The Pennsylvania Wage Payment and Collection Law (WPCL) allows employees to bring a civil legal action against an employer if they are not paid for work performed and wages earned.
“The law, which has the aim of making sure employers are paying employees what is due when due, provides tough consequences for employers who don’t comply,” says Alfredo M. Sergio, an attorney with the Employment Law and Commercial Litigation groups at Semanoff Ormsby Greenberg & Torchia, LLC.
Smart Business spoke with Sergio about what employers need to know about the Pennsylvania law, including possible individual penalties for noncompliance.
What are the highlights of the Pennsylvania Wage Payment and Collection Law?
The WPCL requires employers to notify employees at the time of hire of their rate of pay, the time and place of payment, and the amount of wage supplements and fringe benefits. Employers must pay wages on regular paydays designated in advance, and must pay non-salaried employees semimonthly or more frequently, unless stipulated in an employment contract. The statute has a fairly broad definition of wages, and includes all earnings of an employee, such as regular wages, overtime and commissions.
Employers are also responsible for keeping accurate records of hours worked and wages paid to each employee. If an employer is separating or terminating an employee from the company, the business must pay any wages due by the next regular payday.
If not, the employee can file a claim with the Department of Labor and Industry (which can take up the action on behalf of the employee), or the employee can file suit against the company.
What penalties can an employer and its personnel face for failing to comply?
Penalties for failing to pay wages can have a substantial impact on an employer, whether resulting from a private civil action or action by the Secretary of Labor and Industry. If an employee files a claim for unpaid wages, the employer must immediately pay any undisputed portion of wages.
If the employer or former employer fails to pay the claim or provide a satisfactory explanation of the failure to do so within 10 days after receipt of a certified notification (or ultimately, if the explanation is deemed unsatisfactory), the employer will be liable for a penalty of 10 percent of the portion of the claim found to be justly due, in addition to the principal. If the employer goes 30 days past the regularly scheduled payday without paying wages due an employee, the penalty increases to 25 percent of what is owed, or $500, whichever is greater, plus the principal.
Additionally, the WPCL provides for mandatory attorney’s fees in the event a lawsuit is filed to recover wages. The court has some discretion regarding the amount, but if an employer has violated the law, the employer will end up paying the principal, the penalties and some degree of the employee’s attorneys’ fees, which can be significant. While criminal penalties are not always imposed, the law provides that an employer can be fined up to $300 or for imprisonment of up to 90 days, or both, for each offense. The nonpayment of wages to each individual employee constitutes a separate offense.
Can company personnel be held personally liable for noncompliance?
In addition to general and criminal liability, the WPCL provides for individual, personal liability for violations. This surprises many employers, as they generally think of the corporate structure as providing protection from individual liability or debts of the company.
The WPCL defines ‘employer,’ in part, as including a company’s agent or officer. An agent or officer who has been involved in the decision to withhold wages can be found individually liable for violations of the law. This can even include the company CEO, president or CFO.
Employees often file wage claims not just against the company but also against individual officers of the company to place additional pressure on the employer and its principals to recover unpaid wages.
In what situations do employers most often violate The WPCL?
Among the biggest missteps to avoid are not paying an employee’s wages when due and making deductions from the last paycheck when the employer is not entitled to do so.
Wage payment and collection issues often arise when an employee is separated from an employer, either because he or she quits or is terminated. These issues are arising more often in recent years in a difficult economy. A company might be closing, contemplating bankruptcy or laying off employees, but employers need to pay employees what is owed.
When a company files for bankruptcy, employees often seek to hold corporate officers personally liable for unpaid wages. Even short of bankruptcy, if an employer thinks it will not have enough funds to continue the employment of certain employees, it is dangerous to fire them and not pay what is due.
Wage payment and collection issues also often arise when an employee owes money to the company at the time of separation. While certain enumerated deductions from wages are permitted by the law, it is easy for an employer to think it is justified in making a deduction from a paycheck, only to run afoul of the WPCL (for example, the employer might want to deduct from a separated employee’s final paycheck the cost of a missing piece of equipment or unreturned laptop).
In general, the employer needs to pay the full amount of wages owed to the employee and can pursue the disputed sums separately. The WPCL needs to be foremost in employers’ minds because the consequences — including the danger of individual liability — can be severe.
