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Five valuable lessons I’ve learned working in payroll

18 Jan

payroll professional

Ruth Groshon, CPP, shares valuable insights she’s learned working in the payroll industry.

Like many working professionals working in payroll and human resources, I just fell into the industry. Numbers always intimidated me and I never thought I would be celebrating 10 years working in the payroll industry next year. I began working in the human resources department when our payroll person left and I was asked to take over their role. At the time I knew nothing about payroll and immediately had to become the expert in payroll.

Today I’m sharing four lessons I’ve learned working in the payroll industry:

Find a mentor

I was lucky enough to find mentors early on in my career working in payroll that helped me navigate the payroll industry. Being able to get advice from professionals who have been working in the industry for decades helped ease my transition. Any questions or issues you may encounter during your early years working in the industry, ask your mentor. Mostly they’ve run across a similar situation during their career.

Always remain a student in payroll

After 10 years of working in the payroll industry, one of the most valuable lessons I learned was to always remain a student. To stay up-to-date on the latest trends and laws related to the payroll business, I’ve taken several continuing education courses offered online and in-person in my area. The payroll industry has evolved a lot in the past decade and to remain an expert I’ve found it important to remain competent and up to speed on what’s going on in the industry.

Join payroll organizations

To connect and learn from other industry professionals like myself, I joined the American Payroll Association (APA). I am now a Certified Payroll Professional (CPP). I became certified so that I could develop a deeper understand of the payroll industry.

Stay up-to-date on the latest payroll trends and laws

Outsourcing parts of regular my payroll tasks helped me stay compliant and up-to-date on new rules and regulations that would impact my employees and company. Having an outsourced partner that I could communicate with regularly was essential to easing the stress of stepping into a new role and industry.

Navigating your first years working in payroll? Take our HR and payroll quiz to determine how you can succeed in your career.

The expert’s guide: Five advantages to outsourcing payroll

13 Oct

advantages_outsourcing_payroll

Our new series, The Expert’s Guide, covers trends surrounding the human resources and payroll industry. One of the hot topics in the payroll industry right now is if outsourcing payroll operations is right for businesses. Preparing payroll can be tedious, time-consuming, and prone to human error, yet it’s an integral function for every business. Successful companies want to handle payroll efficiently, so it’s best to leave it to the experts. Your employees depend on you to get it right with payroll so they can get paid accurately and on time.

Today we are discussing five advantages to outsourcing your payroll needs.
1. Leave it to the experts who are skilled in payroll

Outsourcing your payroll operations will also allow you to focus on other areas of your business that need greater attention. Leave payroll to the experts who are certified professionals and up to date on the latest trends and laws in the industry.

2. Relief from tax penalties

Having an outsourced payroll service helps large and small companies stay compliant and avoid tax penalties. When it comes to your federal and state taxes, don’t cut corners when handling your payroll. An outsourced payroll service can help you avoid tax penalties by automatically and electronically filing on your behalf; filing quarterly and annually, making your state and federal tax payments, and processing your year-end 1099 and W-2 forms for your employees—all with little action required on your part. What’s more, if they make a mistake, many companies will pay the mistake and any penalties or fines that result.

3. Time-savings

You and your team will be amazed by the amount of time and money you will save by outsourcing payroll. Leaving payroll to an outside resource can help reduce the stress levels your existing team is facing to push out your weekly payroll reports.

4. Access to a customer service team round the clock
One of the major benefits of having an outsourced payroll system is having access to a customer service team before and after office hours. If a last minute emergency happens, an outsourced team can help relieve stress from your in-office staff having to put in extra hours to resolve the issue.

5. Constant back-up of payroll data
Does your company have the internal storage space to house all of your payroll data? In the digital world of payroll, it’s important that your data is constantly being backed up and on hand should you be audited. In some businesses, reports are pulled on a daily basis. Outsourcing payroll allows your employee data to be housed in a safe and secure place without taking up your valuable internal server space.

Handling payroll is often a daunting task for most small and medium businesses. With so many federal and state laws and looming deadlines, it’s not hard to see why you would want to put your payroll in the hands of a professional service. Deciding to use a full-service payroll service is a huge step, and it pays to do your research. Choosing the right one can give you peace of mind when dealing with payroll compliance and make your HR and payroll staff more productive by removing a time-consuming burden from their work day.

Interested in learning how to get payroll right and discuss outsourcing your payroll, contact us at 1-866-271-6050 or visit our website.

Five great places to start analyzing payroll data

14 Jul

Benoit Gruber, VP, global product marketing at Sage, shares five unexpected places to look when examining your payroll data.

