purpose of including new hire, quarterly wage and unemployment compensation claims data in the NDNH is to provide States with the ability to quickly locate information on the address of, employment of, and unemployment compensation being paid to parents with child support obligations who are residing and working in other States. States are seeking to locate these parents and their employers to either establish or enforce a child support order. Quarterly wage and unemployment compensation claims data provide for the location of continuously employed and unemployed individuals who would not be located solely by new hire reporting.
Regarding the multistate employers’ reports, §453(i)(4) requires the Secretary of Health and Human Services to maintain within the NDNH a list of multistate employers that are exercising the option to report to one State and the State to which those employers are reporting.
3. Utilization of Information Technology
The new hire, quarterly wage, and unemployment compensation information is transmitted from the States to the NDNH electronically through high-speed, secure communication lines. Employers are strongly encouraged to electronically transmit their new hire data to the States.
Multistate employers are required to notify the Secretary of Health and Human Services in writing as to which State the employer designates for the purpose of sending new hire reports. These employers have the option of reporting this information to the Secretary via the Internet, e-mail, fax, or the U.S. Postal Service. OCSE has developed an optional form which multistate employers may use to report this information. The form is available in hard copy and through a Web site that has been created for this purpose. It is expected that the majority of multistate employers will choose to report their designation electronically. The forms appear in Appendix B.
4. Efforts to Avoid Duplication
No similar information currently exists in any other consolidated national database.
The statute includes specific provisions to avoid duplication within State reporting. Multistate employers that transmit reports magnetically or electronically have the option of designating one State (in which the employer has employees) for reporting new hires and must notify the Secretary of HHS in writing of the State chosen. This provision is intended to simplify the reporting of new hires for those employers that have employees in two or more States. The requirement of notifying the Secretary of the designated State is a single time requirement for multistate employers.
States determine where to house the SDNH so that only one State agency collects and reports the new hire data to the NDNH (e.g., the child support agency, the State Workforce Agency, or the revenue department).
5. Efforts to Minimize Impact on Small Entities
In an effort to minimize the impact on employers, the information that the States are required to report to the NDNH (and thus that employers are required to report to States) has been held to the absolute minimum required for the intended use. The data elements in the new hire reporting requirements are already collected on the IRS W-4 Form. States are only required to report the name, address, and Social Security number of the employee, and the name, address, and Federal Employer Identification Number of the employer. Under authority of State law, States have the option to require information beyond the six federally-mandated data elements. If a State has a law to require more data elements, the SDNH has the option to report the following optional data elements to the NDNH: employee’s date of hire, state of hire, and date of birth. States requested that these optional data fields be included in the NDNH for fraud detection purposes. In addition, per employers' and States' request, the NDNH is able to accept a secondary employer address and an employer foreign address. The employer address field on the W-4 denotes an employer's headquarters address for tax purposes. Employers requested the option to transmit another address, most likely the payroll address, because it would be more appropriate for receiving wage withholding notices. Any other information required by States from employers is for purposes other than NDNH reporting, and would not be addressed by this filing.
The quarterly wage and unemployment insurance claim data are already collected at the State level, so this requirement poses no additional burden on employers. The State agencies are responsible for the transmission to the NDNH.
Electronic submission of the data to the NDNH is consistent with States' interest in automating information flow and reducing paper.
The multistate employer notification form only impacts employers who have employees in two or more states and who transmit new hire reports magnetically or electronically. Therefore, most small businesses and other small entities are not affected by this requirement on multistate employers.
6. Consequences if Data Collection Is Not Conducted
Operation of the NDNH is a statutory responsibility of the OCSE under section 453(a)(1) and 452(a)(9) of the Act. The information collected is vital to efficient and effective child support enforcement across State lines.
7. Special Circumstances
The law (under section 453(n) of the Act) provides an exemption to quarterly wage reporting for an employee of a Federal agency performing intelligence or counterintelligence functions “if the head of such agency has determined that reporting [data on an employee] … could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.”
Regarding the frequency of reporting, States are required to enter new hire data in the SDNH within five days of receipt of the information from employers and to transmit data to the NDNH within three business days of data entry. Given these statutory requirements and the rotating nature of new hire data entry, the NDNH receives daily transmissions (approximately 250 business days per year) from the states.
8. Publication of Public Notice
A notice was published in the Federal Register on December 1, 2006 at FR Volume 71, Number 231, page 69569, which allowed for a 60-day comment period for the public to submit in writing any comments about this information collection.
The following comment was received from the Texas Child Support Division on December 14, 2006:
“In response to the recent Federal Register announcement we have a comment on the "Multistate Employer Notification Form for New Hire (W4) Reporting". We recommend a formatting revision which will help to emphasize the importance of including information about additional subsidiaries. The recommendation involves moving the sentence "Please list any additional subsidiaries on a separate sheet" from the bottom of question 6 to immediately after "Subsidiary Information:".”
The Office of Child Support Enforcement responded to the comment by placing emphasis on the statement referenced above. The statement “Please list any additional subsidiaries on a separate sheet.” was moved from the bottom of question 6 to immediately after “Subsidiary Information.” This places emphasis on what the employer must do should they run out of space to provide the information.
