by Stephanie Baxmann | Jul 15, 2024 | HR Administration, Payroll
Siloed systems are relics of the early 2000s; today, integrated HR and payroll systems are the wave of a more efficient future. HR and payroll integration means a more robust onboarding process, fewer errors, greater transparency, and enhanced compliance, among other benefits.
As payroll and HR systems grow increasingly complex, integrating the two systems only makes sense from efficiency and security standpoints. It’s only a bonus that this integration also eliminates many cumbersome manual processes.
Here’s why more organizations are integrating their payroll and HR systems, as well as the best practices for doing so.
How Integrated HR and Payroll Systems Work
There are three principal types of integrated HR and payroll systems:
HRIS (Human Resource Information Systems) are designed to handle basic HR needs such as benefits administration, storage of employee data, employee leave management, and payroll processing. Employee information is stored in individual digital files, which allows time, attendance, and benefits records to flow seamlessly to payroll records. This ensures more accurate payroll records, as it automates calculations and tallies paid and unpaid leave. This makes HRIS ideal for small businesses that do not have a dedicated HR department.
HRMS (Human Resource Management Systems) can work with both small and mid-size businesses, as they offer more features than an HRIS. They are centralized systems for HR, payroll, and employee data. In addition to core HR functions, HRMS can also support performance management tools, learning and development, employee onboarding, and other advanced functions to synchronize data across different aspects of employee productivity.
HCM (Human Capital Management) systems are used by large enterprises, as they are the most comprehensive type of integrated HR and payroll system. They encompass both the core and advanced functions of HRMS, but are also scaled for workforce management and optimization of very large staffs. Succession planning, business intelligence, and other advanced aspects of people management are the main draws of using a HCM over the two types of systems.
Benefits of HR and Payroll Integration
There are innumerable benefits to HR and payroll integration. No matter which type of system your organization picks, unifying the two functions streamlines processes. Here are some of the benefits in doing so:
Fewer Errors
Manual data entry creates errors, and legacy payroll and HR systems that are siloed are very prone to errors. Because integrated systems integrate employee data in real-time, such as attendance rates, benefits deductions, and other information related to compensation and performance, these inaccuracies are vastly reduced because they no longer require human input to process.
Increased Productivity
Integrated HR and payroll systems are major time savers. By eliminating tedious, time-consuming tasks related to manual data entry and checking between two siloed systems, HR staff can focus on more pressing and meaningful matters, like creating a better workplace culture.
Data-Driven Decision-Making
When payroll and HR data are viewed in tandem, they provide a more holistic view of the entire workforce. This enables managers to make better decisions regarding staffing needs and overall business strategy when they can see productivity, retention rates, and other data points in real time.
Increased Employee Morale
Self-service options with integrated payroll systems make employees feel more empowered about their personal finances. When employees feel more in control regarding things like leave requests, changing their payroll information, and finding out more about their benefits without needing to constantly contact an HR manager, it saves teams time and empowers them.
Enhanced Compliance
Payroll and HR regulations are constantly becoming more complex. Having a holistic view of both data sets at all times makes it easier to see if compliance requirements regarding wage and hour regulations, conditions for grant funding and tax credits, and other mandated and optional constraints are met.
Scalability
Integrated systems allow organizations to add or subtract features as needed. As many businesses face uncertain economic times and look to scale back, integrated systems allow them to do so. When growth is evident, the features can be added back. These enable teams to stay agile while retaining core functionality with greater transparency than when the systems were siloed.
Data Security
The cloud-based systems behind integrated payroll and HR systems have more built-in security features than legacy systems. Payroll data security is more important than ever when data breaches are a constant threat to employees and customers, as the sensitive data in payroll records is highly desirable to bad actors. Cloud systems must be compliant with privacy regulations, and they can provide a record of attempts at unauthorized access before unwanted cyber visitors become a serious problem.
The Challenges of Siloed Payroll and HR Systems
What happens when HR and payroll functions are not integrated? After all, these two functions have had to be separate for a long time, and organizations have still thrived.
Data discrepancies across the two systems are a given. Without integration, the consequences of these errors waste time and resources that could be put to better use. Integration eliminates time-consuming manual processes that waste employees’ time, such as checking whether the employee has already used allotted leave time.
