Hiring a new employee is an exciting milestone for any small business. However, before they begin work, there are critical compliance requirements—one of the most essential being new-hire reporting.
Alabama law requires all employers, regardless of size, to report newly hired and rehired employees within seven days of their first paid workday. This reporting ensures compliance with federal and state labor laws, supports tax accuracy, and helps prevent fraud.
A payroll service can handle new-hire reporting on your behalf, ensuring accuracy and compliance. However, certain forms and information are required to complete this process efficiently. Below, we outline what is required, why it matters, and how timely submission benefits your business.
What A Payroll Service Requires for New-Hire Reporting
To ensure compliance, we require the following documents and details for each new hire:
1. Employee’s Completed W-4 Form
- The W-4 (Employee’s Withholding Certificate) determines how much federal income tax should be withheld from paychecks.
- Using the most current version of this form helps prevent tax miscalculations that could result in over- or under-withholding.
2. Employee’s Completed I-9 Form (With Required Identification Documents)
- The I-9 (Employment Eligibility Verification Form) confirms an employee’s legal authorization to work in the U.S.
- Employees must provide valid identification from the I-9 Acceptable Documents List, which may include:
- A U.S. passport (List A)
- A state-issued driver’s license and Social Security card (List B and C combination)
- A permanent resident card or work authorization document
- Employers must verify documents and retain the I-9 for potential audits, even though it is not submitted to the government.
3. Employee’s Social Security Number (SSN)
- The SSN is critical for payroll processing, tax reporting, and Social Security Administration compliance.
- Any errors in an SSN can delay tax filings, create payroll discrepancies, and cause issues with government benefit tracking.
4. Employee’s Full Legal Name and Home Address
- This information is required for payroll processing, tax reporting, and official employment records.
- Accuracy ensures that W-2s, direct deposits, and tax forms are correctly processed and received.
- The legal name provided should match the employee’s Social Security card to avoid discrepancies.
5. Employee’s Start Date (First Day of Paid Work)
- Alabama law requires new hires to be reported within seven days of their first paid workday.
- The start date is critical for payroll tax calculations, benefits eligibility tracking, and unemployment insurance reporting.
- Providing an accurate hire date helps prevent fraudulent unemployment claims and ensures compliance with payroll tax laws.
Why This Information Matters for Compliance
Providing complete and accurate documentation for new hires is not just a legal requirement—it also protects your business and ensures smooth payroll processing. Here’s why timely submission is critical:
- Avoiding Compliance Penalties – Failure to report new hires can result in fines of up to $25 per employee, with additional penalties for continued non-compliance.
- Ensuring Payroll Tax Compliance – Payroll tax withholding, Social Security contributions, and year-end W-2 filings depend on accurate employee records.
- Supporting Child Support Enforcement – New-hire reporting helps state agencies locate parents who owe child support, ensuring payments are made.
- Preventing Unemployment and Workers’ Compensation Fraud – Accurate reporting prevents fraudulent claims, protecting your business from unnecessary financial liabilities.
- Ensuring Payroll Accuracy – Complete and correct employee information reduces payroll processing errors, preventing paycheck discrepancies and administrative delays.
How Payroll Complete Simplifies Compliance
At Payroll Complete, we handle new-hire reporting to ensure compliance with the Alabama Department of Labor. Once you provide us with the required employee information, we submit the necessary reports, keeping your business compliant and reducing your administrative workload.
To streamline the process, all we need from you is:
- A completed W-4 form
- A completed I-9 form with ID verification
- The employee’s full legal name, SSN, and home address
- The employee’s official start date
Once we receive these documents, we handle the reporting process, ensuring all filings are submitted accurately and on time. Additionally, our team stays updated on employment law changes and payroll compliance regulations, so you do not have to worry about keeping track of evolving requirements.
Best Practices for Employers When Hiring New Employees
To ensure a smooth hiring and onboarding process, consider these best practices:
- Collect Employee Information Early – Request that employees complete their W-4 and I-9 forms before their first payroll cycle to avoid delays.
- Verify Documents for Accuracy – Cross-check all information provided by the employee to ensure names, SSNs, and addresses match official records.
- Store Employee Records Securely – Keep W-4 and I-9 forms in a secure and organized file system for easy access in case of an audit.
- Submit New-Hire Information Promptly – Providing Payroll Complete with the necessary documents as soon as possible ensures timely reporting and compliance.
Additional Resources
For more information on hiring and compliance, check out these resources:
- Distinguishing Between Independent Contractors or Employees – Don’t Let Mislabeling Cost You!
- The Employer’s Guide to Hiring Employees in Alabama
Payroll compliance should not be a burden on your business. With Payroll Complete, you can confidently hire and onboard new employees while we accurately and efficiently handle payroll, tax filings, and reporting requirements.