State labor agency seeks fine for non-reporting employers

The Idaho Department of Labor claims employers' failure to

report new hires undermines the state's efforts to identify people

who owe child support so their wages can be garnished and identify

people who continue to collect unemployment benefits after they

have gone back to work.

The Idaho Department of Labor is asking the Legislature to impose a fine on employers who fail to comply with the 1997 law requiring them to report newly hired workers to the department within 20 days.

The agency announced its plan to seek a penalty for non-reporting employers in a press release issued Wednesday. 

The Senate Commerce and Human Resources Committee has scheduled a hearing on introduction of the proposal for Thursday. The bill would impose a $25 fine for every new hire an employer fails to report on time, up to a maximum of $5,000 in fines allowed in any quarter against any individual employer. Should the bill pass, the penalty takes effect July 1.

A new webpage - www.labor.idaho.gov/newhire - was launched this week to help employers learn about the law, comply and make reporting new hires easier. In addition to explaining the law, the site provides a set of frequently asked questions and instructions for reporting new hires online, electronically and via mail and fax.

Over the past 14 years, only about 30 percent of Idaho's employers have complied with the reporting requirement. Those are the largest employers in the state, and they account for about 70 percent of the newly hired workers in Idaho. But the failure of all employers to report undermines the law's purpose - first to identify people who owe child support so their wages can be garnished and second to identify people who continue to collect unemployment benefits after they have gone back to work.

Since the law was passed, child support collections through wage withholding have jumped from less than a third to more than half, and nearly 1,200 parents who have ignored child support orders are being identified and garnished every month.

The law also helps the Department of Labor's Compliance Bureau quickly identify workers who are back on the job but still collecting unemployment benefits and recover those overpayments while they are still manageable amounts. Without 100 percent compliance, however, it can take months to identify claimants who have continued collecting benefits after they have returned to work, and then it becomes increasingly difficult to actually recover any of those overpayments because the amounts are so large.

Department compliance staff cross-matches unemployment benefit recipients with the new hire reports every day to prevent further benefit payments to claimants who are back to work without alerting the department. Over $3 million in overpayments has been recovered this way since the recession began in December 2007.

Beefed up new hire reporting compliance is part of the department's long-range plan to crack down on benefit fraud and overpayments. A special departmental task force will implement this strategic plan.

The department is stepping up education about benefit and tax responsibilities for claimants and employers; increasing staff training to better assist claimants in complying with unemployment benefit requirements; developing new messaging services for employers to obtain real-time information on employee separations; linking directly to the IRS to recover overpayments from federal tax refunds and creating a new computer system for benefit and tax payments to replace the existing system that is over 30 years old.

Department audits are being refocused to detect misclassification of workers as independent contractors and cases where workers are being paid under the table to avoid unemployment insurance and other taxes.