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Why Payroll Compliance Matters (and How to Address It)

With employment laws emerging constantly, the need to ensure compliance never stops. And given payroll is one of the most regulated HR functions, having a consistent, reliable and efficient process is paramount.

For employers, payroll errors yield a slew of potential consequences, including:

  • costly noncompliance fees
  • time-consuming, inconvenient corrections
  • frustrated employees
  • turnover
  • and more

And according to research from the American Payroll Association, 69% of the nation’s workers live paycheck to paycheck. Incorrect payroll doesn’t just risk steep regulatory pitfalls; it has the potential to harm the trust carefully built with employees.

In fact, in a survey conducted by The Harris Poll and commissioned by Paycom, 51% of employees said they would look for a new job if they experienced any payroll errors. In the Great Resignation we’re currently experiencing, any obstacle harming a workforce and deterring top talent is one businesses must overcome.

Luckily, by understanding how the most common payroll errors affect operations — and by adopting the right technology to address them — perfect payroll isn’t just a pipe dream, but a realistic expectation.

Compensation challenges

Mistakes might be inevitable, but with something as crucial as payroll, even simple missteps could spell disaster.

For most HR, payroll and accounting professionals, this knowledge strikes close to home. Last year in a OnePoll survey conducted on behalf of Paycom, four out of five reported being stressed about payroll errors, such as making retroactive payroll adjustments, missing a tax filing deadline, overlooking a deposit date and more. And 91% of the surveyed professionals agree payroll errors fracture employee trust.

While HR is overwhelmingly concerned by the damage an imperfect payroll process and subsequent noncompliance can wreak, employees are troubled by unwieldy tools holding them back. Is it possible to reduce the tedious manual tasks fueling payroll errors and empower employees with their data?

Yes, absolutely!

A self-service solution

Managing the compliance risks of payroll isn’t about getting better at executing its many monotonous moving parts, but removing them outright.

At the same time, involving employees in the process with a self-service tool empowering them to view, troubleshoot and verify their paychecks before payroll runs helps get ahead of the errors behind costly penalties and other compliance consequences.

For employers, the ideal payroll tool helps:

  • reduce liability through enhanced oversight
  • boost engagement through greater employee involvement
  • improve overall data accuracy, especially in the face of audits

And by making the payroll process transparent, this technology builds something undeniably important: trust. After all, as harmful as faulty payroll is to the employer brand, it hurts employees the most.

When members of the workforce have a system to help them understand the factors influencing their paychecks ahead of time, there’s little room for doubt as they see the process in action. This means factors like hours worked, tax withholdings, expenses, reimbursements and bonuses — basically everything making up employees’ pay — are clearly and intuitively presented.

Ultimately, when an entire organization is on the same page about payroll courtesy of a clear, engaging and enhanced process, it’s able to approach the evolving compliance landscape with confidence.

Learn about Beti®, Paycom’s employee-driven payroll experience, and see how this technology could elevate your operations. And for more insight, read our guide, How to Elevate Compliance, Retention and Operations With a Perfect Payroll.

 

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.