Alfredo M. Sergio is an attorney with the Employment Law and Commercial Litigation groups at Semanoff Ormsby Greenberg & Torchia, LLC. Reach him at (215) 887-0200 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems, about how employers can achieve cost savings through electronic payment options.
If you’re like a growing number of businesses, you may find yourself in an all-too-familiar situation. You want to streamline the payroll process and increase your bottom line by participating in an electronic payments program, but not everyone in your company has a bank account or is eligible for direct deposit and so you continue to pay the costs associated with check printing, processing and in some instances, delivery. You’re not alone. Right now there are approximately 10 million households in the United States that don’t have a bank account — we call them the unbanked.
But there is a solution. Paycards offer a viable payment option that allows employers to electronically pay unbanked workers much like they would pay those participating in direct deposit. And, employers can achieve similar cost savings.
How it works
The structure of paycards is actually very simple. An employer establishes a banking relationship with a financial institution. Employers can set up individual accounts for each employee, or a single aggregate account with sub-accounts for each employee. Funds are deposited into the account each pay period. Employees are given a paycard, which allows them to access their wages using an ATM or by using the cash-back feature available at many point-of-sale terminals throughout the United States. Depending on the type of paycard, purchases may also be made using a PIN or signature.
Types of paycards
Different types of paycards can be set up for your employees. The first type is branded cards, which may also be referred to as “signature” cards because they can be used with a PIN or a signature. These cards typically have the Visa/MasterCard branded logo on them and are issued by their respective partner banks. As such, they follow the bank’s process and fee schedule.
Another type of paycard is the vendor branded card. These cards are issued under specific vendor logos and are subject to the vendor’s processes and fee schedules. Unlike branded cards, all transactions on these cards are PIN verified.
The far-reaching benefits of paycards
In addition to the obvious “green” benefits associated with switching over to a completely electronic payroll system, there are also many more advantages to paycards that are enjoyed by companies and employees alike.
Benefits to employers
- Offers a cost-effective way to expand electronic pay to all employees, including unbanked workers
- Reduces costs associated with check printing, processing, delivery, account reconciliation and stop payment fees
- Increases the security and reliability of distributing wages even in the event of an office closure or natural disaster
- Ensures compliance with legal requirements regarding termination pay
- Uses standard ACH, so the hassles and costs associated with changing systems are not necessary
- Meets obligation to pay workers wages “without discount” as required many state wage and hour laws
Benefits to employees
- Requires no credit checks or bank accounts to participate
- Offers peace of mind knowing wages are safely, promptly and accurately deposited onto paycard
- Eliminates any check cashing, bank service charge or money order fees
- Allows cardholders to make purchases, pay bills by phone, online or mail or use cards to make withdrawals at ATMs 24/7
- Eliminates waiting for paychecks to arrive by mail, standing in long lines at the bank and special trips to pick up checks
How to start a paycard program at your company
- Choose a paycard program provider/vendor
- Choose the type of paycard you will offer
- Decide whether you want an individual account for each employee or an aggregate account with sub-accounts for each employee
- Put a plan in place for how and when it will roll out and how you will enroll employees. Make sure you have written policies and procedures and designated roles and responsibilities
- Get your employees excited and onboard by developing brochures, posters, etc.
- Launch your new paycard program
About Heartland Payment Systems
Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A FORTUNE 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook at facebook.com/HeartlandHPY.
Insights Banking & Finance is brought to you by Heartland Payment Systems
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems®, about how implementing an Employee Self-Serve portal can save employers time and money.
A company’s payroll department can spend a huge amount of its day addressing employees’ payroll questions, sending payroll forms and updating payroll information.
Disruptive, time consuming and ultimately costly, these chores can be alleviated with a convenient system that not only enhances payroll productivity, but empowers your employees.
That system is an Employee Self-Serve (ESS) portal.
ESS is a convenient, secure and user-friendly resource that provides all your employees online access to personal data — including their payroll information. Employees have the ability to view and print payroll vouchers and W2s and view their paid time-off balances — reducing routine staff inquiries and easing the burden of distributing payroll vouchers to your work force. Employees can also use this portal to update bank account details.
What’s more, ESS portals eliminate the need for postage and paper printing of payroll forms, offering substantial cost savings. ESS has become increasingly popular as more businesses “go green” in an effort to reduce paper and energy waste.