Analyzing Payroll Data

Payroll is a vital source of data in your business and has the potential to have an immediate financial benefit. It can provide a monthly snapshot of your company’s health. Furthermore it is, by its nature, one of the most up-to-date sets of data in your business. Businesses are required by law to keep live payroll information, so there is no chance of your making decisions based on old news.

There are a number of payroll metrics that can give you a deeper understanding of how healthy your business is from a financial point of view. Here are five places to look when analyzing your payroll data:

  1. Remuneration: Salaries will be an obvious place to start. With these numbers, you can build other metrics into your analysis such as a return on investment (ROI).
  2. Turnover: It’s not good news if you have a high staff turnover rate—it may signify a deeper problem within the business when it comes to areas such as conditions, morale, and corporate culture. And it can cost money in lost productivity, recruitment, and training.
  3. Absence: Analyzing data on sick days and vacation time will help you understand when workers are more likely to be absent and whether employees are taking their annual leave at the right time of year for the business.
  4. Overtime: If employees are regularly working more than their agreed hours, consider what this means in terms of productivity and the way people are working. You can find out whether it’s more cost-effective, for example, to hire part-time or additional staff.
  5. Training costs: Payroll departments can be under pressure to find ways to cut costs and improve efficiency. With a training cost metric, it’s possible to walk that tight line between making cuts and ensuring employees are upskilled properly.

Across each of these areas you’ll find a huge amount of data available to examine and because it covers such a long period of time, it should be easy to start spotting trends. With the right technology it can give you a great platform for future planning, with the reassurance of knowing you have a constantly up-to-date view of your business. It should be the first place you look, before planning for the future.

Interested in learning how to get payroll right and analyze your data better, contact us at 1-866-271-6050 or visit our website.

Benoit Gruber
VP, global product marketing at Sage

Salary growth expected for 2016

3 Feb

Unlike the wage stagnation that marked the previous few years, 2016 looks to be a good one for employee salaries. Numerous institutions from the ERI Economic Research Institute to consulting firms such as the Korn Ferry Hay Group project real wages – salaries adjusted for inflation – will increase by 2.7 percent. With that being said, businesses need a thorough and detailed system and budget in place for rewarding employees. Ensure you have a set plan in your employee management system.

Planning for a raise
Performance-based bonuses and promotions are two tried-and-true ways of compensating your top talent. Also, bonuses and promotions that include pay raises can help your company retain employees as the job market and the economy bounce back from the recession. Landing as well as keeping good employees will get harder as the economy improves.

To formulate your bonus and salary raise budget for the year, you'll want to first  examine the markets from the previous 12 months. Keep track of movements in the Consumer Price Index, the unemployment rates for both the country and your state as well as any fluctuation in the gross domestic product. Also, keep the current minimum wage in mind along with any mandated increases to pay by contractors or unionized staff members.

Keeping it clear
When coming up with a bonus budget for your staff, make sure your employees understand how to get from point A to B when it comes to receiving a bonus or a promotion. Don't keep them in the dark. You not only want to offer competitive salaries to attract and retain talent, you also want to use bonuses and promotions to reward them and raise morale within the company. Your employees, though, must know what kind of work you expect of them in order to move up the chain of command in your business. 

Keep your staff members on track by checking in with each of them on a quarterly basis to go over questions, concerns, their job performance and what they need to do if they want a bonus or raise. Create an office culture of constant learning and development to maintain employee engagement and to keep everyone on the same page. 

A good, solid plan for allocating your bonuses will strengthen the relationship between your staff and company and keep every happy. 

How to prepare for proposed overtime rules

15 Oct

If enacted as it currently is the new proposed changes to overtime pay by the U.S. Department of Labor will give nearly 5 million Americans extra pay, according to the Pew Research Center. Those millions of employees that could be eligible for overtime pay are working in salaried white-collar jobs where payment for working over eight hours a day isn't an option.

The new regulation could have a great affect on human resource planning and payroll management if it becomes law. Human resources will need to process more paperwork. Also, if a company wants to cut costs, it'll mean human resources and supervisors will need to keep track of how long employees work to ensure staff members don't go over eight hours a day or 40 hours a week. 

A new motion
As it is, the proposal raises the threshold for workers currently exempt from overtime pay. The current baseline, set in 2004, is $455 per week or $23,660 per year for employees who work over 40 hours a week. The new recommendation would allow staff members making $970 per week or $50,440 a year to be eligible for overtime compensation, too.  

According to the Pew Research Center, the threshold would rise each year if the government ties it to the Consumer Price Index or wage percentiles so it can keep up with inflation.

