Compliance

Compliance Concerns? Take These Three Essential Steps

Compliance Concerns? Take These Three Essential Steps 2560 1707 Alicia East

Whether it’s a restaurant denying employees overtime pay or a staffing firm misclassifying workers, companies make headlines every day for various compliance missteps. Labor laws vary from state to state and also change over time as new decisions get passed and old laws get revised. This makes staying in line with compliance laws an “up-at-dawn, pride-swallowing siege.” Or if a Jerry Maguire quote is a little dramatic for your taste, let’s just say it’s an active process–not a set-it-and-forget-it situation. Missteps can cost many millions not to mention the other resources companies end up throwing at preventable mistakes. That makes compliance more than a legal necessity: it’s a strategic imperative. While navigating changing laws and regulations can be daunting, there are effective strategies that businesses can employ to avoid compliance woes as well as the negative headlines that come with mistakes.

Three Key Practices to Prevent Compliance Errors

1. Avoid the “Wait and See” Approach

A proactive stance is vital in the compliance domain. “Wait and see” often leads to last-minute scrambles to align with new regulations, resulting in inadequate implementation and potential legal issues. Regular internal audits and proactive policy development are key.

2. Create and Modify Systems on an Ongoing Basis

Create systems in alignment with local, state, and federal guidelines and be ready to modify them in accordance with changes (such as this month’s groundbreaking federal labor law decision). It’s not enough to simply be aware of the rules; businesses must integrate compliance into their everyday operations. This involves creating and continually updating systems, processes, and training programs to ensure they stay in line with local, state, and federal guidelines.s.

3. Engage Partners in Areas Outside Your Expertise

No company is an expert in everything and engaging expert partners is a crucial business practice. Companies with a strong compliance track record often leverage external expertise. Such partners allows businesses to outsource the aspects of their operations that take up too many internal resources. If you don’t have compliance and classification experts on your team, it’s okay! A qualified partner can help. Reach out for a free risk assessment and consultation.

The Bottom Line

Staying ahead of compliance issues is not just about avoiding legal troubles; it’s about building a sustainable, trustworthy, and competitive business. Engaging expert partners, adopting a proactive approach, and integrating compliance into your operational framework can help you keep your head above water and navigate the complexities of regulations confidently and effectively.

Contract Worker-Focused Business Models: Mastering the Seismic Shift

Contract Worker-Focused Business Models: Mastering the Seismic Shift 2560 1440 Alicia East

For many companies, the traditional business model–centered around full-time W-2 employees–is gradually being upended by a shift toward contract workers. This transition is changing how companies approach their workforce strategies, particularly in terms of culture and engagement. To make matters more complicated, companies must walk the fine line between including contract workers in company culture and maintaining their independent status, especially in light of recent changes to U.S. labor laws. Here, we explore the key aspects of this transition and what companies can do to adapt.

Key Challenges of A Transitioning Workforce

Legally, businesses must carefully navigate a complex array of labor laws and regulations that draw clear distinctions between employees and contractors. This includes compliance with tax obligations, benefits, and employment law protections to avoid costly penalties and disputes. Practically, this shift demands a reconfiguration of management practices and company culture to suit a more fluid and diverse workforce. Companies need to realign their communication, project management, and resource allocation strategies, while also maintaining a cohesive organizational identity. They also need to accomplish all of this in a landscape where workers may feel less connected due to the lack of a figurative water cooler to gather around.

Understanding and Meeting Contract Workers’ Expectations

Contract workers, unlike traditional employees, often prioritize flexibility, autonomy, and the opportunity to engage in diverse projects with multiple clients. Still, like anyone, they like to know their contributions are valued. Recognizing these expectations is crucial for companies in tailoring their engagement strategies. Moving away from a one-size-fits-all approach to employees, businesses that engage contract workers have an opportunity to create a culture that includes them while also respecting the legal parameters of engaging contract workers.

