OCSE Guidance Helps Employers Report Terminated Employees Subject to Child Support Withholding Orders
Author: Rena Pirsos, XpertHR Legal Editor
August 8, 2017
US employers are on the front line of the government's efforts to enforce child support income withholding orders (IWOs) issued against noncustodial parents by a court or government agency. They are required to comply with a web of both federal and state child support withholding laws and regulations under the specter of hefty penalties and fines if mistakes are made. So employers should be well versed in how to comply with all aspects of IWOs under the applicable laws.
The Office of Child Support Enforcement (OCSE) has updated its guidance materials on one aspect of IWO compliance that employers may overlook - the requirement to report terminated employees who are subject to an IWO. This allows OCSE to prevent a lapse in payment of child support. The guidance explains when and how employers must report the termination of these employees, as well as how to reactivate child support withholding for an employee who ends up being rehired.
When to Report
The guidance reminds employers that they are required to report the termination of an IWO-subject employee as soon as possible to the child support agency, court or attorney that issued the IWO. Note that federal law says the reporting should occur "promptly." Some states also follow the general federal guideline, but others require notification within a specific time period.
The safest practice is to send the notification immediately upon learning of the termination, especially if the relevant state does not have a specific time requirement. This will avoid the child support agency or authority making a determination that the notice was not sent promptly enough.
According to the OCSE's guidance, even though the employer will no longer be withholding child support from the employee, the employer must report the termination if all of the following conditions apply:
- An employer-employee relationship existed;
- The employee completed and submitted a Form W-4, Withholding Allowance Certificate;
- The employer submitted a new hire report for that employee; and
- The employer received an IWO for the employee.
An employer is required to report a termination even if the employee worked for the employer for only a short time - e.g., the employee terminated during his or her first pay period.
How to Report
The OCSE provides an online portal (eTerm) through which an employer can report a terminated employee to a state child support agency. Alternatively, an employer can fax or mail the completed Notification of Employment Termination or Income Status section of the terminated employee's IWO to the issuing agency. Some states accept this information by telephone or online.
The guidance advises employers that received a National Medical Support Notice (NMSN) for a terminated employee to follow the instructions on the NMSN to notify the issuing agency of the termination.
How to Reactivate a Rehire
The OCSE's guidance also advises employers to keep the IWO of an employee who is temporarily laid off, noting that state laws vary regarding how long an employer should keep an IWO after a termination. For example, some states require IWO reactivation if the employee is rehired within 90 days.
In addition, an employer that rehires an IWO-subject employee must submit a new hire report if the employee has been separated for at least 60 consecutive days. States, however, may have shorter timeframes.