Best Practices for Integrating HR and Payroll Systems
When evaluating an integrated HR and payroll system, consider the features your organization needs the most versus ones that would be nice to have. Implementing the system will have some growing pains, so make sure to do this during a slow period when operations can handle being temporarily disrupted. Working with a partner like Affiliated HR & Payroll can also provide the guidance necessary for selecting the right system that best fits your organization’s needs and priorities.
Streamline your HR and payroll processes with Affiliated HR & Payroll’s integrated systems. Contact us today for a demo and see how we can help your business thrive.
by Stephanie Baxmann | Jul 8, 2024 | Payroll, Regulatory Compliance, Uncategorized
Cyberattacks leave no stone unturned in the 2020s. According to Forbes, organizational data breaches increased 72% between 2021 and 2023. Data breaches aren’t just stolen credit card details and addresses from customers; internal payroll data is a prime target for cyber-attacks given the wealth of personal and organizational information in payroll records.
How do you keep your organization safe from bad actors as they get more sophisticated and convincing? Here’s why payroll data security is important and what you can do to create robust protections for sensitive data in payroll records.
The Importance of Cybersecurity for Payroll
Payroll records contain highly sensitive data that is a goldmine for hackers. Not only do they have employees’ legal names and current addresses, phone numbers, and other contact information, they also contain bank details. Social Security numbers and other identifying numbers, like International Tax Identification Numbers, can be used to steal someone’s entire identity and do everything from taking out loans and credit cards in their name, to signing leases.
Salary information is also in payroll records. While an employee could voluntarily discuss their salary privately, involuntarily revealing salaries to the public can sow distrust in both the employee and the organization.
Protecting payroll information is paramount for both short-term safety and long-term prosperity at both the personal and organizational levels. Breaches can cost millions of dollars to address. If an employee’s bank information or identification number is compromised, it can completely disrupt their lives for several months while they sort it out with the Social Security Administration. They won’t be able to perform very well at work if they are worried about their personal finances, future plans, and the havoc wreaked by a stolen identity.
Payroll Security Best Practices
Cybersecurity for payroll doesn’t have to be an overly complex system. While a cybersecurity professional may be necessary in some situations, there are some basic best practices that even those who are not the most tech-savvy can implement to keep payroll data safe from bad actors. These include:
Use strong authentication methods.
Two-factor authentication can be set up in online payroll accounts for both users and administrators. Email servers and any other portal where sensitive data is at risk should also have two-factor or multi-factor authentication enabled.
Conduct regular security audits.
Semiannual or quarterly security audits with a cybersecurity professional can help your organization address vulnerabilities before they become serious problems. New cybersecurity threats are constantly cropping up and evolving. Routine security audits can keep the organization on top of these threats before they become breaches.
Train employees on phishing, deepfakes, and other cybersecurity threats.
Even tech-savvy employees can fall for deepfakes, which are becoming more convincing. All it takes is a snippet of a phone call with a manager to get a voice sample that sounds genuine, convincing that employee to hand over sensitive information and putting themselves and the entire organization at risk. Employee training on the latest cybersecurity threats can help them stay aware of these threats and recognize them when they happen.
Secure data storage solutions.
Secure cloud solutions for payroll data with the ideal functionalities can keep employee information safe without sacrificing convenience.
Payroll services like Affiliated HR & Payroll are in the business of protecting your highly sensitive payroll data. Payroll data security is a cornerstone of our business, and our cloud-based systems offer built-in security features.
Legacy payroll systems are not only clunky to operate, but they also have several vulnerabilities compared to modern systems. Payroll technology plays a major role in enhancing data security, and payroll cybersecurity doesn’t have to be overly complex.
Proactive vs. Reactive: Your HR Data Security Strategy
Organizations need to have a proactive approach, rather than a reactive one that only responds to threats after they become imminent. Payroll security requires ongoing vigilance to ever-evolving cyber threats rather than damage control once a breach occurs.
A holistic and proactive approach to payroll data security ensures that threats are mitigated before they appear on the radar. Strong authentication, employee awareness of the latest cyber threats, secure data storage, and routine security audits can keep your organization on the up and up. Affiliated HR & Payroll’s payroll security experts are here to ensure your information stays safe.