Balancing Inclusion and Independence

In light of recent changes to U.S. labor laws under the Fair Labor Standards Act (FLSA), the balancing act has become even more tenuous. Companies are seeking ways to engage contract workers without compromising their status as independent contractors. The FLSA uses the Economic Reality Test to distinguish between employees and contract workers. Any efforts to include contractors in cultural and engagement activities must be balanced with efforts to maintain their autonomy. This nuanced approach is essential to ensure that such initiatives do not inadvertently lead to workers’ classification status being at odds with state and federal labor laws. Violations of that kind entail significant legal and financial implications.

The Bottom Line

As contract work continues to become more prevalent, companies must adapt their strategies. Understanding the unique expectations of contract workers, fostering an inclusive culture, and providing robust support systems are key to creating an environment that attracts top talent and maximizes their contributions. It represents a historic shift from an employee-centric to a contractor-focused approach. If you could use a little help navigating the balancing act, we’re here to help.

Regulating AI: What Are Companies and Governing Bodies Doing to Make AI Work For Everyone?

Regulating AI: What Are Companies and Governing Bodies Doing to Make AI Work For Everyone? 150 150 Alicia East

The Writers’ Strike dominated 2023. It lasted almost half of the year and one of the major points of contention was the use of artificial intelligence in writing. In some ways, this battle is the canary in the coal mine–an indicator that defining how businesses can use AI will be a hot topic well beyond Hollywood. It reflects a broader concern across industries about the impact of technology from a business aspect.  It’s a new frontier and governments and businesses are racing to get ahead of it. Let’s talk about current initiatives that are attempting to address AI’s implications.

What Are Companies and Governments Doing to Regulate AI?

Even if you’re completely untouched by the Writers’ Strike, the whole affair demonstrates that AI is rapidly affecting business and society in general. Various strategies and initiatives are currently underway to address the associated challenges:

  1. Establishing Ethical Guidelines and Standards: Organizations are developing ethical guidelines (emphasizing fairness, transparency, accountability, and privacy) to govern AI development and use.
  2. Regulatory Frameworks and Legislation: Governments worldwide are crafting laws and regulations to manage AI’s impact and develop a legal framework to address risks and set standards.
  3. Industry Self-Regulation: AI companies are adopting self-regulatory practices, including internal ethics boards, transparent reporting of AI research and outcomes, and adherence to industry-developed standards for responsible AI.
  4. Public Engagement and Education: Efforts are being made to educate the public about AI, its potential, and its risks. This includes open dialogues, educational programs, and public consultations to gather diverse perspectives on AI governance.
  5. Research on AI Safety and Ethics: Academic and corporate research institutions are investing heavily in understanding and solving ethical and safety challenges associated with AI, like bias in AI algorithms and the long-term implications of advanced AI technologies.
  6. Development of AI Auditing and Certification Systems: To ensure compliance with standards and regulations, there are movements towards creating AI auditing and certification systems. These systems aim to assess AI systems for fairness, privacy, transparency, and security.

The Bottom Line

These collaborative efforts between legal entities and companies are crucial in shaping a future where AI is developed and used responsibly, ethically, and safely for the benefit of business as well as society. Tell us what you hope to see as this topic evolves.

Working With Independent Contractors? Minimize Last-Minute Tax Headaches With These Tips

Working With Independent Contractors? Minimize Last-Minute Tax Headaches With These Tips 2560 1707 Alicia East

The tax implications that come with hiring independent contractors require special considerations–both when you hire and pay workers as well as when you’re preparing for tax time. Making the right moves up front and throughout the process can minimize last-minute stress.

Minimize Last-Minute Headaches by Following These Tips When Engaging Independent Contractors

  1. Make Accurate Worker Classification a Priority: One of the foundational decisions when engaging workers is always going to be how you classify workers. This dictates how you handle subsequent details, including taxation.
  2. Collect Required Paperwork up Front: While companies don’t generally withhold taxes from independent contractors’ payments, they are required to report payments that total $600 or more during the tax year. This requires collecting W-9s from workers and filing either a Form 1099-NEC or 1099-MISC at tax time. As a part of collecting information up front, companies should confirm that each 1099 worker has an appropriate business entity and insurance policies.
  3. Keep Accurate Records: Keep accurate records of all payments–including invoices and receipts.
  4. Be Aware of State and Local Tax Laws: State and local tax laws may vary. Understand any additional reporting or withholding requirements for any state you engage workers in.
  5. Report on Time: Ensure you make payments and report them on time to avoid penalties. The deadline for issuing 1099 forms is typically in January.

