Supporting Statement For
OMB Clearance
March 2013
Prepared by:
U.S. Department of Health and Human Services
Administration for Children and Families
Office of Child Support Enforcement
370 L'Enfant Promenade, SW
Washington, DC 20447
Section Page
A. JUSTIFICATION 3
1. Circumstances Making the Collection of Information Necessary 3
2. Purpose and Use of the Information Collection 5
3. Use of Improved Technology and Burden Reduction 7
4. Efforts to Identify Duplication and Use of Similar Information 7
5. Impact on Small Businesses or Other Small Entities 8
6. Consequences of Collecting the Information Less Frequently 8
7. Special Circumstances Relating to the Guidelines of 5 CFR 1320.5 8
8. Comments in Response to the Federal Register Notice and Efforts to Consult Outside the Agency 7
9. Explanation of Any Payment or Gift to Respondents 8
10. Assurance of Confidentiality Provided to Respondents 8
11. Justification for Sensitive Questions 9
12. Estimates of Annualized Burden Hours and Costs 9
13. Estimate of Other Total Annual Cost Burden to Respondents and Record Keepers 12
14. Annualized Cost to the Federal Government 12
15. Explanation for Program Changes or Adjustments 13
16. Plans for Tabulation and Publication and Project Time Schedule 13
17. Reason(s) Display of OMB Expiration Date is Inappropriate 13
18. Exceptions to Certification for Paperwork Reduction Act Submissions 13
STATISTICAL METHODS 14
A. Justification
1. Circumstances Making the Collection of Information Necessary
Section 453(i)(1) of the Social Security Act mandates the operation of the National Directory of New Hires (NDNH) by the Federal 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
Subsection 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, Social Security number, and date of hire, and the employer's name, address, and Federal Employer Identification Number. Subsection 453A(c) states that employers shall, to the extent practicable, submit new hire reports on an IRS W-4 Form or an equivalent form to be defined by the employer. Subsection 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.
The Trade Adjustment Assistance Extension Act of 2011, Pub.L. 112-40, amended subsection 453A(a)(2) of the Social Security Act (eff. April 21, 2012) by adding that the term “newly hired employee” means an employee (1) who has not previously been employed by the employer or (2) who was previously employed by the employer but has been separated from the prior employment for at least 60 consecutive days.
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 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.
Subsection 453A(b)(1)(B) permits an employer with employees in two or more states (hereinafter, “multistate employer”) 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.
Subsection 453A(b)(1)(C) requires federal government employers to report new hires directly to the NDNH.
Subsection 453A(d) of the Social Security Act permits states to set a penalty for employers’ noncompliance with the 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 not exceed –
“(1) $25 per failure to meet the requirements of this section with respect to a newly hired employee; 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 Social Security Act requires quarterly wage and unemployment compensation reporting to the NDNH. Subsection 453A(g)(2)(B) of the Social Security Act requires the SDNH to furnish to the NDNH, on a quarterly basis, data concerning the wages and unemployment compensation paid to individuals. Subsection 3304(a)(16)(B) of the Internal Revenue Code of 1986, as amended by subsection 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 subsection 453(i) of the Social Security Act. In addition, subsection 303(h)(1)(A) of the Social Security 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 lists the required data elements and the definitions 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 subsection 453(n) of the Social Security 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
Subsection 453A(b)(1)(B) of the Social Security 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:
“(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. Purpose and Use of the Information Collection
2.1 Child Support Purposes
The primary purpose of the NDNH new hire, quarterly wage and unemployment compensation claims information is to assist the state child support agencies (including courts, parents, certain agents and attorneys) to locate information on the address of, employment and income 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, their income and their employers to either establish or enforce a child support order. NDNH information is matched with child support case abstracts transmitted by child support agencies to the system of records, “OCSE Federal Case Registry of Child Support Orders,” (No. 09–80–0202, 76 FR 560, January 5, 2011) not less often than every two business days. The results of the comparisons are transmitted to the appropriate state child support agency. OCSE maintains a list of employers who have registered to report to one state to assist in identifying employer compliance with new hire reporting requirements. OCSE provides each state a report of registered multistate employers who do business in their state but are registered to report to another state to assist in employer compliance.
2.2 Additional Purposes
NDNH information is used by additional state and federal agencies and other entities for the following specified purposes:
Subsection 453(b)(1)(A) permits NDNH information to be used for enforcement of state or federal law unlawful taking or restraint of a child or making or enforcing a child custody or visitation determination.
Subsection 453(i)(3) provides the Secretary of the Treasury with access to information in the NDNH for the specified purposes of administering the Earned Income Tax Credit program.
Subsection 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 Federal Parent Locator Service to facilitate the administration of the programs under parts A (Temporary Assistance to Needy Families), B (child and family services), D (child support), and E (foster care and adoption) of Title IV of the Social Security Act.
Subsection 453(j)(4) provides the Commissioner of Social Security with access to all information in the NDNH.
Subsection 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.
Subsection 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.
Subsection 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.
Subsection 453(j)(8) provides the State Workforce Agencies with access to information in the NDNH for the purpose of administering the unemployment compensation program.