Companies like the international coffee chain, Starbucks, deployed an ESS portal as a means of providing information to its employees, but quickly realized how much more it could be doing using this technology. The organization enhanced its systems so all individuals can complete just about every transaction via ESS.
And it’s not just the large companies. Many small and mid-sized businesses have been adopting secure and private ESS systems because they provide:
• Ability to update personal information. Companies can give their employees permission to review and make changes to their personal data (name, address, next of kin, etc.), W4 elections and voluntary deductions, as well as view their payroll stubs and W2s. Encouraging employees to enter personal data through the self-service portal is one way to leverage technology in order to increase productivity in payroll.
• Electronic time sheets. Electronic time sheets improve the payroll efficiency of employees who use computers, and they are especially useful for companies with multiple worksites. Electronic time sheets improve accuracy and, according to some reports, can cut handling time.
• Savings. ESS systems can be economically implemented over the Internet or a company Intranet. Internet-based payroll solutions can facilitate cost savings by allowing companies to reduce the IT resources needed to support the payroll function. A Web-based payroll solution eliminates the need to purchase and maintain specialized hardware, thereby eliminating maintenance costs and assuring that the latest features are available to all employees. Additionally, ESS can save time and dollars associated with updating materials for employees, and in the cost of printing payroll forms.
• 24/7/365 access. Round-the-clock access to ESS is an added plus for companies that provide services to a diverse and often dispersed work force.
In today’s volatile business climate, your payroll department is no doubt being asked to do more with less. Implementing ESS is one way to achieve that goal and provide real value to employees in an effective and low-cost manner.
Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A FORTUNE 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook facebook.com/HeartlandHPY.
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems®, about how businesses can maintain compliance when filing payroll.
Last spring, the U.S. Court of Appeals for the 8th Circuit ruled that two owners of a trucking company and its subsidiary were personally liable for more than $2 million in payroll taxes that were not paid to the government, allegedly due to the misconduct of their businesses’ bookkeeper. The bookkeeper embezzled $10,000 from the companies, and had not paid payroll taxes for 13 consecutive quarters for one company and 17 quarters for the other.
The owners sold the assets of the trucking company several months later, and paid approximately $5 million to its employees and creditors. They did not, however, remit the outstanding payroll taxes to the government — and the IRS assessed more than $2.3 million in penalties against them.
This example underscores the significant consequences business owners may face when their businesses fail to pay the payroll taxes they withhold from their employees’ paychecks over to the government. As we approach filing deadlines for 2011, it is imperative you to file your payroll taxes on time, correctly and with the right agency in order to ensure you don’t get penalized or put your company’s existence in jeopardy.
To help ensure processing and filing compliance, there are many payroll tax solutions available that calculate your payroll-related taxes, manage monthly or quarterly employment tax reports and handle year-end paperwork. In addition, such professional services can answer essential questions and offer education about federal, state and local tax compliance. Having the appropriate system in place can make all the difference in growing your company, maintaining compliance and being more responsive to the needs of your employees.
To help you better navigate year-end payroll processing and prepare to process payroll in the next calendar year, follow these helpful guidelines:
- Verify employee demographic data. You can be penalized for inaccurate or missing W-2s that your organization produces or fails to file.
- Check employee wage and benefits data. Make sure you have correctly withheld taxes for the value of any taxable fringe benefits.
- Ensure employee contributions, such as those made to 401(k) plans, have not exceeded IRS limits.
- Check that all state, federal and local taxes were withheld correctly.
- Run month-end for December 2011. Payroll taxes for December 2011 are due on Jan. 17, 2012
- Run quarter-end reports for the 4th quarter. Be sure to file form 941 by Jan. 31, 2012.
Below is a list of key tax changes that went into effect in 2011 that may impact your business:
- Value of health care benefits must be included. A new requirement states that businesses need to include the value of the health care benefits they provide to employees on W-2s. Although this was originally required beginning with W-2s for 2011, a one-year delay was announced in October. Employers may voluntarily report the value of health care benefits they provide on 2011 W-2s, but this will not be mandatory until the 2012 filing. The amount reported is not considered taxable income.
