It seems like payroll administration and processing never gets any easier. As 2016 was rolling into 2017, there was a lot of concern about what a new administration would mean to things like mandatory health insurance and overtime pay. Six months into the new year, uncertainty remains in a few key areas.
So, what worries payroll departments the most? According to survey data released by Bloomberg BNA and the American Payroll Association (APA), the top three areas of concern for 2017 are taxes, wage and hour compliance, and wage deductions.
Among the 1,000 APA members surveyed, 83% identified payroll taxes as a big concern. The Bloomberg report outlining the results of the survey did not provide a lot of detail as to what the exact concerns were, but they did indicate that payroll departments were concerned about potential changes relating to tax compliance in multi-state environments.
Such concerns are easily understandable given how drastically tax environments can differ from one state to the next. Any company with multi-state operations multiplies its tax compliance issues with every state it does business in. Every year, changes to the tax structures in those states has to be considered.
Wage and Hour Compliance
Approximately 81% of the survey respondents cited wage and hour compliance as a major issue. This is not surprising either. The Obama administration published new overtime rules that were then promptly put on hold by the Trump administration. Those rules remain in limbo for the time being.
According to Dallas-based BenefitMall, companies that already made changes in anticipation of the new overtime rules now have to decide whether to roll back those changes or keep them intact with the understanding that the new administration will eventually do something with overtime pay.
Of the top three concerns of payroll departments for 2017, wage deductions is the only one that is somewhat surprising. Approximately 75% of the survey respondents cited it as the top concern. The wage deductions they are most concerned about include things like child support, wage garnishments, and other kinds of levies.
Deductions such as child support and wage garnishments can be a very tricky thing. Companies have to meet their legal obligations while giving deference to court orders. At the same time, courts have quite a bit of latitude in establishing how child support and wage garnishments are implemented. It can be a juggling act at times for payroll departments.
Payroll Outsourcing as a Solution
It is no surprise that companies are concerned about various aspects of payroll processing for 2017. It is the nature of the beast. BenefitMall suggests that outsourcing payroll to a third-party provider like them is one way to address the challenges payroll departments are facing. As BenefitMall explains, it is a matter of allowing experts to handle payroll processing and compliance.
A company like BenefitMall is the perfect candidate to handle payroll because it is what they specialize in. Just like they would not attempt to beef up their maintenance department for the purposes of constructing a new campus for their headquarters, a construction company should probably not be relying on a handful of office workers to take care of payroll. The construction company specializes in building; that’s what they should do. They should leave payroll to the experts.
It will be interesting to see how the remainder of 2017 plays out in the key areas payroll departments are concerned about. It is likely that the Trump administration will do something about overtime pay, though no one knows for sure where they intend to go with it.