Subsection 453(j)(9) provides the Secretary of the Treasury with access to information in the NDNH for the purpose of collecting federal (non-tax) debts.
Subsection 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.
Subsection 453(j)(11) provides the Secretary of Veteran’s Affairs (VA) with access to information in the NDNH for the purpose of verifying the employment and income of individuals who are applying for, or receiving, certain VA benefits, compensation or services.
Subsection 459a(c)(2) permits access to NDNH for a foreign reciprocating country.
Subsection 466(e) authorizes the Department of State to use NDNH information to locate a parent for purposes of the International Child Abduction Remedies Act.
The NDNH may also be used by entities for certain blanket purposes, such as law enforcement, the Department of Justice, courts and other adjudicative bodies, contractors, and those required as a result of a security breach.
3. Use of Improved Technology and Burden Reduction
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 website that has been created for this purpose. It is expected that the majority of multistate employers will choose to report their designation electronically.
4. Efforts to Identify Duplication and Use of Similar Information
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 Health and Human Services 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 Health and Human Services y 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, for example the child support agency, the State Workforce Agency, or the revenue department.
5. Impact on Small Businesses or Other 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 data elements found on IRS W-4 Form (name, address, and Social Security number of the employee, and the name, address, and Federal Employer Identification Number of the employer). Due to recent legislation (Claims Resolution Act, Pub.L. 111-291, December 8, 2010), states must also report the date of hire, which reflects the date an employee first performs services for pay. Because the new hire information is reported on the IRS W-4 Form, the impact to add the “date of hire” to the form by the employer is minimal and does not pose a burden. The expanded definition of “newly hired” employee now defines a newly hired employee as an employee who was previously employed by the employer but has been separated from such prior employment for at least 60 consecutive days. Because the employer is required to submit a new IRS W-4 Form when an employee is hired, there is no impact to the employer. Under authority of state law, states have the option to require information beyond the federally-mandated data elements. If a state has a law to require more data elements, the SDNH has the option to report the state of hire and date of birth data elements to the NDNH. 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 IRS W-4 Form 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 of Collecting the Information Less Frequently
Operation of the NDNH is a statutory responsibility of the OCSE under subsection 453(a)(1) and 452(a)(9) of the Social Security Act. The information collected is vital to efficient and effective child support enforcement across state lines.
7. Special Circumstances Relating to the Guidelines of 5 CFR 1320.5
The law (under subsection 453(n) of the Social Security 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. Comments in Response to the Federal Register Notice and Efforts to Consult Outside the Agency
A notice of this proposed information collection was published in the Federal Register at 77 FR 76295 on January 27, 2013, which allowed for a 60-day comment period for the public to submit in writing any comments about this information collection. No comments were received.
9. Explanation of Any 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 subsection 453(g) of the Social Security Act. No other form of payment or gift will be provided to employers or states.
10. Assurance of Confidentiality Provided to Respondents
The Secretary of Health and Human Services is required by subsection 453(m) of the Social Security 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 Health and Human Services), disclosure is limited to data without personal identifiers under subsection 453(j)(5) of the Social Security 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. Justification for Sensitive Questions
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 and the date of hire. NDNH information is used only as authorized by law.
12. Estimates of Annualized Burden Hours 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 59 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 5.9 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 SSA, approximately 11 percent of employers report all new hires electronically.
Based on the experience of SSA, the above 11 percent of employers employ approximately 82 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, 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. For fiscal year 2012, 4,632 new registrations were received.
Reporting Requirement |
Number of Respondents |
Number of Responses Per Respondent |
Average Burden Hours Per Response
|
Total Burden Hours |
New Hire: Employers Reporting Manually |
5,294,9701 |
1.982 |
.025 hours (1.5 minutes) |
262,101.02 hours |
New Hire: Employers Reporting Electronically |
635,1623 |
76.404 |
.00028 hours5 (1 second) |
13,587.39 hours |
New Hire: States |
54 |
193947.416 |
.016667 hours 7 (1 minute)
|
174,556.16 hours |
Quarterly Wage & Unemployment Compensation |
53 |
278 |
.00028 hours (2 minutes) |
.40 hours |
Multistate Employers’ Notification Form |
4,632 |
1 |
.050 hours (3 minutes) |
231.60 hours |
Total |
|
|
|
450,477 hours |
Some states collect and transmit additional optional data elements to the NDNH: employee’s 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 $21.30 per hour for state employees transmitting data and $18.31 per hour for employers reporting data to the states.9
The assumptions for calculating the “Respondents’ Cost for Hour Burden” are that the average hourly wage rate for state employees transmitting data is $21.30 and the average hourly wage rage for employers reporting data to the states is $18.31.
The total burden hours for “New Hire: Employers Reporting Manually” is estimated to be 262,101.02 hours. The total cost for these burden hours is $4,799,068 (262,101.02 x $18.31). Since there are 5,294,970 employers submitting records, this works out to $.91 per employer ($4,799,069 / 5,294,970).
The total burden hours for “New Hire: Employers Reporting Electronically” is estimated to be 13,587.39 hours. The total cost for these burden hours is $248,785.03 (13,587.39 x $18.31). Since there are 635,162 employers submitting records, this works out to $0.39 per employer ($248,782.03 / 635,162).