Protect your business from cyber threats with secure payroll solutions from Affiliated HR & Payroll. Contact us today for a consultation.
by Stephanie Baxmann | Jul 2, 2024 | HR Administration, Payroll, Texas, Uncategorized
Businesses nationwide are turning to the independent workforce to weather uncertain economic times and waves of layoffs. Small businesses frequently rely on freelancers and gig workers when they need extra help for a project or busy time of year.
However, just because a worker is temporary or agrees to be paid as an independent contractor doesn’t make them one under federal and Texas laws. Here’s what you need to know about Texas employment law regarding worker classification and how worker classification is defined in Texas.
How Does Texas Employment Law Define an Independent Contractor?
In Texas, the distinction between an employee and an independent contractor is based on the 20-factor test used by the IRS to determine if the work is independent or dependent on personal services. Worker classification is done on a case-by-case basis, with not all factors given equal weight or consideration. These are the factors Texas labor law examines:
Instructions
Employees are given specific instructions on when, where, and how to work. Independent contractors can receive some guidance and examples, but they have the freedom to choose how, when, and where they want to do the job.
Training
Not all workplaces offer training, but employees are typically trained by an owner, manager, or more senior employee. There may also be required training sessions or coursework. Independent contractors have their own licensing, education, and credentials and generally don’t receive training beyond onboarding new programs.
Integration and Reliance
Organizations rely on their employees for successful operations. Independent contractors are usually brought in on a project basis or work separately from the client’s overall operations.
Services Rendered Personally
Independent contractors are able to farm out their gigs to other subcontractors or individuals. Even senior employees cannot delegate work they must personally perform to another employee.
Supervision and Help
Employees in management capacities may take on additional help, such as seasonal and temporary employees, interns, and new hires, but the employer pays these helpers. Independent contractors who need additional help are responsible for their results and for paying for their time.
Continuous Relationship
Permanent employees are expected to remain with the same employer for some time. Independent contractors usually work on a project basis or have a defined start and end date. While they may work with regular recurring clients, the relationship is never assumed to be in perpetuity like an employee-employer relationship.
Set Work Hours
Employees work at their employer’s discretion. They are told which days and hours they must work. Independent contractors have complete autonomy over the timeframes in which they work, deadlines notwithstanding.
Reliance on the Employer or Client
Employees are generally devoted to one employer, with the employer having the right to prioritize the employee’s time. Independent contractors virtually never devote themselves exclusively to one firm.
Location
Employers can dictate if employees can work at home or must report to the office or other job sites. While this depends on the nature of the work, independent contractors can work wherever they want. They also generally supply their own fixed base, such as a home or rented office, while employees rely on their employer to set this for them.
Sequential Order
Employees must perform tasks according to the employer’s instructions, demonstrating the employer’s control over them. Independent contractors focus solely on the results and submit them to the client on time. They decide on orders or sequences for how they work.
Reporting Requirements
Employees may be required to submit oral or written reports to their employers regarding their workloads, projects, and organizational objectives. Independent contractors may voluntarily provide these reports for large projects, but they are usually not mandated to submit such reports.
Payment
Employees are typically compensated at specific intervals, such as weekly payment for hourly wages or biweekly for a salary. Independent contractors are remunerated based on an agreed-upon project rate and invoice for their hourly work.
Business and Travel Expenses
Employee business and travel expenses are usually covered by the employer through company funds and credit cards or reimbursement of personal funds. Independent contractors generally pay for all of these expenses out of pocket.
Tools and Equipment
Employees are typically provided with the tools and equipment needed to do their jobs. While it isn’t out of the ordinary for employees to have their own hand tools, they usually are not buying large pieces of equipment.
Independent contractors, however, pay for their own tools and invest more significantly in their equipment than laptops and basic hand tools.
Investment
Even if an employee has some equity in their employer’s company, they are economically reliant on it otherwise. They usually don’t own the means of production. Independent contractors are substantially invested in their independent business and want to ensure it is profitable.
Profit or Loss
Employees are paid for their services regardless of how well the company is doing. Independent contractors realize a profit or loss based on their revenues and expenses.
Working for More than One Client or Employer
While second jobs and the “over employment” trend have gained popularity in the 2020s, most permanent full-time employees only work for one employer. Independent contractors are expected to do the opposite and never rely solely on one firm for revenue.
