Pursuant to state and federal laws, new hires and re-hires have long since been reported to the Employer New Hire Reporting Operations Center in the Texas Office of the Attorney General. Previously, “employees” were defined by whether federal income taxes were withheld from their wages. As a result, employers had not been required to report the hiring (or re-hiring) of individuals properly classified as “independent contractors” under these mandates.
However, effective May 1, 2017, the Office of the Attorney General implemented new reporting rules that could impact many Texas employers. The definition of “employee”, for the purposes of this report, has significantly changed. As it pertains to new hire reporting, the definition of “employee” has been broadened to include those individuals hired as independent contractors. Accordingly, Texas employers must submit new hire reports on both traditional employees and independent contractors within 20 calendar days of their hiring.
The Attorney General indicated that these changes to the new hire reporting rules promote important public policy concerns – supporting the Texas Workforce Commission (TWC) in detecting fraudulent claims for unemployment benefits; lowering business taxes; reducing spending on public assistance programs; and assisting with the collection of court-ordered child support in our communities. In addition to these societal benefits, compliance with these changed reporting regulations is also important to avoid burdensome investigations and potential financial penalties.
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(1) 42 U.S.C. § 653a(a)(2)(A).
(2)“’Employee’ means an individual who is an employee within the meaning of Chapter 24 of the Internal Revenue Code of 1986 (26 U.S.C. Section 3401(c)) or an independent contractor as defined by the Internal Revenue Service.” 5 Texas Family Code (TFC) § 234.101(1).
(3)The Office of The Attorney General & Texas Employers, Texas Employer New Hire Reporting (brochure available electronically at https://www.texasattorneygeneral.gov/files/cs/newhire.pdf).