When to Consider Engaging a Partner

Many companies find that outsourcing the administrative worker classification and payroll details to capable partners is cost effective and reduces stress. The right partner can also help mitigate compliance concerns and minimize last-minute tax headaches. Sound like something your company could benefit from? Contact us for a free consultation!

The Bottom Line

To prepare for tax time, any company that engages independent contractors should maintain accurate records, stay informed about relevant tax laws, and consult with tax professionals or other partners as needed.

 

Looking For a Haunted Future? Misclassify Your Workers

Looking For a Haunted Future? Misclassify Your Workers 2560 1707 Alicia East

If you engage a contingent workforce and would rather not be haunted by fines, jail time, and damage to your reputation, this post is for you. When the Biden Administration rolled out a proposal that would make it harder for companies to classify workers as independent contractors, he solidified his commitment to making accurate worker classification a top priority. Take a cue and make worker classification a top focus. Violators can expect to be subject to strict penalties, fines, and negative press.

A Haunted Future For Worker Classification Violators

Big companies make headlines for their classification missteps. Smaller companies should see those big fines as a warning to take a look at their own practices. It can be a costly mistake to think you’re exempt from the consequences. The Biden administration has made worker classification a priority and made it easier for workers to argue for minimum wage and overtime protections/compensation. In addition to having to pay back 100% of the matching FICA taxes they would have paid had they classified the worker correctly up front, employers can end up subject to additional penalties for each W-2 form they fail to file, a percentage of the employee’s wages, and penalties between $5,000 and $25,000 for each worker classification violation.

In addition, class-action lawsuits, failed audits, and negative headlines can damage a company’s reputation to the point where both workers and consumers are hesitant to engage with the company. It’s just not worth it! Perhaps scarier than the possibility of monetary damages, misclassification has landed some business leaders under house arrest. Let’s get to the punch line: misclassifying workers is not good business in the long run.

The Bottom Line

Whatever the structure, every business needs to protect itself by making compliance a major priority. This reduces the risk for fines and unpleasant attention from the IRS. Any company without the capacity to accomplish this in-house should consider working with a partner. In our world, accurate worker classification and top-notch risk management are always top priority. We are the first to be aware when change is in the air. We track rules in every state as well as on a federal level and offer services to help clients stay compliant. Contact us if you have any questions about your own status. 

Watch Out For This Hazard of The Remote Work Revolution

Watch Out For This Hazard of The Remote Work Revolution 2560 1707 Alicia East
As workers disperse into new areas, it has reshaped the way businesses operate. While the arrangement offers benefits to businesses and workers alike, it also brings new challenges in terms of payroll and compliance because it requires a greater level of resources to monitor and comply with multiple regions’ compliance standards. In this post, we’ll explore how a worker’s remote status can affect an organization’s payroll and compliance practices. We’ll get into the good news, too: what businesses can do to protect themselves.

Top 5 Hazards of The Remote Work Revolution

Remote work has upended the traditional workplace. One of the lesser known impacts of this revolution is its effect on payroll and compliance. The key areas where remote work can affect an organization are:

1. Tax Implications:

  • Remote work often involves employees working from different states or even countries. This can trigger complex tax issues, such as determining which jurisdiction’s tax laws apply, potentially leading to discrepancies when appropriate taxes for the region are not applied.

2. Wage Disparities:

  • Salaries and cost-of-living vary significantly by location. Remote workers may expect different compensation based on their geographic area, creating pay disparities within an organization.

3. Labor Laws and Regulations:

  • Each location has its own set of labor laws and regulations that employers must adhere to. These can encompass working hours, overtime, paid time off, and more.

