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 | 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!
by Stephanie Baxmann | May 21, 2024 | HR Administration, Recruiting and Developing Talent, Regulatory Compliance
Managing seasonal workers’ payroll comes with unique challenges compared to handling payroll for full-time or part-time employees. Compliance with state labor laws is crucial, but opportunities exist to optimize labor costs and business efficiency. Streamlining your seasonal workers’ payroll with Affiliated HR and Payroll can ease the administrative burdens and enhance your business’s overall performance.
Understanding Seasonal Workforce Dynamics
Seasonal employees are different from full-time employees because their work is expected to end at a set time. This makes correctly classifying them very important. Will you hire them as employees for the duration of their contract, or will they be independent contractors? How they are classified affects payroll and tax withholding. Proper classification is essential to avoid issues with employment regulations.
Even though seasonal employment is short-term, employers still need to collect federal Forms W-4 and I-9 for tax purposes. Seasonal employees must have withholdings for federal income taxes, Medicare, Social Security, and unemployment. Depending on their status, there may also be benefits to consider, such as healthcare.
If you hire seasonal employees around holidays, like for the Christmas retail rush, they might expect quick payment so they can spend their earnings during the holidays. An on-demand payment system might be something to consider during these peak times to keep your workers happy.
All these factors contribute to the complexities of payroll for seasonal employees. While payroll for regular employees might be routine, you may need to make adjustments for seasonal workers.
Key Strategies for Effective Payroll Management
Several strategies can help streamline operations and manage seasonal workers’ payroll more efficiently:
- Use Specialized Payroll Software: This can help you classify seasonal workers correctly and reduce the time spent on payroll. An automated system makes tracking additional workers easier during a busy season.
- Stay Up-to-Date on Labor Laws: Knowing the latest state-specific labor laws will minimize errors in reporting and withholding, helping you avoid fines. For instance, different states might have varying regulations for overtime pay, and staying informed can prevent costly mistakes.
- Keep Accurate Records: Seasonal workers are often college students looking to make extra money during their breaks. Keeping accurate records and ensuring timely payment can keep them happy and willing to return for future seasonal work. This is especially true for businesses that rely on the same workers year after year, like summer camps or holiday retail stores.
- Consider Outsourcing Payroll: Affiliated HR and Payroll offers certified payroll services that keep you compliant with local, state, and federal laws, even as seasonal workers come and go. This can be a huge relief for businesses that experience fluctuating staffing needs throughout the year.
Benefits of Efficient Seasonal Payroll Management
Letting a payroll provider handle your seasonal employees’ payroll is a cost-efficient way to do business. The time you usually spend on payroll can be allocated to other important parts of your business. You also gain peace of mind, knowing you’ll always be in legal compliance, as they stay updated on labor law changes for you.
Efficient seasonal payroll management is crucial for keeping seasonal workers happy and motivated. Timely and accurate paychecks are one of the easiest ways to maintain high morale among your seasonal workforce, which is essential for your business’s success.
Moreover, happy seasonal workers are more likely to return the next time you need them. This can save you significant time and money on recruiting and training new staff. Consistency in your seasonal workforce can also improve the overall customer experience, as returning workers are already familiar with your business operations.
Seasonal Employment Payroll Solutions
Adding seasonal employees to your payroll adds complexity to your business. Managing payroll for these workers involves compliance with labor laws, proper worker classification, and ensuring timely and accurate paychecks.
Streamline your seasonal payroll process today! Contact Affiliated HR and Payroll for expert solutions tailored to your business needs.
by Afilliated HR & Payroll | Apr 3, 2024 | Benefits & Compensation, HR Administration, Regulatory Compliance
Pay stubs can be referred to as pay or wage statements and may be considered the decoder ring of payroll. Pay statements summarize employees’ gross pay, taxes and deductions, and net pay. They can be in printed format or made available electronically.
Pay stubs help employees confirm what was withheld from their gross pay so they can understand how the final net pay amount was arrived at. Pay stubs are useful to employers as well, especially when they need to solve wage and hour disputes or tax discrepancies.
While no federal law requires pay stubs, most states do — you can view pay stubs as part of payroll compliance. For example, some states need employees to consent to receive electronic pay statements. State mandates can pose potential complications for businesses with employees in multiple states, as each state has its own set of rules.
What’s on a pay stub
Pay stubs should have these basic elements:
- Amount per pay period.
- Year-to-date pay.
- Basic identifying information: name and address of the employer, name and address of the employee, and the employee’s Social Security number.
- Pay period and total hours worked.
- Gross wages, or the total amount earned for the pay period before taxes. If an employee worked 15 hours at $20 per hour, gross wages are $300. Pay stubs should note hours worked, what the pay rate is and any additional earnings or accrued time off.
- Tax deductions, including federal tax withholding, state tax withholding, unemployment taxes, Social Security tax and Medicare withholding.
- Employee benefits deductions often include health insurance, health savings accounts, life insurance payments and retirement contributions.