The following comment was received from the New Mexico Child Support Division on January 31, 2007:
“The collection of new hires directory data is not onerous and is extremely useful in securing income withholding to pay ongoing child support obligations. The quarterly wages and unemployment data also required to be sent to the NDNH is maintained by the state labor departments, but the IV-D agency, who is the manager of the New Mexico Directory of New Hires, has been able to coordinate this exchange of information with the state Department of Labor. It is not altogether clear the purpose for sending the wage and unemployment data to the NDNH. It would be very useful if, in addition to the data already required in the Federal law for employers to report, if employers were also required to report an availability status (this could be a state-defined code) of medical insurance to the new employee in the new hire reports.”
The Office of Child Support Enforcement responded to the comment in a letter stating the following:
“We appreciate your concern regarding the usefulness of the NDNH’s quarterly wage (QW) and unemployment insurance (UI) data. The NDNH’s QW and UI data files provide New Mexico’s child support agency with information similar to the information New Mexico receives from its own State employment agency. However, the NDNH has the additional benefit of providing QW and UI information from other States’ employment agencies and also from Federal agencies.
In response to your question about requiring employers to provide notice of the availability of medical insurance for the child, we cannot require employers to provide this information. Federal law specifically defines what information must be provided by employers to the State Directories of New Hire, to be forwarded to the NDNH. Information regarding the availability of medical support is not required under Federal law.”
9. Provision of Payment or Gift to Respondents
States are reimbursed by the Federal Government for the costs of transmitting new hire, quarterly wage, and claim data from the SDNH to the NDNH under section 453(g) of the Act. No other form of payment or gift will be provided to employers or states.
10. Assurances of Confidentiality
The Secretary of HHS is required by section 453(m) of the Act to establish and implement safeguards to restrict access to and use of confidential information in the NDNH to authorized persons. The NDNH is housed at the secure Social Security Administration (SSA) facility with access limited to authorized personnel. Data extracts authorized by legislation are made by batch processes and transmitted securely to recipients. All data recipients must agree to the OCSE Security Addendum to the Memorandum of Understanding that prescribes the protections that must be afforded the data. When used for research purposes (as authorized by the Secretary of HHS), disclosure is limited to data without personal identifiers under section 453(j)(5) of the Act. In addition, each State must have in effect safeguards designed to protect privacy rights. All State data is transmitted over secure lines to the NDNH.
11. Questions of a Sensitive Nature
One of the data elements required for purposes of new hire reporting is the employee’s Social Security number. This data is already collected from employees on the IRS W-4 Form. The NDNH does not require the collection of any additional information beyond the data elements on the IRS W-4 Form. The new hire data is used only as authorized by law.
Estimates of Respondents’ Hour Burden and Costs
12.1 Respondents’ Hour Burden
The estimates of burden and costs to respondents are based on the following assumptions:
The NDNH collects an estimated 60 million new hire reports per year.
Employers in all 50 States, as well as the District of Columbia, Guam, the Virgin Islands, and Puerto Rico are required to report the hiring of all employees to the SDNH.
There are approximately 6.3 million employers in the United States.
States are required to enter new hire data in the SDNH within five days of receipt of the information from employers and to transmit data to the NDNH within three business days of data entry.
Based on the experience of the SSA, approximately 18 percent of employers report all new hires electronically.
Based on the experience of SSA, the above 18 percent of employers employ approximately 70 percent of all of the nation’s employees.
Employers who report new hires electronically usually transmit their reports in a batch file, thus significantly reducing the per-response hour burden.
There is no incremental burden at the employee level for the new hire data collection, as employees are already required to report their name, address, and Social Security number on the IRS W-4 Form. Even if the State chooses to report one or all of the optional data elements (employee’s date of birth, date of hire, State of hire, secondary employer address, and employer’s foreign address), no incremental burden would be placed on the employees because these data elements could all be accounted for by the employer.
Quarterly wage and unemployment compensation data are treated as one information collection for the purposes of this clearance request, as they are received from the same source.
Quarterly wage and unemployment compensation data are furnished to the NDNH by the States on a quarterly basis.
There is no incremental burden at the employer level for the quarterly wage and unemployment compensation data collection, as employers are already required to submit this information to the States. Because this data will be reported from the SDNH to the NDNH electronically, the burden on the States is minimal.
The multistate employer registration form is a one-time submission. OCSE has received the majority of the multistate registrations. At this point, an average of 234 new registrations are received per month.
Reporting Requirement |
Number of Respondents |
Number of Responses Per Respondent |
Average Burden Hours Per Response
|
Total Burden Hours |
New Hire: Employers Reporting Manually |
5,166,000* |
3.484** |
.025 hours (1.5 minutes) |
449,959 hours |
New Hire: Employers Reporting Electronically |
1,134,000* |
33.272** |
.00028 hours (1 second)*** |
10,565 hours |
New Hire: States |
54 |
83.333**** |
66.7 hours ***** |
300,150 hours |
Quarterly Wage & Unemployment Compensation |
54 |
8****** |
.033 hours (2 minutes) |
14 hours |
Multistate Employers’ Notification Form |
2,808 |
1 |
.050 hours (3 minutes) |
140 hours |
Total |
|
|
|
760,828 hours |
Note: All values have been rounded.
