Managing payroll compliance complexities with your HRMS
Payroll is a highly regulated discipline filled with compliance complexities where mistakes are costly. Your HRMS provides the foundation to ensure that regulatory requirements and governance is handled effectively and in a cost-efficient manner. Here are some of the main areas where your HRMS should be the cornerstone of your payroll compliance program.
1) An effective HRMS will ensure that federal, state and local requirements are met
There are a number of payroll compliance requirements at all levels and it can be difficult to keep track of them without a systematic approach. While many of your HR and Payroll managers will know some of these requirements by heart, automating them in an HRMS makes life easier. For example, if you require an I-9 from an employee prior to starting work, set up your HRMS system notifications to alert the line manager and the payroll manager on an employee’s start date when one is missing.
Do you hire students during summer breaks? Ensure that your HRMS gives a hard warning for any hire that is below the minimum working age. You can also add in rules if you’re managing time & attendance data in your HRMS; do not allow managers to inadvertently break the Fair Labor Standards Act (FLSA) by setting alerts when a manager tries to schedule an employee beyond the legally allowed working hours for a shift, day, week etc.
2) Build your workflows to ensure payroll compliance
Today’s generation of HRMS offer a lot of functionality to help you build payroll workflows. If your payroll processes requires a sign-off for a pay increase above a certain salary percentage or amount, build this rule into your system. Gone are the days of paper approval trails and emails. You need to automate these types of transactions to guarantee 100% adherence to internal and external regulations.
3) Create audit trails to ensure payroll compliance
Audit trails serve a two-fold purpose in the field of payroll compliance. In the event of a non-compliant incident, you are able to find the exposed weakness in your processes and build a stronger control. Secondly, when devious employees think about performing a non-compliant action in the system, they will be deterred when they know that HRMS activities are logged with a user id and date/time stamp.
4) Stay up to date on system fixes and patches
The rate of change for HR and payroll legislation is rapid. If your company has employees in multiple states and localities, the payroll compliance requirements are mind-blowing. You cannot afford to retain a static HRMS that is behind the times. The ability to stay current on new laws and requirements is often one of the major selling points of Software as a Service (SaaS) HRMS solutions as well as outsourced payroll vendors who specialize in staying up-to-date on current government requirements.
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