Find Model Legislation for Child Support on reporting independent contractors and lump-sum payments on PayrollOrg’s website (under the Compliance tab and then Payroll Hot Topics). Included are fact sheets explaining the model legislation and an opinion letter from the U.S. Department of Labor on Consumer Credit Protection Act (CCPA) limits for lump-sum payments.
The models were developed by the National Council of Child Support Directors’ (NCCSD) Employer Collaboration Committee, which includes state child support directors, the Employer Services Team at the federal Office of Child Support Services, and payroll professionals who are members of PayrollOrg.
More than 20 states now require new hire reporting and child support withholding for independent contractors. The model act can help states if they decide to pursue legislation requiring companies to report independent contractors as new hires. It also helps standardize the process for withholding child support from payments made to contractors. The model act includes suggested data elements, payment threshold amounts, and reporting timeframes that closely conform to existing new hire reporting requirements for employees.
The model act is designed as a best practice to create reasonable procedures for the management of lump-sum payments for child support arrears. The model act identifies employer reporting requirements and mandates that child support agencies notify employers to withhold from the lump-sum payments or release the payments to the employees within a reasonable time frame following notice. It also establishes that employees receive either the full amount of the payments or reduced amounts based on a legal document to withhold from a child support agency and within the CCPA withholding limits.
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Alice P. Jacobsohn, Esq., is Director of Government Relations for PayrollOrg.