4. Employee Classification:

  • Classification varies region to region. There is not a one size fits all answer and remote workers can blur the lines between employees, contractors, and freelancers. Misclassifying workers can result in legal trouble and compliance issues.

5. Data Security and Compliance:

  • Managing sensitive company data in remote environments demands heightened data security measures to remain compliant with data protection laws and protect workers’ personal information.

Protecting Your Business in the Remote Work Era

While remote work presents challenges for payroll and compliance, businesses can take several steps to protect themselves:

1. Implement Clear Remote Work Policies:

  • Develop comprehensive remote work policies that address tax implications, wage disparities, labor laws, and compliance requirements. Make sure employees understand and adhere to these policies.

2. Institute Solid Payroll and HR Practices:

  • Invest in a robust payroll system or a partner that can adapt to the complexities of remote work. Whatever payroll system you implement should offer features for managing remote employee compensation, tax withholding, and compliance.

3. Conduct Regular Compliance Audits:

  • Regularly review and audit your payroll and compliance practices to ensure that you remain in adherence with all relevant laws and regulations.

4. Implement Data Security Measures:

  • Implement strict data security protocols and train remote workers on best practices to protect sensitive company information. Consider using virtual private networks (VPNs) and encryption tools for secure data transmission.

5. Engage Partners:

  • Collaborate with experts who can provide guidance on employee classification, labor laws, and compliance across different jurisdictions. If you don’t have the in-house resources to do it right, it’s good business to consult with partners that specialize in labor and employment to navigate the complex legal landscape of remote work.

The Bottom Line

The rise of remote work is continually transforming the business landscape, but it also introduces new complexities in payroll and compliance. Organizations must be proactive in addressing these challenges by developing clear policies and seeking expert guidance to protect themselves and maintain compliance. By doing so, businesses can fully embrace the remote work revolution while mitigating potential risks and liabilities. Have questions about your organization’s policies? Contact us.

Protecting Your Business: 5 Essential Measures to Reduce Workers’ Compensation Risks

Protecting Your Business: 5 Essential Measures to Reduce Workers’ Compensation Risks 2560 1920 Alicia East

Anyone with employees needs workers’ compensation insurance. Yep, everyone. Workers’ compensation provides wage replacement and medical benefits to employees injured in the course of employment. Just like any other insurance, you hope you’ll never need to cash in on it. But if you do end up needing it, it’ll save your butt a million ways. That said, the costs associated with workers’ compensation claims can be a significant burden on a business, so it’s best to take proactive measures to create a safe work environment and manage potential liabilities effectively.

5 Steps to Safeguard Against Workers’ Compensation Risk

Step One: Be Proactive

Employers that ensure worker safety and implement best practices before they need them are in the best position to protect employees, keep claims manageable, and maybe even keep premiums down. That’s a good reason to pursue prevention like you would pursue a crisis. If you do, you might end up preventing said crisis all together.

Proactive measures include making regular safety meetings, ongoing education, and performance metrics standard procedure. Encourage open communication about safety concerns. Identify potential safety hazards in your workplace and provide written safety policies and procedures to address them. Regularly update them to reflect changes in regulations or emerging risks.

Keep your workplace clean and organized to reduce slip and trip hazards. Ensure that safety equipment, such as fire extinguishers, first aid kits, and eyewash stations, are easily accessible and regularly inspected.

You know that weird thing that happens when you are so close to a situation that you lose objectivity about it? That’s a good reason to have a third party conduct regular safety audits and inspections whenever it makes sense for your business.

Step Two: Create Airtight Internal Processes to Handle Claims

After you’ve taken measures to prevent workplace accidents, it’s still good business to prepare for the worst. Create a process for employees to report safety concerns, near misses, and accidents promptly. Investigate incidents thoroughly to identify root causes and implement corrective actions to prevent similar incidents in the future.

