Q: How does Minnesota child support collection law affect employers?
A: An employer paying wages to an employee who is under a court order to pay child support is a source of collection for county child support enforcement agencies. Just as employers are required to withhold federal and state taxes from wages paid an employee to ensure collection, a withholding from wages to collect child support is required when applicable.
Should a company have at least one employee under a court order to pay child support, the process of creating the order may result in the company being identified as the employer of the party obligated to pay (the obligor). Most child support orders require a specific sum of money to be paid by the obligor monthly for child support, and should a business be identified as the paying party’s employer then it’s required of the employer to withhold the stated amount from employee’s wages.
Most orders further identify to whom these wages should be sent. It’s usually either the Minnesota Child Support Payment Center or a county collections office. Employers are to send withheld money within seven business days of pay date. These funds can be transferred via U.S. Postal Service or electronically from your payroll department or service. The Minnesota Department of Human Services website has more details.
Federal and state law require employers to report new hires or rehires. Employers who fail to comply face a civil penalty as high as $500.
In the instance of a temporary employment agency, if a new hire completes a form W-4 and is sent off to work, then the agency should report.
In regard to independent contractors, your company “may” report new independent contractors receiving 1099 forms from you. The use of the word “may” generally means a company is not required to report independent contractors; however, when the employer is the state of Minnesota, reporting is required. Be careful to avoid the mistake of labeling someone who’s actually an employee as an independent contractor. Incorrect identification can lead to regulatory agency and tax collection challenges.
John Del Vecchio has been operating a general practice, solo law office since 1988 and is on faculty at the University of St. Thomas Opus College of Business.