The total burden hours for “New Hire: States” is estimated to be 174,556.16 hours. The total cost for these burden hours is $3,716,300.65 (174,556.16 x 21.29). Since there are 54 states submitting records, this works out to $68,820.38 per state ($3,716,300.65 / 54).
The total burden hours for “Quarterly Wage & Unemployment Compensation” is estimated to be .40 hours. The total cost for these burden hours is $8.52 (.40 x $21.29). Since there are 53 states submitting records, this works out to $.16 per state ($8.52 / 53).
The total burden hours for “Multistate Employers’ Notification Form” is estimated to be 231.60 hours. The total cost for these burden hours is $4,240.60 (231.60 x $18.31). Since there are 4,632 respondents submitting records, this works out to $0.92 per respondent ($4,240.60 / 4,632).
Reporting Requirement |
Average Annualized Cost Per Respondent |
Total Annualized Cost |
New Hire: Employers (Manual) |
$.91 |
$4,799,069.68 |
New Hire: Employers (Electronic) |
$0.39 |
$248,785.03 |
New Hire: States |
$68,820.38 |
$3,716,300.65 |
Quarterly Wage & Unemployment Compensation |
$.16 |
$8.52 |
Multistate Employers’ Notification Form |
$0.92 |
$4,240.60 |
Total |
|
$8,768,404.39 |
13. Estimate of Other Total Annual Cost Burden to Respondents and Record Keepers
Respondents and Record Keepers already have systems in place that are used, so there is no capital or start-up cost burden to respondents. There are also no incremental costs associated with collecting this information. There are no ongoing operations and maintenance costs attributable to the requirement to submit to the National Directory of New Hires.
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. Annualized Cost to the Federal Government
The cost to the federal government is estimated to be $9.9 million. This includes the system development and technical assistance contracting costs, telecommunications, security, data quality, and software and hardware costs incurred by OCSE in association with the NDNH.
15. Explanation for Program Changes or Adjustments
There are several adjustments to this information collection. The estimated number of new hire reports collected declined from 60 million to 59 million. OCSE reviewed the methodology for estimating the burden hours associated with submitting data to the NDNH on respondents. As part of this review, new data was collected on the number of employers reporting their new hire information electronically. While the number of employers in the United States has declined since the previous submission, based on OCSE and SSA’s experience, more new hire information reports are now received electronically. This increase in electronic reporting, which takes less burden hours to complete, has resulted in a decreased burden estimate of approximately 310,000 hours.
There is also an increase in the average number of new registrations received from Multistate Employer Notification Forms from an average of 348 per month to an average of 386 a month (4,632 per year). As a result of internal data quality analysis of the multistate employer registry, and subsequent cleanup of the registry, OCSE has been conducting outreach to states and employers to encourage them to add and/or correct their multistate employer information. This increases the total burden hours for the Multistate Employer Notification Form from 209 hours to 231.60 hours. Over the three year period of this information collection, OCSE foresees that the average of new registrations will remain at approximately 4,632 a year. A minor revision was made to the Multistate Employer Notification Form to update the URL for online registration and language was also added to it instructing employers of a new requirement to report the “date of hire”. It has been determined that there is no burden to employers to provide the date of hire since most states have collected the information prior to the legislative change and include the “date of hire” element on their state new hire reporting form. This information is transmitted and captured in the NDNH.
There is a reduction of $25 million in other annual cost burden to respondents because the systems were a onetime start-up cost. There are no ongoing maintenance costs for the systems in place.
16. Plans for Tabulation and Publication and Project Time Schedule
There is no planned analysis or publication of the data collected.
17. Reason(s) Display of OMB Expiration Date is Inappropriate
Not applicable.
18. Exceptions to Certification for Paperwork Reduction Act Submissions
There are no exceptions to the certification statement.
B. Statistical Methods
1 Eighty-nine percent of all employers report manually (based on SSA’s experience).
2 For the “Employers” tiers, “response” is defined as the number of new hire reports. Only eighteen percent of all new hire reports are reported manually and 82 percent are reported electronically (based on OCSE’s experience).
3 Eleven percent of all employers report electronically (based on SSA’s experience).
4 “Response” is defined as the number of new hire reports. Eighty-two percent of new hire reports are reported electronically (based on OCSE’s experience).
5 Based on the assumption that employers reporting new hires electronically transmit their reports in a batch file, thus significantly reducing the per-response burden.
6 Based on the average number of reports per transmission and the average burden per new hire report that are submitted manually. Reports submitted electronically are automated. The average number of reports per transmission is calculated by dividing 10,473,160 (total number of manual new hire reports) by 54 (total number of states).
7 The average burden per new hire report is estimated to be one minute.
8 “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.
9 Based on Bureau of Labor Statistics July 2011 National Compensation Survey Hourly wages
| File Type | application/msword |
| File Title | NATIONAL DIRECTORY OF NEW HIRES |
| Author | Michelle Carpenter |
| File Modified | 2013-03-29 |
| File Created | 2013-03-29 |