Issue link: https://www.e-digitaleditions.com/i/135744
Payroll the top three compliance sues confronting the payroll space, hotel or celebrity chef found to be violating minimum wage laws at present, include healthcare reform, immigration reform, is subject to zealous plaintiff attorneys filing class actions that and tax changes. The latter, he says, "encompasses IRS filing tend to be reported with big photographs in tabloid papers, developments, state-level complexities, and potential tax thus damaging that entity or person's reputation," Diassi sasys. reform/deficit reduction impacts." "These entities, for the most part, are not deliberately, flat-out in violation. They're just not aware [they're out of compliance]." Somebody's Gotta Do It Fortunately, complying with this complex and evolving This lack of awareness can be chalked up partly to the difficulties patchwork of rules is increasingly the responsibility of service that legacy payroll systems endure in trying to stay apace of providers such as Unicorn HRO. "We're doing more and more of the shifting morass of record-keeping laws and regulations. the compliance work for clients, simply because it is ever more "If you look at companies with more than 2,000 employees, confounding," says Tim Diassi, executive vice president and they're all fundamentally using payroll technology that is 15 to general manager at Florham Park, NJ-based Unicorn HRO LLC. 20 years old," says Larry Dunivan, chief information officer at "There are so many regulations involving taxes that they just Minneapolis-based Ceridian HCM. "These systems have been can't keep up with, and be confident they're in compliance." modernized in different ways, forms, and shapes, but they nonetheless have great difficulty keeping up with the shifts At the same time that myriad federal, state, and municipal tax in regulations. In many cases, they're forced to rewrite [the agencies have stepped up their enforcement activities, the software coding] from scratch—not the most efficient or cost- rules themselves are increasingly more complicated, making effective process." compliance a treacherous exerce. "With regard to the HR side and employee benefits, the rules seem open-ended—more of As the compliance environment becomes even more complex, a gray area," Diassi explains. "We can walk the client through and Dunivan says this is "guaranteed as long as we have the process from a consulting standpoint, but that doesn't mean Democrats in the White House," the burdens on payroll will they always follow the correct [filing] process. One can't blame exponentially increase. Not that many organations want to be them because this is complicated stuff. Mistakes are inevitable." in the business of payroll-related compliance. It is obviously not many companies' core competency; nor is payroll IT. "If the Busch agrees, noting a set of particularly confusing rules technology is weak," Dunivan asserts, "there will be unintended affecting the hospitality industry, particularly restaurants. consequences." "There are all sorts of regulations affecting tipping," he explains. "For example, the federal government requires that Enter the Cloud you file Form 8027 [to report employees' tip incomes] every Why tempt such consequences when one can essentially pass February. The form requires that you not only list total tips but on workforce management, wage, and time-and-attendance track the source—was it paid with a credit card, check, or cash? payroll obligations to outsourcing service providers, particularly You also have to track whether the individual who received the now that they provide such services in a hosted Software-as-a- tip was directly tipped by a customer or indirectly tipped, the Service (SaaS) environment? case with a busboy or assitant bartender drawing from a pool of tips." Given companies' intricate and constantly altering compliance responsibilities, a cloud-based payroll system provider can These various categories of tipping income require ways to become the de facto internal payroll department, focused on identify and manage the source of money. When an employee a single responsibility that is, in fact, its core competency. "The works overtime, these burdens increase. "Different rules now payroll user gets real-time data from the swipe of a badge right govern the tipping that occurs when an employee receiving to net pay, whereas today you have a series of interfaces and minimum wage, for instance, is getting time and one-half in batch jobs eating up four to six days of the payroll cycle, with overtime pay," Diassi says. "If you have invalid overtime rates lots of process points of failure in between," says Dunivan. or you're underreporting wages and tip income—even if it's "Payroll cycle time is dramatically reduced, there is no latency, inadvertent—the door swings opens to a Department of Labor and everything is validated in real time." investigation." Cloud-based systems also offer the opportunity to immediately The Labor Department is not alone in investigating compliance recognize when there is a problem in the payroll/compliance abuses with new aggressiveness, he adds. "A major restaurant or pipeline. "If you have an employee who has been paid [12] HRO TODAY MAGAZINE | MAY 2013