Public Availability
Generally, an employee’s service is between them and their employer. Their services are not made available to the public. Independent contractors make their availability known to the public in some way, be it through business cards, dedicated websites, social media presence, business licenses, and other types of promotion.
Ability to Quit
Texas is an at-will state, so employers can terminate an employee whenever they want without providing a reason. In turn, employees can quit at any time without being held liable to the employer.
Independent contractors may be held liable, even if the client doesn’t enforce it. They may be in breach of contract if they terminate the job before fulfilling their contractual obligations or must compensate the client if it takes them a long time to find a suitable replacement contractor.
Consequences for Improper Worker Classification
As the nature of work in the 21st century continues to evolve, many confusing labor compliance matters arise. Just because a worker works from home or has a flexible arrangement doesn’t necessarily mean they’re an independent contractor by default.
Employers don’t have to pay payroll taxes or contribute to the Texas unemployment fund when a worker is an independent contractor. Subsequently, the TWC fines employers for each instance of misclassification. The severity of the fine depends on whether it was willful or not, and the extent of the unpaid taxes owed. If your Texas organization has government contracts, there is an additional $200 per misclassified employee.
Additionally, there may be consequences at the federal level for not paying into the federal unemployment fund and insufficient employer FICA contributions. This is also based on whether the misclassification was willful or an honest mistake.
Ensure Compliance with Affiliated HR & Payroll
Worker classification is a complicated compliance area that is constantly changing due to tax and labor law shifts. Affiliated HR & Payroll’s compliance experts can help you stay compliant with TWC and IRS regulations regarding the correct classification of workers. Ensure your business stays compliant with Texas laws. Contact Affiliated HR & Payroll today for expert guidance on worker classification and other HR services.
by Stephanie Baxmann | Jun 18, 2024 | Regulatory Compliance
On April 23, 2024, the Biden-Harris administration announced a new final rule from the Department of Labor that will likely have a major impact on many companies. The rule revises the Fair Labor Standards Act (FLSA) regarding overtime eligibility thresholds for executive, administrative, or professional (EAP) employees.
Many EAP employees will become eligible for overtime pay once the rule goes into effect on July 1, 2024. Although the rule is expected to face significant legal challenges, businesses must now prepare to ensure compliance if it goes into effect as scheduled.
Overview of the New Overtime Eligibility Thresholds
The FLSA requires that employees working over 40 hours per week be entitled to overtime pay. However, employees who fall within the EAP categories are exempt and are not owed overtime. These employees must receive a fixed and predetermined salary, currently $35,568 per year ($684 per week), and perform executive, administrative, or professional duties.
New Thresholds:
- July 1, 2024: Increase to $43,888 per year ($844 per week).
- January 1, 2025: Increase to $58,656 per year ($1,128 per week).
This represents a 40% increase in the salary thresholds for overtime in less than a year. Additionally, starting on July 1, 2027, the salary thresholds will automatically increase every three years.
Impact on Businesses
HR and payroll staff at many companies will need to reassess how employees are classified. Employees paid below the new thresholds must be reclassified as non-exempt and will be eligible for overtime pay. Businesses currently relying on lower-paid salaried workers may face significant overtime costs.
Steps for Ensuring Compliance
To ensure compliance with the new federal overtime regulations, businesses should:
- Review and Adjust Employee Classifications: Ensure employees earning below $43,888 on July 1, 2024, or $58,656 on January 1, 2025, are reclassified as non-exempt.
- Update Payroll Systems: Reflect new thresholds in payroll systems and ensure third-party or automated systems are updated accordingly.
- Train HR and Payroll Staff: Provide training on the new regulations to ensure staff are well-informed.
- Conduct Regular Payroll Audits: Ensure ongoing compliance with the new regulations, considering the two changes happening within six months.
Benefits of the New Rule
The new overtime pay rules for 2024 could result in some benefits for salaried EAP employees. If they work overtime, the extra pay for those hours will increase employee satisfaction and retention. It will also offer enhanced pay equity for lower-paid salaried workers and predictable guidelines for employers. Starting in 2027, employers will know that the thresholds will automatically increase every three years.