Remaining compliant
Companies and their human resource departments should draw up a plan of how to deal with any changes the motion could bring if it becomes law. According to the Society for Human Resource Management, business can prepare now while the Department of Labor reviews the public commentary about the proposed regulations. The department allowed anyone to comment on the proposal via a government website until Sept. 4, 2015, and so far it received nearly 200,000 responses, the SHRM reported.

"For critical positions that often result in overtime pay, employers should consider hiring more full-time, part-time or seasonal employees, or restructuring their workforce to offset a potential expansion of overtime pay," Phyllis Cheng, an attorney with DLA Piper, told the SHRM.

The proposed regulation could cause logistical problems for companies, leading some businesses to slash employee hours or cut back on benefits in order to pay out more in overtime salary. 

To curb this potential problem, employers should pinpoint which employees still fall under the overtime threshold and which ones are closing in on it, Paul DeCamp, an attorney, told the SHRM. A company could raise the salary of a staff member who's current salary is already near the overtime brink. Bumping up the employee's salary would keep him or her above the threshold and ineligible for overtime pay.  

Businesses might need to move workloads around, splitting them up among multiple employees to ensure none work overtime.

The proposal could also have a chilling effect on work-life balances. Employees who take work home with them or on the road could see their hours cut or monitored more closely. 

Exempt employee status change on the horizon

19 Jun

Coming soon to a workplace near you: changes in overtime pay for employees in a variety of positions. The Obama administration plans to unveil its new regulations for employers paying workers overtime wages. These new guidelines would, among other things, include a new definition for exempt and nonexempt worker classification.

Who is exempt?
Currently, employees are exempt from being paid for working overtime, which means more than 40 hours per week, if they are executives, administrative professionals or workers in the computer, creative arts, science or learning industries, according to the Department of Labor. The position an employee holds in one of these industries determines his or her exact exemption status. In general, however, exempt employees are salaried and make no less than $455 per week, or $23,660 per year.

Nonexempt employee status covers just about every other role in the book. These workers are entitled to one-and-a-half times their regular pay rate if they work more than 40 hours in one week, according to the Fair Labor Standards Act.

What changes are on the horizon?
The Obama Administration is considering increasing the threshold for exempt workers from $23,660 to somewhere between $45,000 and $52,000, according to Politico. If the DOL raises the threshold to $42,000, The Economic Policy Institute estimates an additional 3.5 million workers will be eligible for overtime pay. Should the DOL try to account for inflation and raise the threshold to cover the same percentage of workers as were nonexempt in 1975, the threshold would have to be $69,004, subsequently covering 65 percent of salaried employees in the U.S.

How can human resources prepare for this change?
While no final figure has been reached yet, HR departments across the nation may want to prepare now for future changes. Outsourcing payroll is a positive step in the direction of compliance. Rather than entering salaries and overtime hours and then adjusting overtime wages manually, an outsourced payroll solution automates this process, freeing up HR to focus on other pressing issues. Penalties for failing to comply with any DOL or FLSA stipulations could cost businesses money and their reputations, making it more difficult to recruit and hire top industry talent.

It's imperative HR professionals ensure accuracy when it comes to both salaries and overtime pay, especially if these changes do take place and companies across the U.S. are given a fixed amount of time in which to make their own employee status adjustments. 

Making changes to your 401(k) can boost returns

18 Nov

It may be a good idea to check your 401(k) occasionally. They best employee payroll software makes this easy. Someone's 401(k) benefits usually work by passively investing in different asset classes without your direct input. A portion of your money goes into each of the investments, and you don't have to think about it. The problem with this is there are points when your investing strategy might change, but if you don't update your 401(k) then your investments will never become anything different, which may cause you to gain less money than if you made periodic alterations to boost your returns, NASDAQ reported.

The best times to change your retirement fund are whenever something important happens, such as getting married or receiving a promotion. NASDAQ also recommended that you update at least once a year.

Consider an IRA
The Motley Fool also brings up the topic of the IRA. In terms of tax incentives, having both means that if your income is above $70,000 then you lose the deduction benefits of an IRA. Otherwise, anyone under the age of 70 1/2 can invest in an IRA. IRAs have a basic contribution limit of $5,500, while 401(k)s allow you to invest $17,500 of your money into them.

Employers generally match 401(k)s with money of their own, while IRAs only take money from investors and put it away. IRAs are cheaper in invest in, since there is generally little to nothing in the way of annual fees, although the return may not be as good. Additionally, IRAs give you many more investment options than a 401(k), which has a few investment plans you must choose from.

