The beginning of the year brought a little bit of relief when the government finally managed to pass a resolution saving the country from plunging over the fiscal cliff. The problem, though, is that this solution doesn’t save businesses from the negative backlash they anticipated going into 2013. Taking steps to prepare for new taxes, protect employee retention rates, and come up with strategies to get ready for other compliance changes should start right now so firms aren’t caught off guard later in the year.
Taxes and the Fiscal Cliff
Everyone spent December on pins and needles while anxiously watching the Senate and House of Representatives debate how to best handle the future income of corporations and consumers in terms of helping pay off federal debts, or in other words, increased tax rates. While some reports were as pessimistic about the cliff as if another Mayan disaster was approaching in the world of finance, others felt that the impact would be significant but not as damaging to personal or business revenue.
What came out of Washington was a deal that shot a lot of employees in the leg, aiming just above the foot with the fiscal bullet by going for the over $200,000 income bracket more aggressively. Some private individuals could see tax rates jump as high as 40 percent, The Atlantic reported, a change that will require human resources management software to make some swift calculation alterations in order to keep up. Failure to remit correctly from here on out could result in a substantial compliance problem, and as the source reported, every employee will need to be reviewed, their filing status assessed and taxes adjusted accordingly.
Benefits on Belay
Hanging tightly to income tax rates may seem more like an employee-facing issue, but since software for payroll is responsible for managing these facets of corporate finance, it’s essential that HR personnel be in touch with what’s happening to pre-tax and tax rates in general.
Another fist to the face of employee retention rates, beyond the initial insult of reduced take-home pay for pretty much everyone in the corporation, is the rising cost of medical coverage. This is both a reaction to new federal medical guidelines and increasing general program costs. The Affordable Care Act has gone into effect finally, causing about 1 percent in increased taxes for all workers across the board. Every person who makes more than $200,000 will have to see this deduction taken from their pre-tax income as of January 1, and on top of the other increases to personal withholding, businesses need to be wary of what they can do to help reduce the impact of these changes.
While the financial repercussions on the individual level are not the fault of the company responsible for taking them out of paychecks, simply maintaining compliance could hinder workforce retention rates. Some recent surveys of employee engagement have shown that income is once again an important factor in how likely a worker is to stick with a corporation, so in addition to benefits and work environment, seeing a reduction in overall pay could make top talent reticent about maintaining their current job status.
Focus on Information
All of this input needs to be fed into human resources management systems, analyzed and monitored, correlated with individual employee files and added to personnel profiles so that ongoing maintenance of the workforce can be kept up to date. Firms are already struggling with big data deployments, social media inundation and increased threat environments from cloud and mobile offerings. Now, HR personnel also need to make sure their electronic filing solutions are up to federal compliance guidelines, because for firms in the healthcare field, this is the first year where Electronic Health Records will be a requirement. Other businesses will want to start heading this way, too; the increased usage of eDiscovery, federal audits and government reliance on digital systems means that laws could soon mandate these tools for every industry.
Compliance Week wrote that keeping track of Affordable Care Act provisions, fiscal cliff tax updates and employee retention, and benefits issues is much easier when operating on integrated databases. Where once all these elements were siloed into individual departments and maintained by independent aspects of the corporate information environment, now HRMS tools are allowing personnel to cross-reference employee files with productivity and payroll information, check past histories to see if there have been substantial fluctuations in these indicators and try to isolate the corporate occurrences that precipitate any drastic variations in workforce performance.
In short, there is a brave new world of data analytics available to businesses that make the best use of digital systems and big data infrastructure. Monitoring these tools for compliance and security will be primary areas for IT personnel to get preoccupied, but HR staff will be instrumental in the maintenance and governance of these solutions as well.
For a more detailed overview of critical compliance issues for 2013 and beyond, as well as summary of options that will help ensure your business can meet regulatory demands register now for the live webcast Compliance in 2013: Are You Prepared? on January 29, 2013 from 1:00 p.m. to 2:00 p.m.