Section 653a(a)(2)(A)(i) defines an "employee" as
an individual who is an employee within the meaning of Chapter 24 of
the Internal Revenue Code of 1986 (IRC). Thus, an individual who is an
employee for purposes of federal income tax withholding from wages is also
an employee for new hire reporting purposes. Chapter 24 of the IRC and
the regulations declared thereunder define an "employee" as every individual
performing services if the relationship between the individual and the
person for whom the services are performed is the legal relationship of
employer and employee (see IRC section 3401(c) and 26 CFR 31.3401(c)-1).
Generally, the legal relationship of employer and employee exists when the
person for whom the services are performed has the right to control and
direct the individual who performs the services not only as to the result to
be accomplished but also as to the details and means by which that result is
to be accomplished. It is not necessary that the employer actually direct or
control the manner in which the services are performed; it is sufficient if
he or she has the right to do so.
An individual’s status as an employee or an independent contractor may be determined
by filing Form SS-8, Determination of Employee Work Status for Purposes of Federal
Employment Taxes and Income Tax Withholding, with the local IRS office, or by reference to
IRS Publication 15A--Employers Supplemental Tax Guide. IRS forms and publications may be
obtained by calling 1-800-TAX-FORM (829-3676).
Employer:
Section 653a(a)(2)(B)(i) provides that the term
"employer" has the same meaning as in section 3401(d) of the Internal Revenue
Code (IRC) of 1986 and includes any governmental entity and any labor organization. At a
minimum, in any case where an employer is required to give an employee a Form W-2 showing
the amount of taxes withheld, the employer must meet the new hire reporting requirements.
Section 3401(d) defines "employer" as the person for whom an individual performs
any service of whatever nature, as the employee of such person. Section 3401(d) goes on to
provide in part that "if the person for whom the individual performs or performed the
service does not have control of the payment of the wages for such services, the term
"employer" . . . means the person having control of the payment of such
wages." Thus, every entity (including governmental entities and labor organizations)
is an employer if the entity exercises or has the right to exercise control and direction
over an individual who performs or has performed any service for the entity unless the
entity does not have control of the payment of the employee’s wages. In these cases,
the entity having control of the payment of such wages is the "employer." All
entities satisfying 3401(d) of the IRC must meet the new hire reporting requirements set
forth in section §453A(b)(1) of the Social Security Act, as amended.
Multistate Employer:
Section 653a(b)(1)(B) provides multistate employers with an
exception from reporting that is intended to simplify the reporting of new hires
(specified in 653a(b)(1)(A)). A multistate employer is defined as an employer who has
employees in two or more States and who transmits reports magnetically or electronically.
New Hire:
An individual is considered a new hire on the first day in
which an individual performs services for remuneration, i.e. first day of work. This is
also the first day in which an employer begins to withhold amounts for income tax
purposes.
Rehire:
A report that a person has been rehired must
be sent to the State New Hire Registry when the following three (3)
conditions exist: (1) an individual returns to employment following an
unpaid absence of at least six weeks , (2) the employer/employee
relationship was severed, and (3) a new W-4 form is submitted to the
employer. This rule is applicable to seasonal type employment
situations.
An individual who is retained as an employee by a new owner in
a change of ownership does not need to be reported as a new hire
unless there was a formal termination of employment with the predecessor and
a new hire action was made by the new owner.