Challenges and Considerations
One of the challenges of the new rule is something that often occurs when a new major federal regulation is imposed on the marketplace. Some employees’ positions will simply be eliminated because it will cut into the “bottom line” for many companies. An alternative to this could be that companies will adjust work hours or redistribute workloads to stay profitable.
One of the initial challenges for employers will be the administrative and financial burden of adjusting to the new rule. Employees who don’t meet the new salary thresholds will need to be reclassified. They’ll also be entitled to more compensation if they work more than 40 hours a week, which will be a new expense for companies. Navigating complex cases might also require businesses to retain legal counsel to ensure compliance.
New Overtime Rules for 2024
Businesses must start preparing by updating their payroll systems, anticipating increased labor costs, properly reclassifying formerly exempt employees as non-exempt, and training their HR and payroll staffers on the new final rule.
Schedule a consultation with our Affiliated HR and Payroll Services compliance experts to review your payroll practices and avoid costly penalties.
by Stephanie Baxmann | Jun 11, 2024 | Payroll, Regulatory Compliance, Texas
The minimum wage in Texas is tied directly to the federal minimum wage. To comply with Texas labor laws, all businesses must pay employees at least the minimum hourly wage, with limited exceptions. Adequate compensation for your workers leads directly to the success of your business and increased employee satisfaction.
This guide covers the Texas minimum wage requirements, some special considerations, and some best practices your business can follow.
Texas Minimum Wage Laws
The Texas minimum wage is currently $7.25 an hour, which applies to every county and almost every municipality in Texas.
- Austin: The City of Austin raised its minimum wage to $20.80 per hour in October 2023.
- Houston: Houston plans to raise its minimum to $15 an hour by 2025 but is currently still in line with the state’s $7.25 an hour.
Other than these exceptions, the $7.25 an hour minimum wage is universal across the rest of Texas. The last time the minimum wage changed in Texas was in 2009, when it increased from $6.55 to $7.25 an hour.
Federal vs. State Minimum Wage
The Texas minimum wage is tied directly to the federal minimum wage, which is currently $7.25 an hour. The federal minimum wage is not tethered to inflation, so both have remained static for quite a few years. This consistency simplifies things for employers, who don’t have to navigate differences between state and federal minimum wages.
Employees who work longer than 40 hours per week are entitled to time and a half wages, or 1.5 times their usual hourly rate. For minimum wage employees, this translates to $10.88 per hour.
Compliance Requirements for Businesses
Certain exceptions to the Texas minimum wage requirements exist, which we list below in ‘Special Considerations.’ Other than in those situations, however, all employers must comply with Texas labor laws by paying minimum wage (or higher) to their non-exempt employees.
The Texas Workforce Commission enforces minimum wage laws in the Lone Star State. If a worker believes they are being paid less than minimum wage, they can file a complaint with the commission. A thorough investigation of the business is then conducted. Therefore, record-keeping for employees is crucial. Non-compliance can result in back wages and legal action.
Special Considerations
Certain categories of workers, such as certain types of volunteers, learners, and individuals with disabilities, are not subject to the minimum wage requirements in Texas:
- Youth Workers: Under 20 can be paid a training wage of $4.25 an hour for the first 90 days of employment.
- Student Workers: High school and college students working part-time (20 hours or less per week) can be paid $6.16 per hour.
- Tipped Employees: The base wage is $2.13 an hour, with the requirement that the combined hourly wage plus tips must total at least $7.25 an hour. Tips must be reported monthly and are taxable. Employers can claim a tip credit.
Best Practices for Employers
Implementing best practices can help you meet employer responsibilities for Texas minimum wage. No bills are currently pending in the Texas legislature to raise the state’s minimum wage, but changes could happen in the future. Employers should stay informed about wage and labor laws.
- Effective Payroll Systems: Ensure accurate and timely wage payments, employee classification, and compliance with state regulations.
- HR and Payroll Training: Keep staff updated on compliance requirements with training materials and detailed guides.
Wage Compliance in Texas with Affiliated HR & Payroll
With the right software and training, your HR and payroll staff can keep your business compliant with Texas labor laws. Contact Affiliated HR & Payroll Services for expert guidance on managing minimum wage compliance and other payroll requirements in Texas!
