How HRMS can help with payroll compliance management
May 16, 2018
By Natalie B. Hoffmann, CPA.CITP HKP President
Human resource management systems (HRMS) are essential for any employer looking to improve their operational efficiency and manage their human resource (HR) compliance properly with the ever-changing HR laws today. Federal, state and local laws all combine for a complicated HR compliance landscape that employers are expected to navigate and comply with; and there are no excuses for noncompliance.
Thankfully, with today’s technology, compliance can be proactively managed through an efficient and effective HRMS that combines payroll processing, HR and benefits administration, and time and attendance management. There are several ways an HRMS can assist with your payroll compliance management and help you conquer your toughest HR compliance mountains.
If you have been calculating withholding by hand, or failing to maintain accurate calculations in your accounting software, you may find you are running into basic human errors which can severely impact your payments to the state and federal government. Often, you do not realize you have been collecting the wrong amount until you receive a memo of funds due. Today’s modern HRMSs have built-in modules which calculate the correct federal and state income tax, Social Security and Medicare responsibilities, and benefits withholdings for your company automatically when your employees clock in and clock out. By using this technology, employers and HR professionals save a wealth of time and reduce or eliminate the human error roadblocks that can drastically affect payroll calculations and funding.
If you have missed a withholding update from your state or the federal government, you know the hassle it can be when the surprise comes in the mail that you owe more money. With the cloud, the correct withholding amounts will automatically update and sync with your information ensuring you always have the most accurate calculations for your payroll. When state or federal withholdings change, an HRMS can import the correct info and adjust your calculators in real time protecting you from failing to input the new data timely. This is perhaps one of the biggest benefits of an HRMS as it reduces the likelihood of missing a major change in your withholding responsibilities which can have a huge impact on your business when employment tax bills come due.
With an HRMS from a reputable provider, employers are opened up to an immense wealth of knowledge from the provider and their extensive resources. You may often have questions about whether your business is at risk, qualifies for an exemption, or has greater responsibility based on location, revenue or employee count. This is where your provider can help you determine where your business stands in the eyes of the Department of Labor (DOL) and your state or local municipality. Additionally, they can provide answers to complicated HR questions, help you develop documents that are legal in the eyes of the DOL and more – questions a basic internet search cannot answer for your unique situation. Working with an HRMS provider sets you up for greater success with your organization’s human capital management.
One of the most valuable attributes of an HRMS is the ability to accurately calculate and manage employee time, paid time off, medical leave, parental leave and more. Between health care law compliance and varying levels of overtime requirements by state, time management is more important than ever as it can affect your standing with various federal and state requirements. An HRMS can keep track of how many employees you have, whose hours qualify for various state, federal and municipal requirements, and when you cross a threshold into another level of compliance responsibility. The fines for failing to comply with many of these regulations or to properly pay overtime can be hefty, and it’s not standard across the board or across the country, so proactive management is essential.
Businesses who are looking to grow often run into some of the biggest roadblocks when compliance requirements change because they cross a certain threshold based on employee count and DOL responsibilities but fail to account for the change. Companies who try to manage employee growth in-house often struggle with the additional paperwork from onboarding and open enrollment periods, along with greater withholding responsibility financially. With an HRMS, businesses can scale in size more easily with just a few tweaks or additions to their system, and they can readily see where they fall when it comes to employment tax and DOL requirements. Onboarding and open enrollment becomes paperless, making benefit administration easier than ever even with more employees joining the company. Scaling the HR Mountain that grows when your business does becomes easier with HRMS technology.
HR law compliance and DOL requirements are not to be taken lightly. In fact, they can make or break an organization with one lawsuit. Failure to comply with health care law, the Fair Labor Standards Act, overtime requirements federally and by state, and more, can present huge legal cliffs that are very difficult to step back from. It behooves employers to proactively manage their compliance, and the most efficient way to do so is with an HRMS. The technology exists to help scale the compliance mountain, and it is ready and waiting for employers to embrace it.
Originally published on hrsolutions.com, Sept. 17, 2017.