Most employees, and even some employers think that payroll is just cutting and processing paychecks. Most payroll professionals will tell you that it’s a lot more than simply pressing “print checks.”
One of the main functions of a payroll department or payroll processor is verification of hours worked, and making sure employment laws are followed with the DOL Wage and Hour division. For companies that are national, each state might have a different wage and hour law when it comes to overtime, final paycheck laws, and holdback periods. The payroll department has to be up to date and informed of these variations each pay day. That’s a big job in and of itself!
Another function of payroll is taking care of wage deductions. These can be voluntary deductions such as Flex Spending for both medical and child care (Cafeteria Plan), Insurances (Health, Dental, Vision), 401k Deductions, Uniform Deductions, or Tool Deductions. Sometimes these deductions can change on a monthly or quarterly basis. Each time an insurance is renewed, rates change for both employees and employers. These deductions have to be changed in a timely manner, or employees are at risk of overpaying or underpaying. Sometimes it’s frustrating to have to back-charge employees.
Other functions of payroll are:
- Setting up employees from new hire paperwork
- Wage verification
- Calculate and process payroll taxes
- Respond to employment verifications for employers
- Respond to financial lenders (mortgage, housing, academic)
- Respond to state agencies (welfare, housing, workforce services)
- Respond to garnishments and calculate totals (involuntary deductions)
- Reprint paycheck stubs and/or W2’s
- Calculating and monitoring vacation pay (if applicable)
- Calculating and monitoring wage increases, bonus pay, and overtime pay
- Maintaining and filing payroll records
As you can see, there are a great deal of payroll functions that are separate from just getting a paycheck. Payroll processors need to have a great deal of education with both financial and accounting fields as well as some HR knowledge. Outsourcing your payroll to a PEO allows you to have the best of both worlds. With a PEO, you typically get a payroll/accounting department that works side by side with HR professionals in order to make sure that payroll is done correctly and laws are followed. Give us a call today and let our team of Payroll and HR Professionals brainstorm how we can provide these services to you immediately.