Implement a plan for how you’ll handle a claim if one does still come up after you’ve put all your preventive measures in place. Make sure reserves are accurate. Have a standard operating procedure. Decide who will talk to the adjuster and within what time frame. Taking the time to lay out your processes while your brain isn’t in crisis mode results in sounder decisions. The added benefit is that it will reassure your adjuster that you’re engaged and motivated to reach a speedy resolution.

Have a “Return-to-Work” Program established to  help injured employees transition back into the workforce as soon as they are medically able. This can reduce the duration of workers’ compensation claims and associated costs. These measures demonstrate a level of professionalism and reassure insurance companies and employees alike.

Step Four: Invest in Accurate Worker Classification

This may not seem related, but an independent contractor filing a workers’ comp claim can easily land a well-intentioned company on the DOL’s radar. This happens with surprising frequency despite the logical assumption that an independent contractor should understand the implications of a business-to-business relationship. One key aspect of a true B2B relationship is that a worker’s business activity exists independent of the employer. Preventing misclassification and communicating clearly with workers is a worthwhile preventative investment.

Step Five: Engage The Right Partners

Review and evaluate your insurance coverage to ensure it adequately meets your business needs. Consider working with an insurance expert to identify potential cost-saving opportunities. Seek professional guidance from partners (such as an Employer of Record, like PayReel) that is in position to help you manage the risks associated with having employees. They can provide valuable advice on risk mitigation strategies and legal compliance.

The Bottom Line

If you don’t have the budget to implement every possible safety measure for a project, you don’t have the budget for the project. Protecting your business against workers’ compensation risks is not only a legal requirement but also a smart business practice. By creating a safe work environment, implementing comprehensive safety measures, and actively managing workers’ compensation claims, you can reduce the financial and reputational risks associated with workplace injuries. Remember that investing in safety is an investment in the long-term success and sustainability of your business. The best workers’ comp claim is the one that never happens.

What California’s Private Attorneys General Act (PAGA) Means For You

What California’s Private Attorneys General Act (PAGA) Means For You 2560 1707 Alicia East

California’s Private Attorneys General Act (PAGA) is a critical piece of legislation with far-reaching consequences for labor rights and business operations. With PAGA, employees have power to enforce labor laws and directly hold employers accountable for violations. We’ll discuss what this significant piece of legislature means for employees and businesses.

What’s in a Name?

The Private Attorneys General Act grants employees the right to “recover civil penalties on behalf of themselves, other employees, and the State of California.” The name itself holds a big key to understanding the act because the law effectively deputizes private individuals to act as “private attorneys general” and gives them the authority to pursue civil penalties. Under PAGA, employees can make claims regarding a wide range of labor issues, including wage and hour violations, inadequate break periods, and workplace safety concerns.

What is The Argument in Favor of PAGA?

Like any legislation, PAGA has detractors, but proponents say it has the following benefits:

  1. Increased Employer Accountability: The idea is that by giving employees power to hold employers accountable for violations that might otherwise go unnoticed, employers are held to a higher level of accountability to maintain positive workplace conditions.
  2. Deterrence of Violations: PAGA intends to serve as a deterrent against employers taking advantage of employees as the threat of substantial financial penalties and long legal battles encourages companies to comply with labor laws.
  3. Empowerment of Employees: PAGA purportedly empowers individual employees to take an active role in safeguarding their own rights. It democratizes the process of upholding labor standards by enabling individuals to seek justice without relying solely on government agencies.

How Does PAGA Affect Businesses?

Detractors says the Private Attorneys General Act presents significant challenges and drawbacks for businesses and makes it prohibitive to operate there. They also say it increases the potential for frivolous lawsuits, and a cascading list of damages.

  1. Makes Operating in California Harder: The constant threat of PAGA claims has the potential to increase financial strain. Penalties for violations can be substantial and even if businesses ultimately prevail in PAGA lawsuits, the processes can tie up internal resources and lead to collateral damage. Negative media coverage and public perception can impact a company’s brand image and customer trust. This can have long-lasting effects on customer loyalty, shareholder confidence, and overall business success.
  2. Incentivizes Frivolous Lawsuits: While most companies have internal procedures to address grievances, PAGA empowers employees to file lawsuits for relatively minor violations that might’ve been handled internally instead. Opportunistic individuals may bring forward frivolous lawsuits and exploit the system for personal gain rather than use the system to address genuine labor law violations. Such lawsuits waste valuable time and resources and also undermine the credibility of legitimate claims, therefore diluting the effectiveness of PAGA.

