Compliance

A technology integration is an intervention to dissolve common payroll errors

By Rick Bell

Jun. 5, 2020

Paying employees accurately and on time should be a forgone conclusion for employers. But that’s not always the case.   

Incidents of unfair pay practices have surfaced since the COVID-19 pandemic hit. Lawsuits involving wage discrimination and unfair compensation practices also can cost an employer tens of thousands of dollars in damages.

According to law firm Seyfarth Shaw, wage-and-hour settlements are a leading cause of litigation exposure for corporations and that HR leaders must focus on prevention. While the majority of companies are fair and honest regarding their compensation practices, errors can occur. Prevent those mistakes from creeping into your compensation function by integrating workforce management software with your payroll software.

Eliminate the mistakes

Wage-and-hour lawsuits are unnecessary and largely avoidable. Payroll integrations in your tech stack can help ease a complex, arduous process fraught with opportunities for mistakes.  By integrating a payroll system with Workforce.com’s platform for automated timesheet exports and calculations, a company can negate costly wage-and-hour lawsuits.

  1. Poor record keeping and data entry. Mismatching names and Social Security numbers is so common that, according to AllBusiness.com, the Social Security Administration has established a special verification phone number. Errors in data entry and poor recordkeeping of employee hours can result in costly government penalties.
  2. Misclassifying employees. The number of temporary employees and independent contractors continues to grow among the labor force, and organizations constantly confront problems in properly classifying those workers. Are they exempt or nonexempt employees? Are they an independent contractor or an exempt employee? While the Fair Labor Standards Act provides protections for most employees, it’s still easy to slip up on employee classifications without an integration of workforce management software into the payroll function. If neglected, it can turn into a costly payroll error.
  3. Miscalculating pay and overtime. Poor time-tracking capabilities can lead to miscalculated pay. There are guidelines that must be followed when determining overtime, and miscalculations can be costly. Besides overtime, there are commissions and paid time off, among other things to track. State policies vary and it’s a best practice to default to the law that is more generous for the employee. Workforce.com’s payroll integration technology can help retool poor time tracking capabilities.
  4. Adherence to pay deadlines. Payroll is the basic bond between employer and employee. While payroll should function like a well-oiled machine, missing deadlines can happen. Payroll technology can help with establishing a payroll calendar that encompasses deposits as well as timely payroll tax filings with federal and state agencies. Remember, late deposits can result in penalties and interest charges. Oil up the payroll machine and set up timelines both internally for paydays and externally for taxes for a smooth payroll process.
  5. Mishandling garnishments and child support. An employee may owe money through a court order to other parties. Payroll is responsible for sending the money to the appropriate person or agency.

Avoid payroll errors

To avoid costly wage-and-hour lawsuits, HR and business leaders should keep these tips in mind:

  • A reliable payroll software program maintains accurate time-keeping and record-keeping practices through up-to-date systems.
  • Supervisors must recognize the differences between exempt and nonexempt employees.
  • Rather than hide it until it’s too late, encourage managers to proactively report wage issues.
  • Conduct wage-and-hour audits to ensure correct classification of employees.
  • Assess your independent contractors. 

Keep payroll mistakes from disrupting your organization by investing in payroll software. Workforce.com’s payroll system integration technology works seamlessly with more than 50 different payroll systems. Process your payroll minus the long hours, avoid the errors and easily run reports, file taxes and distribute pay stubs.

Rick Bell is Workforce’s editorial director. For comments or questions email editors@workforce.com.

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