January 2015
Early next year, the maximum that someone can invest in a 401(k) will increase to $18,000, according to a separate Motley Fool story. Those who can afford to invest the whole amount will see a benefit to their returns assuming their employers do matching. This is the major reason why it would be a good idea to look at your 401(k). Another reason might be to switch from riskier investments early in a career to low risk investments later down the road when someone has more money to lose if things go south. An additional issue is how your company matches someone's money. If it gives that person stock, then it may be a good idea to put some of that money somewhere else if the company's longevity is in question.

The bottom line is that while a 401(k) is always a great way to make money, it will make you even more money if you pay attention to it at least once a year.

What should employers know about the new 401(k) after-tax rules?

15 Oct

Many employees begin saving for retirement through a 401(k) account, hoping it will generate enough money over time that they can stop working at a reasonable point in their careers. At the same time, a large number of workers invest in a Roth IRA for the same reasons. Employers often handle these accounts for their staff using payroll management software, but it's not always an easy task, especially if an employee has both types of retirement accounts.

However, recent changes to the way employees can deal with after-tax money in their 401(k) account in relation to their Roth IRA may alter the way employers help manage workers' retirement savings.

Making it easier to transfer funds
The IRS is the government body that writes the rules for retirement accounts, and it has recently made several alterations that will provide employees a bit more freedom. Forbes wrote that IRS Notice 2014-54 gives employees the ability to transfer after-tax money from their 401(k) account to their Roth IRA without having to pay taxes on the transaction. Beginning January 1, 2015, employees will be able to take advantage of this opportunity to roll over funds between the two accounts.

Why is it advantageous for employees?
A 401(k) account is essentially a contributor-based savings plan that has limits in terms of how much workers can contribute. At the same time, money is taxed in this kind of account, while a Roth IRA is tax free. With regard to the latter, workers fund their retirement savings using after-tax money, which grows in the account until it's withdrawn at retirement.

Before the IRS made this change, employees could technically still do the same thing, but it was a convoluted process, Investment News explained. In fact, many tax experts felt that the IRS was against the practice, which makes the recent announcement a welcome surprise.

Still, it doesn't give employees a blank check in transferring after-tax money from their 401(k) to a Roth IRA. The first caveat is whether a worker actually has after-tax money in his or her 401(k) account.

What's expected of employers?
Many employees who meet the criteria for transferring money between accounts will likely want to take advantage of the opportunity. Employers should facilitate the process. Human resources managers will need to clearly communicate the changes in the IRS's treatment of retirement savings to employees. This may even involve bringing in a financial advisor who can explain any aspects of the changes that may cause confusion. 

How to handle salaries

8 Oct

Only about half of employees believe their fellow workers are being paid in a way that reflects their performance, according to a study by Towers Watson. Additionally, 4 in 10 employees are highly engaged with their work. Although Entrepreneur reported that most employees are happier in a job they find more satisfying for less pay versus a higher paying job that is not as enjoyable, the research by Towers Watson would seem to indicate most people choose work based on salary.

So, who's at fault here? Are employees putting too much of the burden on managers, or are managers not working efficiently enough at finding appropriate salaries? According to Human Resources Executive Online, it's a bit of both. Some managers are able to get away with doing poor work because they aren't properly reviewed by those in a managerial position. Other times, salaries are handled by people who are too far up the chain of command to make accurate decisions.

Employees can't all be star performers
Laura Sejen, global practice leader of rewards for Towers Watson, suggests that most employees are able to do about the same level of work in comparison with other workers doing the same job.

"Put yourself in the shoes of a manager with pay decisions to make," Sejen said in conversation with HRE Online. "On average, people tend to do their jobs well. Some do better and some do worse, but on average, most of your employees fall into what I call the 'steady Eddie' category. [As such,] it becomes difficult to have these conversations with these steady Eddies year after year, it becomes difficult to tell them their merit increase is only about 2.5 percent or 3 percent, because that's what's required to be able to give more to star performers."

Managers must be willing to tell their employees that ultimately not everyone is in a high-performing position where a greater salary would be appropriate. In a best case scenario, the largest bonuses rightly should go to the few workers who truly make a big difference for the company.

How employers can make employees feel valued
Money is a major incentive for getting workers motivated, but ultimately it is not the only tool in a employee management's toolkit. According to Entrepreneur, giving employees an opportunity to make a positive work/life balance for themselves may help inspire them to work harder when they are doing their job, as well as to rest thoroughly when they are not working.