- Penalty for nonqualified distributions doubles. Another health care requirement stipulates that the penalty for nonqualified distributions from health savings accounts will be doubled to 20 percent.
- Penalty for improper filing increases. W-2 and 1099 penalties for failure to file correct and timely returns have increased. Penalties range from $30 – $250 per incorrect return. Employers need to file on time and file correctly to avoid issues.
While there’s no way around your obligations related to payroll taxes, by partnering with a reputable provider you can run your year-end payroll processing efficiently — avoiding costly mistakes.
Mark Strippy is Executive Director, Payroll Services at Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States. A Fortune 1000 company, Heartland delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, Web-based payroll, check management and related business solutions to more than 250,000 business locations nationwide. For more information, visit HeartlandPaymentSystems.com.
Running a business can be stressful enough. So you rely on the companies you work with to hit the mark on operational essentials, like processing payroll. But sometimes these are precisely the things that bring you the most stress.
Smart Business spoke to Mark Strippy, Executive Director at Heartland Payment Systems®, about why now is a great time to put the best possible payroll processes in place to relieve some stress heading into the new year.
Catalysts to change
There are several circumstances motivating business owners today to seek a new payroll service provider. Not surprisingly, service and expense are among the top reasons a business owner chooses to make a change. Some owners are left feeling like a number, while others feel the spotty support they receive isn’t worth the price of the service.
Other reasons are more specific to the payroll industry. For example, compliance is a fundamental component of payroll processing. Although, as a business owner, you stay on top of compliance regulations, you trust your payroll processor is current on compliance standards, and applies the appropriate procedures to processing payroll for your business. If your processor falls short on compliance, it can greatly impact your business.
Technology has a critical role in optimizing business operations — and payroll is no exception. A business owner processing with antiquated technology might be shopping around for a new processor because their business is not getting what it needs. As technology advances, businesses are reaping the benefits of more streamlined, more accurate payroll processing. By transferring your business to a company that offers leading-edge payroll technology, you could be saving yourself — and your staff — a lot of time and money.
By signing on with a new payroll processor in the fourth quarter, you can impact how smoothly that transition goes. That’s because, ideally, you would want to have your payroll ready to switch over on the first day of the new year.
There are several reasons this works to your advantage:
1) Each year we hit reset on payroll at the stroke of midnight on New Year’s Day. At this point, there are no year-to-date earnings, taxes or deductions. Also, any termed employees will not need to be carried over or converted to the new system.
2) Most benefit programs hold open enrollment in the fourth quarter for coverage to begin on the first of the year. It’s a great time to get the new plan in sync with the payroll application.
3) By converting for the first payroll in the first quarter, there are no previously impounded tax dollars that need to be returned by the previous payroll processor. Your employees are perhaps the most important component of the success of your business, so you want to trust they are being taken care of. One way to know you have the right payroll provider is when the service they provide is seamless for you and your staff. If it is time for your business to make a change, consider making it before January 1. You may find it’s one of the least stressful decisions you make this year.
Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering them useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.
Business owners have many choices when it comes to how to pay their employees. Some handle the payroll process internally, and spend a great deal of time managing all the paperwork of federal and state taxes, Social Security, Medicare, union dues, 401(k) contributions and more.
Some use payroll software, which allows accurate recordkeeping, but often has a long learning curve. Some hire a local accountant, or a professional tax lawyer/CPA.
Others outsource these tasks to companies that provide automated payroll services.
Smart Business spoke with Jim Geuther, Director of Business Banking at FirstMerit Bank, about what services to expect from payroll providers and how to ensure you choose the right one for your company.
Why is it important for a business to choose the right payroll provider?
Payroll appears to be pretty simple on the surface — employers calculate employees’ gross earnings, they deduct the respective payroll taxes and other ancillary deductions such as insurance or 401(k), they send the government their share and produce a payment for the net amount to the employee.
Payroll is actually more complicated than this. There are bonuses, sick time, overtime and other factors that can change from pay period to pay period, affecting compensation. In addition, federal, state and local taxes are always changing and, depending on the complexity of a payroll, the time it takes to keep track of all of these changes can turn it into a daunting task.
If employers aren’t up to date on payroll tax requirements such as rates or frequency of payments and filings and they miss a deadline or pay an incorrect amount, they can be fined. In addition, these errors can lead to an inaccurate payroll and, ultimately, unhappy employees. That’s why it is so important to do it correctly.