How Can Businesses Protect Themselves?

Understanding the implications of PAGA and taking proactive measures to protect themselves against potential claims is essential to the health of a business. Here are some strategies companies can adopt to safeguard their interests while ensuring compliance with labor regulations.

  1. Comprehensive Compliance Practices: The foundation of protection against PAGA claims lies in ensuring that your business is fully compliant with labor laws and regulations. Establish comprehensive compliance practices that include regular audits of your HR policies, wage and hour practices, employee classification, and other pertinent areas. By identifying and correcting potential violations early, you can mitigate the risk of PAGA claims arising from inadvertent errors.
  2. Transparent Documentation: Maintain thorough and accurate records of all employment-related activities, including payroll, working hours, breaks, and employee classifications. Transparent documentation not only demonstrates your commitment to fair practices but also serves as invaluable evidence in case a PAGA claim arises. Consistently documenting policies, training sessions, and communication with employees can help establish your company’s efforts to comply with labor laws.
  3. Effective Employee Communication: Clear and open communication with your employees is key to preventing PAGA claims. Ensure that your employees are well-informed about their rights, responsibilities, and grievance procedures. Create a culture that encourages employees to raise concerns internally before resorting to legal actions. Having a well-defined internal process for addressing grievances can help resolve issues before they escalate into legal disputes.
  4. Regular Training and Education: Invest in training programs that educate both management and employees about labor laws and workplace policies. Regular training sessions can help prevent unintentional violations and foster a proactive approach to compliance. By demonstrating your commitment to keeping all stakeholders informed, you create a stronger defense against PAGA claims.
  5. Engage a Compliance Partner: Given the complex nature of labor laws and the nuances of PAGA, seeking support from experts is wise. They can provide insights into potential vulnerabilities and help you implement strategies to mitigate risks. If handling all of these details is beyond your interest or bandwidth, you can engage an Employer of Record that is in position to do all of the above and indemnify you of many of the risks associated with engaging employees in California. Contact us to discuss your potential vulnerabilities as well as how you can protect yourself.

The Bottom Line

The Private Attorneys General Act (PAGA) has reshaped the landscape of employee rights and employer responsibilities in California. While it does present potential challenges for businesses, adopting a proactive and comprehensive approach and engaging the right partners can significantly reduce the risk of PAGA claims.

 

Preventing Sexual Harassment in The Workplace (But With Fun Gifs)

Preventing Sexual Harassment in The Workplace (But With Fun Gifs) 2560 1707 Alicia East

If you’ve worked in an office environment and also watched “The Office,” you can probably recall a Todd Packer type. They speak in innuendos, find themselves incredibly entertaining, and generally make people around them wish they could disappear.

In “The Office,” there’s one exception: Michael seems to find Todd Packer’s behavior aspirational rather than offensive. Still, coming from the guy who can’t resist an opportunity to drop his, “That’s what she said,” line, this doesn’t bode well for ol’ Todd.

In my experience, most of the problematic people are a little more subtle than Todd Packer, but any level of sexual harassment can negatively impact employees’ well-being and even bring down productivity.

California’s sexual harassment training requirements are meant to prevent the Todd Packers of the world from having a captive, highly-uncomfortable audience in the workplace. Whether there are similar laws in your location or not, sexual harassment prevention really is an important subject. Preventing sexual harassment promotes respect, dignity, and equality.

