A Guide to the Modern Payroll System

A good payroll system is comprised of many components, but at its core, what is payroll? Here’s what to look for in a modern payroll system.

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Keep Up With Legislation and Loose Ends

• The Fair Labor Standards Act (FLSA) requires you to keep all records that explain the reasoning for paying different wages to employees of opposite sexes at the same company for two years. You need to keep any employee benefit plan or any documented seniority or merit system for at least one year to be compliant with the Age Discrimination in Employment Act. You’re required to keep all records of an employee’s pay history for at least three years.

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What is Payroll in Regards to Your People?

First, identify which type of workers you employ, or how many of each. There are four main categories:

• Full-time

• Part-time

• Temporary

• Seasonal

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Pay Schedules

Next, look into which pay schedule works best for your employees. Will you pay weekly, bi-weekly, monthly, semi-monthly, or monthly?

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• Weekly pay schedules are common in many organizations and work best for companies who pay hourly wages. They pick a standard weekday, such as Friday to disburse paychecks. Although weekly pay is convenient for employees, it’s the most work for administrative professionals.

• Bi-weekly pay schedules are the most popular for large and small organizations. Employees receive paychecks on the same day every other week. Employees always know when they get paid so they can budget for expenses easily with this schedule. It’s also less work for payroll staff as it doesn’t require them to run payroll every single week.

• Semi-monthly pay schedules distribute paychecks twice a month. Dates usually fall on the beginning, middle, or end of the month, including the 1st, 15th, and 31st. With this schedule, payday can vary from month to month, which means sometimes it will fall on a weekend or holiday. However, many other systems run on a monthly basis, such as benefits packages (typically).

• If payroll is linked directly to employees’ benefits packages, semi-monthly paychecks will make the two easy to sync.

• Monthly pay is the least time-intensive for HR staff, but also the least popular among employees. It works best in industries in which the income is irregular, making it difficult to pay employees more frequently. Paychecks are received once a month on a specific, recurring date, e.g. the 20th of every month.

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A Modern Workforce

What is payroll beyond just payday? It turns out, there’s more to payroll than just receiving paychecks. HR leaders typically utilize HR software to help streamline the payroll process. A modern payroll system should be simple, easy to use, mobile, accessible, and transparent.

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Customer Service

Regardless of how simple your payroll product can be, HR issues are complex. Look for a product that offers customer support by phone, email, and live chat, so you’ll always have the help you need.

Reporting

A good business intelligence feature can give you crucial insight into your workforce. Track compensation and pay changes by team, department, and location. Run custom salary reports by gender, race, and age to help support your diversity and inclusion efforts.

Compliance

Look for a payroll system that automates the hard stuff and makes you feel confident that you are adhering to the latest tax and labor laws as well as state and local legislation.