One example of this is to allow employees to customize their work schedule. In theory, employees should be able to work however they want as long as they show up to the appropriate meetings and get work done on time. If giving them the opportunity to work early in the morning and leave early in the afternoon is appropriate, then consider doing that, as it may positively impact their job experience.

Opening up the salary process
A suggestion by HRE Online is to make salaries more transparent by showing how the numbers are generated. Additionally, professionals across different units can work together to identify true high performers and reward them accordingly.

An example cited by Sejen is that if a company only wants to reward the top 10 percent of its employees, then it should evaluate what makes an employee a "top earner," and then make this information well known. After that, it should clearly and precisely evaluate those 10 percent and ensure the number is accurate, so it doesn't grow to 20 percent or shrink to 5 percent.

"One of the best things HR can do [when it comes to payroll] is to shine [a light on the process] by measuring and making visible what is really happening," said Jim Kochanski, a senior vice president with Sibson Consulting.

Oh no…you received an EEOC charge in the mail

16 Sep

Companies both large and small have a special kind of anxiety when they receive a letter from the Equal Employment Opportunity Commission. Human resource information systems provide the first line of defense for organizations that want to proactively manage governmental investigations. Having an informed human resources department plays a huge role in making certain the company follows all regulations pertaining to hiring and employee policies that fall under the jurisdiction of the EEOC.

While unexpected and probably unwanted, an EEOC complaint may be a necessary event that ensures a company follows the rules that prevent discrimination and retaliation in the workplace. With that in mind, it's always important to be prepared in case the charge escalates into an actual lawsuit.

What should the employer do first? 
The initial response from a business owner should be to educate yourself about the charge. There are a number of violations, including discrimination based on age, disability, national origin, pregnancy, race, religion and gender. However, the EEOC treats businesses differently based on the number of employees they have on their payroll. For instance, Title VII of the Civil Rights Act, which protects against discrimination based on race, color, religion and a few other criteria, only applies to businesses with 15 or more employees, according to the human resources site The Human Equation.

Meanwhile, the Equal Pay Act of 1963 targets wage discrimination at organizations with at least one employee, which covers most companies. With this in mind, it's important for businesses of all sizes keep close records of payroll information. Employee payroll management software can help alleviate most issues that may arise in a few ways. First, it's far easier to perform self-audits that may highlight pay disparities ahead of time, which Forbes explained is one of the administrative tasks that the EEOC often requires. At the same time, software keeps all records up to date and immediately accessible in the event the EEOC asks for them. In combination with the software, Forbes suggested it's best to maintain legal counsel to bear witness to any audits.

To avoid setting off the EEOC's suspicions for other discriminatory practices, record-keeping is of paramount importance. Ensure hiring policies are not only publicly known to all applicants and new hires, but also retained in a central computer system. By taking action ahead of time by educating employees on EEOC regulations and putting necessary infrastructure in place, employers are in a far better position to respond when a charge comes in the mail.

What does the EEOC expect of the employer?
The following steps upon receipt of a charge are fairly straightforward. According to the EEOC, both the employer and the person pursuing the claim are obligated to provide information to support their cases. The EEOC will likely ask the business owner for a statement of position, which is a written document that explains his or her perspective with regard to the charge. According to Connections Magazine, it's critical that the employer fully understands the charge and the violation so he or she can effectively respond to it. At this point, legal counsel may be a necessary resource to ensure the company uses the correct language in the statement and clearly outlines their position on the matter.

The company may also be asked to supply copies of personnel files, policies and any other documents that could influence the investigation. Should the EEOC deem it necessary, the federal agency may conduct an on-site inspection, the magazine wrote. As a result, businesses should be prepared to field questions an investigator may ask in relation to the outstanding charge. Subsequently, it's often a waiting game as the EEOC judges the merits of filing a lawsuit based on its scrutiny of the complaint. The average inquiry will last more than 180 days, according to the EEOC.

What is the standard format that should be used to communicate with the EEOC?
The employer's primary responsibility is to provide all pertinent information to the investigator in the most efficient manner possible. While the federal government has made strides to make correspondence more convenient and speedier by using email and online portals, it's likely the company will be required to submit hard copies of all documentation. The EEOC provides employees interested in bringing charges against their employers with an online assessment system, but it still asks them to submit actual charges at the agency's field offices or through the mail. Employers should also expect to use direct mail and fax.

The mere fact that a company receives an EEOC charge doesn't indicate wrongdoing. It's truly a preliminary step to find out whether there are grounds for any future action. Still, employers need to take the appropriate steps, such as utilizing payroll management software, to ensure they can handle an investigation and cause the least disruption to their daily operations.