Key Aspects of California’s Sexual Harassment Training Requirements

  1. Mandatory Training Requirements: California law mandates employers with five or more employees provide sexual harassment prevention training. All staff, including supervisory and non-supervisory staff, employees and contractors, and even unpaid interns and volunteers. This training is required within the first six months of employment and should be provided every two years after that. The training must consist of at least two hours for supervisors and at least one hour for non-supervisory employees.
  2. Content/Method of Training: Employers have some liberty in how they choose to conduct the training (using videos, webinars, etc.), but the curriculum must ensure that employees understand what constitutes harassment, how to prevent it, appropriate ways to report an incident, the potential legal consequences for violations, and what role bystanders can play in preventing harassment.
  3. Purpose: Proper sexual harassment training is designed to equip employees with the knowledge and confidence to identify, address, and report any inappropriate behavior. The idea is to empower individuals to contribute to a healthy work environment and ensure a level of accountability at all levels of the organization. When it works as designed, this ensures workplaces remain free from harassment, discrimination, and toxicity and also promotes a more equitable and productive working environment.

Bottom Line For Employers

Complying with California’s sexual harassment training laws is not just a legal obligation, but also a way to create a respectful and inclusive workplace culture. While we do want to bring a little bit of levity with GIFs from “The Office,” we do know that nothing about sexual harassment is funny.

When you partner with PayReel as the Employer of Record (EOR) on your project, you can be assured we’re on top of sexual harassment training requirements on your behalf. When we hire employees in states with these requirements, workers must take the state’s training, download the certificate, and upload it into PayReel Online so we ensure compliance.

Whether it’s a part of your state’s regulations or not, fostering an environment where employees feel safe and valued reduces a business’s risk of legal disputes, negative publicity, and loss of productivity. In short: just do your part to send the Todds of the world packing.

Here’s What to Think About if You’re Expanding Your Business (And Therefore, Your Payroll)

Here’s What to Think About if You’re Expanding Your Business (And Therefore, Your Payroll) 2560 1707 Alicia East

If you’re planning to expand your business, one of your top priorities should be making sure you’re in position to classify and pay employees and independent contractors properly. This is especially important if you’re looking to hire people in any state without any red tape. Today, we’ll talk about what it takes to run payroll and when it’s helpful to engage a partner.

Doing Payroll Right

Since payroll is always a complex, high-stakes business, it’s worth investing anything required on the front end to make sure you do it right. Whether you train an in-house team or engage a partner, they need to be in position to classify correctly, stay on top of laws as they change, identify and respond to the different tax requirements, and have a system in place that allows the process to be simple, accurate, and fast. This helps you avoid future fines and legal battles.

Doing it right means doing the following:

  1. Learning local employment laws. This includes identifying regulations regarding working hours, holidays, sick pay, insurance, and more and having a (preferably automated) system in place to follow those rules.
  2. Onboarding workers. This includes collecting information such as name and date of birth as well as tax forms, background checks, benefit status, and work eligibility.
  3. Storing and securing data. Since you’re dealing people’s personally identifiable information (PII), you MUST have a way to secure that highly-sensitive data. The fines for mishandling data are serious, so you should be equally serious.
  4. Authorizing payments and ensuring your employees get paid accurately.  This includes identifying the appropriate deductions/taxes, keeping accurate records, paying on time in every location, sending out notifications, reporting as required to government institutions, etc.
  5. Having a system in place to identify and adjust to changes. You don’t always have time to wait weeks to adjust to new laws. Things evolve rapidly, so your system needs to be ready to evolve just as rapidly.
  6. Staying compliant. Laws are different from place to place and do change frequently, so your payroll management software solution should have systems in place to ensure  compliance wherever you operate.

Would Outsourcing Payroll Benefit Your Business?

Outsourcing payroll is especially valuable in certain situations. If a company needs to hire employees in multiple states, is growing rapidly, and/or needs to hire temporary workers frequently, engaging an Employer of Record (EOR) could be a game changer. An EOR mitigates compliance risks, increases payroll efficiency, and eases the administrative burdens of managing a workforce.

The Bottom Line

Payroll is one of the most complex and challenging aspects of operating a business and should be given appropriate attention by every business. When a company is growing, payroll is one of the most important aspects of business to have in good working order. The right people on your in-house team or the right partner are essential. If you think a partner would be beneficial to your business, reach out! Relax: We got it.