Unemployment Insurance and New Hire Reporting

Legal Definitions

Employee

Federal law 42 USC 653a 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

Federal law 42 USC 653a 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. IRC § 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 federal law 42 USC 653a(b)(1) as amended.

Multistate Employer

Federal law 42 USC 653a(b) provides multistate employers with an exception from reporting that is intended to simplify the reporting of new hires (specified in federal law 42 USC 653a(b)(1)(B)). A multistate employer is defined as an employer who has employees in two or more States and who transmits reports magnetically or electronically.

Date of Hire

Means the date labor or services for compensation are first performed by the employee.

Date of Rehire

Means the date labor or services for compensation are first performed by an employee who was previously employed by the employer but has been separated from that employment for at least 60 consecutive days.