How can an outsourced payroll provider benefit a business?
With payroll being a much more complicated task than it appears, businesses need someone they can count on for more than just paycheck calculations. Entering all that data and pushing out a check is the easy part. It is everything else after the fact that becomes difficult.
FirstMerit’s Business Online Payroll, for example, provides payroll tax payments and filings as well as 100 percent liability that payroll taxes will be paid and filed accurately and on time.
Offering direct deposit saves time and money for the employer and employee, because there are no checks or check stubs to print and the employees don’t make an extra trip to the bank on payday, so their time is spent focusing on business productivity.
With most in-house accounting products there are additional costs for keeping the technology up to date and tax tables current. With an outsourced payroll provider, there is no software to purchase, no need to have personnel maintain it and no ongoing fees to keep current.
Having an employee do in-house payroll presents a risk of knowledge walking out the door if that employee leaves the company. There is no need to have an ‘expert’ in house with an automated payroll service.
How can business owners determine which payroll provider would be the right fit for their company?
There are many factors that go into determining the best solution when it comes to payroll. The five most important factors are reputation, customer service, ease of use, ability to grow with the company and, of course, cost.
Businesses need to look at the complete picture when deciding on a payroll provider. Working with a small local payroll provider can present issues with out-of-state calculations and few, if any, offer any liability or guarantee with their service. However, working with a payroll provider that has a proven track record of success and growth offers peace of mind to the business owner.
Businesses should look for a payroll provider that has been recognized and awarded for the customer care it provides and can answer questions and provide solutions to problems. Also, look for a payroll service that provides live support available at one number, eliminating all the shuffling around and waiting for a call back.
With the many options available for payroll services, ease of use is one of the most important factors for business owners. FirstMerit provides an award-winning online product that allows business owners to run their payroll from any Internet-capable device. Employers simply log in to their online account, enter hours and other specific payroll information, preview the payroll to ensure data is correct and press ‘approve’ — everything else is taken care of. Processing payroll this way takes about five minutes.
Another important factor to look at is whether the provider can grow with the business’s future needs. Finally, businesses should consider the cost of working with a payroll provider. One of the major advantages of working with an all-inclusive provider is that there are no hidden costs for direct deposit, reports and payroll tax payments and filings. Our online technology significantly cuts operational costs, and those savings are passed on to our customers. Some customers pay half the cost charged by larger companies, accountants and CPAs and most local providers.
Jim Geuther is Director of Business Banking at FirstMerit Bank. Reach him at (216) 694-5683 or email@example.com.
The notion of becoming environmentally sustainable is a popular and increasing trend among businesses today — a trend that can have a meaningful impact on your business financially and from a socially responsible perspective as well. So it’s really not a question of should you go green with your payroll, it’s really a question of when.
Smart Business spoke with Mark Strippy, Executive Director at Heartland Payment Systems®, about the benefits of a Web-based payroll solution.
Is now the time for your business to go paperless with its payroll?
According to the American Payroll Association, every year more than 146 million workers in America receive a paycheck. That's more than 3.5 billion paychecks per year. By providing paperless payroll you reduce or eliminate the production of paper reports and direct deposit vouchers — helping your business save in paper waste, water and energy.
Other benefits of Web-based, paperless payroll to help you save resources and gain efficiencies include:
- Direct deposit, payroll cards and online pay statements mean you never have to make a special trip to your other business locations to drop off paychecks.
- You can submit your payroll data according to your schedule — whether it is early in the morning or late at night — through a Web-based payroll system. And you can submit it from anywhere.
- Payroll reports are available when you need them, not when the courier shows up. Reports can be emailed to your CPA and bookkeepers — creating additional efficiencies and security.
- Online pay statements allow your employees to keep track of their earnings 24/7/365.
- Direct deposit is a secure, convenient way to pay your employees, giving them immediate access to their funds on payday — even if they’re on vacation.
Plus, by using a Web-based green payroll solution, you won’t have to archive paper copies of payroll reports, W2 checks or vouchers. All data is stored online and should be protected by the payroll company’s data security policies and procedures.