* Eighteen percent of all employers report electronically and 82 percent report manually (based on SSA’s experience).
** For the “Employers” tiers, “response” is defined as the number of new hire reports. Thirty percent of all new hire reports are reported manually and 70 percent are reported electronically (based on OCSE’s experience).
*** Based on the assumption that employers reporting new hires electronically usually transmit their reports in a batch file, thus significantly reducing the per-response burden.
**** For the “States” tier, “response” is defined as the number of transmissions to the NDNH. All States are required by law to transmit new hire data to the NDNH electronically, within three business days after entering the data into the SDNH. There are 250 business days per year. States send a transmission once every three business days, which is equal to 83.333 transmissions per year.
***** Based on the average number of reports per transmission and the average burden per new hire report. The average number of reports per transmission is calculated by dividing 60,000,000 (total number of new hire reports) by 54 (total number of States). The result (1,111,111) is then divided by 83.333 (estimated number of transmissions per State, see above explanation). Based on this calculation, the average number of reports per transmission is 13,333.39 reports. The average burden per new hire report is estimated to be .005 hours (.3 minutes), which is based on a range of two seconds to one minute. The burden is estimated to be two seconds per report for the 70 percent of new hire reports submitted to the State electronically. This two-second burden estimate is based on the same batch-file assumption as above, and includes data receipt and data transmission. If the State has to manually enter the new hire data before transmitting to the NDNH (which is the case for 30 percent of all new hire reports), the burden is estimated to be one minute. The average burden hours per report (.005) multiplied by the average number of reports per transmission (13,333.39) is equal to the average burden hours per transmission (66.7).
****** “Response” is defined here as the number of transmissions to the NDNH. States are required to transmit quarterly wage and unemployment compensation data four times a year.
Some States collect and transmit additional optional data elements to the NDNH: employee’s date of hire, State of hire, date of birth and employer’s secondary address and foreign address. The burden associated with the collection and transmission of these additional data elements is accounted for in the above burden estimates.
12.2 Respondents’ Cost for Hour Burden
The annualized costs to respondents for the hour burdens are based on an average wage rate of $18 per hour for State employees transmitting data and $15 per hour for employers reporting data to the States.
Reporting Requirement |
Average Annualized Cost Per Respondent |
Total Annualized Cost |
New Hire: Employers |
$.95 |
$5,985,000 |
New Hire: States |
$100,050 |
$5,402,700 |
Quarterly Wage & Unemployment Compensation |
$2.38 |
$129 |
Multistate Employers’ Notification Form |
$0.75 |
$2,102 |
Total |
|
$11,389,931 |
13. Estimate of Annual Cost Burden to Respondents
The total estimated annual operational and maintenance cost burden to respondents associated with these information collections is $25 million. These costs include employer outreach, equipment, data processing, and other associated costs for new hire reporting. The start-up phase of the information collection is complete, so no start-up costs are given.
There is no start-up or maintenance cost burden associated with the multistate employer notification form, as it is a one-time requirement for multistate employers.
14. Estimate of Annualized Cost to the Federal Government
The cost to the Federal Government is estimated to be $4.7 million. This includes the system development and technical assistance contracting costs, telecommunications, security, data quality, software and hardware costs incurred by OCSE in association with the NDNH.
15. Change in Burden
The burden time for a manual report by an employer has been re-determined. The time given previously (2.5 minutes) was high. The only action taken is to send a one-page fax, or to place a single sheet of paper into an envelope, address, and stamp the envelope. Based on experiments, the time has been changed to 1.5 minutes.
When the calculation of hours was performed, the number of reports used was the number for all employers in the country, including Federal employers. However, PRA does not require that burdens on the Federal Government be accounted for. Thus, the number of reports (electronic), per respondent, was recalculated to omit Federal employers.
The burden hours for this information collection have decreased from 1,962,431 hours to 760,828 hours. The decrease is due to the fact that data entry clerks at the SDNH are able to enter the New Hire Report in one minute or less. The original time of four minutes to enter a New Hire Report was estimated and not verified by any State. This reduction from four minutes to one minute was based on information received from States on actual times that is takes a clerk to enter a New Hire Report. The sampled States indicated that the expectation is for a clerk to enter a New Hire Report in less than one minute.
16. Plans for Analysis and Publication
There is no planned analysis or publication of the data collected.
17. Display of Expiration Date
Not applicable.
18. Exception to the “Certification for Paperwork Reduction Act Submissions”
There are no exceptions to the certification statement.
SUPPORTING STATEMENT:
PART B – COLLECTION OF INFORMATION EMPLOYING
STATISTICAL METHODS
The information collection requirements outlined in this report do not employ the use of statistical methods.
| File Type | application/msword |
| File Title | NATIONAL DIRECTORY OF NEW HIRES |
| Author | Michelle Carpenter |
| Last Modified By | jshaw1 |
| File Modified | 2007-02-27 |
| File Created | 2007-01-24 |