© 2022 American Payroll Institute, Inc. APA Supports State Legislation on Child Support Lump-Sum Payments The APA Government Relations Task Force (GRTF) Child Support Subcommittee is supporting the Michigan and Washington child support agencies in preparing draft legislation to implement “Model Legislation on Managing Lump-Sum Payments for Child Support.” The model was prepared in 2019 by the National Council of Child Support Directors with the APA and support from the federal Office of Child Support Enforcement (OCSE). It is designed as a best practice to create reasonable procedures for the management of lump-sum payments for child support. These procedures were identified after extensive research, surveys, and open discussion. Reason for APA’s position When the idea for a model act came to APA’s attention in 2018, members expressed concern that collecting child support from lump-sum payments could interfere with employers’ interests in ensuring that employees receive their pay. This was especially true if the lump-sum amounts were intended as special awards to employees and for retaining talent. However, states were already requiring reporting and withholding with various procedures and collecting as much as 100% of the lump- sum amounts to pay for employees’ owed arrears. In collaborating with states to develop the model legislation, the APA was neutral and remains neutral today on whether a state should establish a program. Instead, because states were already issuing orders for lump-sum payments and were moving forward with more programs, the best position for APA is to try and encourage states to adopt processes and procedures that make the most sense for payroll and to support states willing to listen to payroll professionals on those processes and procedures. Model legislation offers relief The model clearly identifies employer reporting requirements, mandates that child support agencies notify employers to withhold from the lump-sum payments or release the payments to employees within a reasonable timeframe following notice, and establishes that employees receive either the full amount of the payments or reduced amounts. Reduced amounts would be based on a legal document from a child support agency with orders that fall within the federal Consumer Credit Protection Act’s withholding limits, preferably no more than 50%. In its letters to Michigan and Washington, the APA said the model procedures offer payroll professionals relief because: Employers may agree only to report to state agencies whose legislature clearly authorizes reporting and withholding of child support from lump-sum payments. Without an established “child support lump-sum payment” law, employers risk liability for violations of wage and hour laws. A delay in employer response from agencies may cause a lag in processing payments to employees. This creates a conflict for employers’ goals of making timely payments to employees and supporting children and families. Unclear and inconsistent requirements force employers to manually create state-specific processes. By leveraging the agreed-upon best practices, employers can identify efficiencies and automate reporting, withholding, and payment processes. Outreach is needed During a meeting on potential legislation in Washington in July, one participant expressed concern about the burden on employers and was not aware of existing requirements by states. A survey of participants in APA’s Strategic Payroll Leadership Task Force Best Practices Subcommittee in August found that 44% do not report lump-sum payments, 41% do report, and 14.3% did not know whether reporting is required. The survey did not identify if an employer provides lump-sum payments to employees. While not a statistical sampling of employers in the U.S., the data indicates a need for outreach. The APA’s GRTF Child Support Subcommittee continues to express to states the need for increased education and has offered to help. In Michigan, child support agency staff are speaking at APA-affiliated chapter meetings and the statewide conference on October 19. Currently, 21 states have child support lump-sum payment programs. Some states, such as Louisiana, North Dakota, Texas, and Virginia, have mandatory reporting requirements. More information can be found about lump-sum reporting and state requirements on OCSE’s website and in APA’s Guide to State Payroll Laws and APA’s Guide to Federal and State Garnishment Laws. APA Releases Report on Roadblocks to the Blockchain The APA Government Relations Task Force (GRTF) Electronic Payments Subcommittee has released its report, “Roadblocks to the Blockchain: An Analysis of Regulatory Hurdles for the Payment of Wages with Cryptocurrency.” September 2022 A Supplement to Payroll Currently, Issue 9, Volume 30
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