Most payroll companies today charge additional fees for printing and delivery costs. However, Web-based access to the employer/employee data should be free (or provided at a significantly reduced price) compared to payrolls that are delivered via courier — so there will be savings by switching to this greener option. And you can reinvest that savings back into your business for other improvements.
Remember, too, greening a business shows that the owners care about people and the environment. By reducing waste and energy, a business demonstrates that it is socially responsible.
If you’re ready to make the switch to more environmentally friendly payroll — that also saves you money and time — you need to make sure the payroll company/service that you use is able to provide a secure Web-based set of tools to provide you and your employees access to standard payroll reports, and a report writer for customized reports. The employees must have access to an employee self-serve (ESS) Web application with the ability to enter and modify demographic information as well as to review and print payroll specific information.
Today, “green” is everywhere. By greening your payroll you can turn a responsibility into an opportunity to gain efficiencies, save money and provide a perk for employees.
Now is the time.
Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, Web-based payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering them useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.
Business owners now have a new resource to help them better manage their payroll. The Merchant Bill of Rights Payroll Act is designed to promote fairness and transparency in payroll processing. It educates business owners about the many facets of payroll and what they should expect from their processor.
“Payroll is more than just paying employees. It’s a critical business function that — if not managed properly — can be a significant drain on a business owner’s time and resources,” explains Mark Strippy, executive director of payroll services at Heartland Payment Systems®, one of the nation’s largest payments processors.
“That’s why we created The Payroll Act. By educating business owners about the fundamentals of payroll processing as well as what they should expect — and deserve — from their processor, this tool helps them make well-informed business decisions that can significantly impact their payroll-related expenses and operations.”
Smart Business spoke to Strippy about how owners can ensure they receive the payroll services they need.
What is the Payroll Act?
The Payroll Act is an extension of The Merchant Bill of Rights (MBOR), a public advocacy initiative introduced by Heartland in 2006 to promote fair credit, debit and prepaid card processing practices on behalf of owners of small and mid-sized businesses. The MBOR proposes 10 fundamental rights to protect business owners, enabling merchants who don’t have the resources of large purchasing organizations to effectively manage their costs, determine which processor best meets their needs and ultimately realize significant savings.
What are some of the fundamental rights to protect business owners?
1) Full disclosure of all fees associated with your payroll processing
2) Delivery of accurate, timely paychecks for all employees
3) Access to your payroll any time via secure Internet technology
4) Compliance with 100 percent of federal, state and local payroll legislation
5) Knowledgeable service support — available when you need it
6) Detailed, accurate reporting
How can business owners make sure they are receiving the best service possible?
Don’t forget to do your homework. Ask fellow business owners, chamber of commerce or trade association members if they use a payroll processor. Find out what services they receive and if their provider meets or exceeds their needs. Also ask them what their frustrations are.
To learn more about the Merchant Bill of Rights Payroll Act, visit http://MerchantBillofRights.org/PayrollAct.
Heartland Payment Systems (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll, check management and related business solutions to more than 250,000 business locations nationwide. A Fortune 1000 company, Heartland is a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals.
Outsourcing payroll is a smart decision for business owners looking to relieve themselves of the time and labor-intensive complexities of processing payroll. And the beginning of the year is an ideal time to make the change. In fact, more than half of small businesses decide to outsource their payroll each year starting in January when year-end calculations and reporting are complete, expediting an easy and smooth transition.
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services, Heartland Payment Systems, for some tips to help you get started “shopping” for a processor.
1. Determine your business needs. Consult your payroll manager, human resources department, accounting personnel and IT staff to understand the functionalities all disciplines need.
2. Evaluate the features and benefits. Meet with several payroll service providers to determine how they work. Do not pick a processor based on price alone; instead be sure they can provide all the services your business needs. For example, your business might need help with 401(k) or worker’s compensation, so be sure the provider can handle those services as well as basic payroll.
3. Do your homework. Ask fellow business owners, chamber of commerce or trade association members if they use a payroll processor. Find out what services they receive and if their provider meets their needs. What are their frustrations?
4. Compare costs. Many processors nickel and dime their customers by charging for items such as additions or deletions of employees, while others offer fixed rates for the length of the contract without incremental fees.
5. Look for a payroll service provider that guarantees confidentiality and information security. There are a variety of payroll submission methods — such as by phone, fax, e-mail and over the Internet — and you should be comfortable with how sensitive payroll data is transmitted. Choose a payroll service provider that protects your employees’ data.
