Most HR managers have a love-hate relationship with payroll. On the one hand, they understand the value of the business and its valuable employees. On the other hand, is increasing complexities around federal and state regulatory rules, taxes, benefits, and more. All of these challenges make payroll both one of your most essential functions, but also probably the most dreaded to complete. Here are three of the biggest pain points faced by HR teams when running your payroll.
Manual Payroll is Almost Impossible
Larger companies almost always outsource payroll to a company that specializes in the process. Smaller firms may struggle because they do not have the budgets to hire an on-staff payroll specialist. This means there is usually a crossover worker that handles HR and hiring, payroll, and other administrative tasks. This makes payroll more of a manual administrative function, which also makes it more prone to error. Making a mistake on payroll can also make for a lot of unhappy workers. It can also get you into legal hot water with the government.
Salary Calculations Are Incredibly Complicated
Depending on how you pay your workers, their checks could fluctuate slightly by month. You may calculate full-time, part-time, and contract worker pay. Employee classification errors are a common mistake. There is exempt salaried, non-exempt/hourly, and independent contractor, and each comes with its own overtime rules. This is one area that, if you get it wrong, it can cost you big-time in penalties and fines.
Each employee’s paycheck is different, which gets more complicated if you have workers living in different states. For example, some states have minimum wage rules. Other states have different regulations on how overtime is calculated.
Then there are benefits and other salary deductions that are individualized by the employee. Some workers may owe back taxes to have child support garnished. Health insurance varies by coverage levels. Then there are the additions to the salary, such as commissions or bonuses.
Are you completely sure which worker documents you need to keep on file if there is an audit? Which payroll records do you need to protect your company from regulatory penalties? What about healthcare and tax compliance? Your payroll must remain in compliance with these rules—which, we might add, are ever-changing:
- Affordable Care Act
- Fair Labor Standards Act
- Fair Scheduling Laws
- Family Medical Leave
- Industry-Specific Rules
- Payroll-Based Journal
- Regulations for Non-U.S. Workers
- Union Agreements
Work With a Trusted Employer of Record.
Escaping the payroll conundrum and eliminating the risk that you’ll make a costly error is exactly how FoxHire can help your business. As an employer of record, we can handle all of the complex issues related to payroll that are so time-consuming for your business. Contact us today to hear more about how we can help you keep your business safe.