Tag Archives: Employers

Employers

Four salespeople wearing aprons in hardware storeOur ability to collect consistent child support depends upon employment — and employers. The Family Support Act of 1988 revolutionized the collection of child support by requiring employers to withhold support payments from the paychecks of parents owing support. The law flipped the paradigm: instead of garnishing delinquent payments, the law established a process modeled after income tax withholding to withhold payments as they became due. In fact, the income withholding law is an early application of behavioral economics by setting up automatic payroll deductions with an opt-out to help parents do the right thing.

Next came the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), enacted twenty years ago. PRWORA required employers to report new hires and established the National Directory of New Hires. Obtaining employer data on a systematic basis allowed us to determine whether parents owing support have a regular paycheck coming in.

These two business practices — income withholding and new hire reporting — transformed our program. Today, 75 percent of collections are paid through income withholding, and our current collection rate is at an all-time high of 65 percent. This means that families are more likely than ever to receive regular on-time payments that they can depend upon and budget for. And it means that we could not be where we are today without our essential partnerships with employers. Indeed, employers are our MVPs. In recent years, several child support agencies have launched employer outreach campaigns and established dedicated employer liaisons to keep our employer partnerships robust.

As part of our efforts to facilitate income withholding and new hire reporting, OCSE has prioritized automated tools, portal enhancements, and standardized procedures to streamline the process. These streamlined processes make it easier for employers to help us carry out our mission and get more support to families.

We have made a number of improvements such as:

  • e-IWO — Federal legislation enacted in 2014 requires states to use electronic income withholding. More than 50 states and territories participate in e-IWO, and they issue withholding orders to more than 9,000 unique Federal Employer Identification Numbers. Find out more in Sherri Grigsby’s ‘Employer outreach builds allegiance’ article on page 3.
  • Reporting lump sum payments — Employers can now report lump-sum payments through the federal portal to increase child support collections and help employers comply with state laws.
  • e-Term — Employers can report employee terminations electronically through our portal.
  • Verification of employment — Following a change in federal legislation, we issued guidance (DCL-16-01) to employers and to state child support agencies that a verification of employment sought by a child support agency does not trigger the reporting obligations of the Fair Credit Reporting Act.
  • New hire reporting pilot — This tested new approaches to improve new hire reporting rates among employers.

Employers do something else for child support collections, too. They provide jobs. Most of the parents in our caseload are working and raising families. The most effective way to improve our collection rate is to increase the number of parents who are employed and paying monthly support through income withholding. A growing number of employers are providing job opportunities for parents with a criminal record and have signed the White House Employer Fair Chance Business Pledge, a commitment to consider job applicants with a record. We have a link to the pledge on the OCSE Employers webpage.

OCSE launched the Child Support Noncustodial Parent Employment Demonstration (CSPED) in 2012. A number of other research projects have studied interventions designed to improve the employment outcomes of low-income adults. Our colleagues at the Office of Planning, Research and Evaluation (OPRE) within the Administration for Children and Families are publishing a series of briefs as part of their Employment Strategies for Low-Income Adults Evidence Review (ESER), a systematic review of studies published between 1990 and mid-2014 regarding employment and training interventions for low-income adults.

In the August 2016 Child Support Report, our spotlight is on employers. Read this month’s issue to learn more about the important connection between fatherhood and jobs, why the federal office is reaching out to employers, and how Illinois is helping employers get more money to families.

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Employers key in driving child support collections to families

Gears illustrationThe nation’s employers are a key partner in the child support program. Employers conduct core child support functions, which include reporting newly hired employees, implementing child support and medical support orders, and remitting child support payments.

The OCSE FY 2012 preliminary data report shows that employers remitted 72 percent of all child support payments, or $22.9 billion. The FY 2013 preliminary report indicates that employers remitted 74 percent of all child support payments, and employers reported 53.52 million new hires.

Quite simply, we could not collect and disburse more than $30 billion every year without employers. As child support professionals, we all thank employers for their huge contributions to this program.

In partnership with state child support agencies, OCSE has streamlined processes that help both employers and states gain efficiency in exchanging information and collecting payments. The e-IWO (electronic income withholding order) is the gold standard for transmitting uniform, secure information and reducing costs. Thirty-one states (representing 76.2 percent of the national child support caseload) and 566 employers (representing 6,290 Federal Employer Identification Numbers of parent companies and their subsidiaries) use this electronic process.

Other electronic processes include the Debt Inquiry Service which allows employers to report upcoming bonus and lump sum payments to many states at once. Forty-seven states and territories and 80 employers use the Debt Inquiry Service. This June we will implement electronic terminations (eTerm) to allow employers to notify states about employee terminations or let states know that an individual never worked for them.

States are piloting initiatives that will streamline more processes. Oklahoma Child Support Services transitions custodial parents who close their child support cases but wish to retain an income withholding by sending a new IWO to the employer for the custodial parent. They are expanding this initiative by adding IWO instructions to the pro se section of their website to help parents initiate, amend, or terminate their IWO cases. “Healthy Families” is Oklahoma’s new motto, and they are helping to achieve that by assisting pro se customers.

Employers do have concerns about some state practices in income withholding. Omitting full Social Security numbers, adding state-specific requirements such as periodic step-downs in amounts, and requiring the full amount of the order each month when the employer’s pay cycle is weekly or bi-weekly require extra administrative work from employers. They believe that these requirements move away from a standard form with standard wording and requirements.

We hope to clarify some of these concerns when we publish the revised Income Withholding for Support (IWO) form this May.

To offer a forum for discussions between states and employers on these and other important issues, the OCSE Employer Services team planned an Employer Symposium for May 22, immediately following the ERICSA (Eastern Regional Interstate Child Support Association) conference. ERICSA will feature an employer track on the final day of the conference to welcome interaction. We hope that many states and employers will join us  to continue discussing ways to improve our outreach to families and employers.

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