6. Check if the payroll service provider can assume tax filing responsibilities. A payroll service provider should prepare quarterly and annual employee tax filing and assume liability for accurate and timely submission.
7. Be sure the payroll products and services are user-friendly. In addition to making sure the program is easy to use, investigate what type of support is available — such as a help desk and professionals who can assist with program troubleshooting.
Payroll planning, tax reporting, year-end calculations and many other tasks associated with payroll can be complicated and time-consuming, especially for small businesses. Although outsourcing payroll takes the burden off the business owner, it is important to recognize that not all payroll processors are created equal. All businesses need to be diligent in selecting their processors to ensure they get the best payroll bang for their buck.
Heartland Payment Systems, Inc. (NYSE: HPY), the 5th largest payments processor in the United States, delivers credit/debit/prepaid card processing, payroll, check management and payments solutions to more than 250,000 business locations nationwide. Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services, Heartland Payment Systems, about how businesses can avoid the expense and headaches of common payroll mistakes.
Payroll is likely one of the biggest expenses your business incurs — and one that can cause the most headaches. Whether you have one employee or hundreds, you have a legal obligation to pay your employees accurately and on time. While that’s intuitive, there are many other not-so-obvious legal payroll requirements that may not be.
These 10 tips will help you avoid some common payroll mistakes.
1. Note important payroll deadlines
Report and deposit your payroll taxes to federal, state and local agencies on time. Late deposits can result in penalties and interest charges.
2. Classify employees appropriately
Classify your employees into the appropriate categories such as temporary employees, consultants and other independent contractors to ensure payroll reporting for tax purposes is accurate.
3. Report and calculate overtime pay
Here’s where the proper classification of “exempt” and “non-exempt” employees is really important because it can be costly. According to the Department of Labor, litigation claiming non-exempt employees who were treated as “exempt” employees and, therefore, not entitled to overtime — but should have been — continues to increase.
4. Distribute 1099 forms on time
Give your independent contractors who earn more than $600/year a 1099 form by January 31 of the following year. This will help you meet your filing deadline and avoid late penalties — $15 for every 1099 form that is 30 days late, $30 for every form filed by August 1 and $50 for all 1099 forms filed after August 1.
5. Double-check data entries
Data entry mistakes — including incorrect hourly wages and the wrong number of employee hours per pay period — cost companies millions of dollars annually. In addition to potentially increasing expenses if workers are paid for hours they didn’t work or at a higher hourly rate than they should be, this can result in government penalties. Be sure to double-check your entries for accuracy.
6. Send court-ordered payments to the proper recipient
If you don’t follow court-ordered garnishments such as levies or child support, you may be prosecuted and could be fined up to $1,000 — or even imprisoned.
7. Don’t rely solely on your software program
Be sure to enter all of the necessary payroll data. Your payroll program is only as good as your input. It can’t perform accurate calculations without all of the necessary information.
8. Save payroll records
Keep time sheets, cancelled checks and W-4 forms — in a safe and accessible location — for four to six years. Failure to do so could lead to criminal penalties and/or civil actions.
The Wage and Hour Division of the Department of Labor must be able to inspect your records within 72 hours of notifying you.
9. Maintain payroll confidentiality
Keep your payroll information within the payroll department and the senior management team. Failure to do so could lead to criminal penalties and/or civil actions by disgruntled employees.
10. Train more than one employee in payroll functions
Have more than one employee trained to do payroll in case the employee who is primarily responsible is out of the office. The IRS, the state and employees need to receive payments on time. Also, have a manual backup system in case a computer fails.
Following these tips can help you foster and maintain employee satisfaction — as well as prevent headaches with federal, state and local agencies. You can also avoid payroll mistakes by outsourcing. If you’re considering outsourcing, turn to Heartland. We’ll take away your payroll processing worries so you can focus on operating, improving and growing your business.
Heartland Payment Systems, Inc. (NYSE: HPY), the 5th largest payments processor in the United States, delivers credit/debit/prepaid card processing, payroll, check management and payments solutions to more than 250,000 business locations nationwide. Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. For more information, please visit HeartlandPaymentSystems.com, MerchantBillOfRights.com, CostOfABurger.com and E3Secure.com.