- Voluntary deductions, which include the amount an employee chooses to withhold monthly and may include a regular charitable contribution.
- Involuntary deductions such as wage garnishments, past taxes owed and court-ordered child support payments.
- Net pay, the amount of money employees take home after all deductions are made.
Pay stubs offer employees transparency in how they’re getting paid, noting gross income, deductions and net income. Workers get year-to-date information and can verify that compensation is accurate. Lenders often ask to see pay statements as proof of income or employment before approving a loan. Pay stubs help prevent pay-related conflicts.
If you miscalculate, the withholding amounts for taxes may include errors that may cost you penalties. Pay statements that are inaccurate or improperly delivered can confuse employees and increase the risk of legal liability. It’s in your best interest to:
- Know all state and local requirements.
- Include the necessary information.
- Make pay stubs easy to access.
Many companies opt to work with a payroll service provider, which will typically include pay stub delivery as part of their service and can assist with state and local pay statement requirements. It’s generally a good practice to save pay statements for at least one year so you can verify the accuracy of your annual Form W-2, Wage and Tax Statement for employees to prepare their individual tax returns.
Pay statements contain personal information that can be subject to identity theft. Retain them in a safe place and securely dispose of them. If employees report losing a stub, advise them to monitor their credit reports and alert their bank and credit reporting agencies so they can flag any suspicious activity. If a copy of a lost pay statement is needed, employees may request another from your payroll department.
by Afilliated HR & Payroll | Feb 21, 2024 | Career Planning, Industrial Relations, Recruiting and Developing Talent, Regulatory Compliance
The Department of Labor’s final rule for employee or independent contractor classification under the Fair Labor Standards Act rescinds the 2021 Independent Contractor Rule, replacing it with guidance on analysis that’s more consistent with the FLSA as interpreted by longstanding judicial precedent, and was scheduled to take effect March 11, 2024.
The final rule reduces the risk of misclassification while providing greater consistency for businesses and gig workers, specifically:
- The designation of control and opportunity for profit or loss are given greater weight.
- Considering workers’ investments and initiative only as part of the opportunity for profit or loss.
- Prohibiting consideration of whether work performed is central or important to your business.
A step toward greater clarification
The 2021 IC Rule narrowed the economic reality test: Is a worker economically dependent on the employer for work? This had a confusing and disruptive effect, departing from decades of case law and describing and applying the multifactor economic reality test as a totality-of-circumstances test.
Analysis of the final rule may be applied to workers in any industry and will be accessible in the Code of Federal Regulations. It doesn’t adopt an ABC test, permitting an independent contractor relationship only if all three factors in a three-factor test are satisfied. Instead, the multifactor economic reality test that courts use to determine whether a worker is an employee or an independent contractor is used, relying on the totality of the circumstances where no one factor is determinative.
The final rule revises only the DOL’s interpretation under the FLSA and has no effect on federal, state or local laws with different standards of classification. The IRS and National Labor Relations Act have different statutory language and judicial precedent governing the distinction between employees and independent contractors. The laws are interpreted and enforced by different federal agencies. The rule has no effect on state wage and hour laws that use the ABC test — California’s and New Jersey’s, for instance. The FLSA doesn’t preempt federal, state and local laws that apply.
In brief, according to new federal guidance, businesses should meet whichever standard provides workers with the greatest protection.
The key aspects
The final rule affirms that a worker is not an independent contractor if economically dependent on an employer for work, applying six factors:
- Opportunity for profit or loss depending on managerial skill.
- Investments by the worker and the potential employer.
- Degree of permanence of the work relationship.
- Nature and degree of control.
- Extent of the work performed as integral to the potential employer’s business.
- Skill and initiative.
Workers cannot voluntarily waive employee status, choosing to be classified as independent contractors. They cannot waive FLSA-protected rights like minimum wage or overtime pay. The Supreme Court has explained that waiving their FLSA rights would harm other employees, undermining the goal of eliminating unfair methods of competition in commerce.
Among the similarities to the 2021 rule: advice on definitions and on identifying economic dependence as the ultimate inquiry of the analysis, providing a nonexhaustive list of factors to assess economic dependence with no single factor being determinative. Both clarify that economic dependence doesn’t focus on the amount of income the worker earns or whether the worker has other sources of income.
Differences between the new rule and the 2021 rule:
- Returns to a totality-of-the-circumstances economic reality test, where no single factor or group of factors is assigned any predetermined weight.
- Provides additional analysis of the control factor, including how scheduling, supervising, price-setting and working for others are considered when analyzing the nature and degree of control over a worker.
- Returns to the DOL’s consideration of whether the work is integral to the employer’s business rather than exclusively part of an integrated unit of production.
- Omits a provision from the 2021 rule that minimized the relevance of an employer’s reserved but unexercised rights to control a worker.
Note that this is just a summary of a complex series of provisions. One thing certainly hasn’t changed between the new rules and the old: the need for companies to obtain qualified professional advice to make sure they are in compliance.
