Transcription

Changing Payroll Frequencies:How It Can Be DonePresented on Wednesday, September 14, 20161 2016 The Payroll Advisor

2016 The Payroll Advisor2

Housekeeping3CreditQuestionsToday’stopicSpeaker 2016 The Payroll Advisor

To earn RCH credit you must4Stay on thewebinar, online forthe full 60 minutesBe watching usingyour unique URLCertificatesdelivered by email,to registered email,by October 14th 2016 The Payroll Advisor

Our Focus For Today5 Understanding the need for the changeThe choices availableCompliance issues involvedThe change’s impact on payrollThe change’s impact on employeesThe change’s impact on systems and proceduresKey communication factors to include at all stages of the changeFormulating the plan to implement the changeTesting the change before implementationImplementation and the outcome 2016 The Payroll Advisor

About the Speaker6Vicki M. Lambert, CPP, is President and AcademicDirector of The Payroll Advisor , a firm specializingin payroll education and training. The company’swebsite www.thepayrolladvisor.com offers asubscription payroll news service which keepspayroll professionals up-to-date on the latest rulesand regulations.The Payroll Pause Newsletter from Thepayrolladvisor.com Announces Its Fall Sale!Our summer sale was so successful we are extending into the fall! Stay up-to-date on the latestpayroll news and regulations with The Payroll Pause, an annual subscription news service fromThepayrolladvisor.com and its founder, Vicki Lambert. Use code P6XJ05K3057 for the discounted annualsubscription price of 99, more than 33% off its normal price. This offer is exclusively for Ascentiscustomers and webinar attendees. But don’t delay the sale ends October 5 th. 2016 The Payroll Advisor

Understanding the Need7 What is motivation for change?Who should make decision? Company leaders Human Resources Payroll Finance IT 2016 The Payroll Advisor

What is the Motivation for Change8 May be motivated by competitionMaybe by industry standardsPossible acquisition or sale in the future?Possible cost savings is expected?Payroll does need to understand why the change isbeing considered or implemented to provide the correctfeedbackMaybe the employees are requestingMaybe a union contract change 2016 The Payroll Advisor

Who Should Make the Decision9 Company LeadersHuman ResourcesPayrollFinanceIT 2016 The Payroll Advisor

Company Leaders10 Leaders-they have the finalsay so they make thedecisionThey need to have a clearunderstanding of theconsequences of the changefrom all perspectives 2016 The Payroll Advisor

Human Resources11 They need to weigh in on theimpact on benefitsWhat about employee moral?Will this effect recruiting andretention?Especially if going to longerpayroll cycles such as biweeklyto semimonthly 2016 The Payroll Advisor

Payroll12 Of course they should beBut not always even in this dayand ageLater we will cover: Staffing Compliance issues System issues 2016 The Payroll Advisor

Finance13 Effects on accrualsFinancial reportingGeneral Ledger deadlinesFiscal year endManagerial and Cost ReportingSources of informationUsers of information 2016 The Payroll Advisor

Technical Side14 Outside service bureauIn house systemMajor change or smalladjustment?Staffing available 2016 The Payroll Advisor

What Are the Choices?15 Weekly – 52 pay periodsBiweekly – 26 pay periodsSemi-monthly - 24 pay periodsMonthly – 12 pay periodsPros and cons for eachChanging to each has its ownunique set of challenges 2016 The Payroll Advisor

Weekly16Pros: Consistent pay cycles and paydates Overtime calculations are exact No compliance issues withstates 2016 The Payroll Advisor

Weekly17Cons: Higher costs: More payrolls moreprocessing costs More check stock used More vendor payments andtax deposits 2016 The Payroll Advisor

Biweekly18Pros: Consistent pay periods and paydays Overtime calculations still simple Generally still compliance with statewage and hour laws More cost effective than weekly Readily accepted by employeesincluding new hires 2016 The Payroll Advisor

Biweekly19Cons G/L accruals may be difficult Costs still high due to frequentprocessing In two months of the year extrapayrolls to account for withfringe benefits 2016 The Payroll Advisor

Semi-monthly20Pros: Easy accounting interfacesuch as accruals and budgets Lower costs than weekly orbiweekly for processing 2016 The Payroll Advisor

Semi-monthly21Cons: Overtime compliancebecomes difficult andburdensome to payroll Inconsistent pay dates andpay cycles Compliance problems withstate wage and hour lawscan occur 2016 The Payroll Advisor

Monthly22Pros: Finance interface is asnap Less costly of allmethods in terms ofprocessing 2016 The Payroll Advisor

Monthly23Cons: Compliance issue isnumber one—statesmay not allow it Calculating overtime isburdensome forpayroll due toinconsistent payrollweeks 2016 The Payroll Advisor

Compliance Issues24 Need to verify if in compliance with state wage andhour law unless doing “weekly”Must research each state employee is located orworking inNo averages, means or accepted generalities For example: Can’t just pick CAIf in all 50 then all 50 need to be checkedMay also depend on industry in some states 2016 The Payroll Advisor

Compliance Issues25 First question that must be answered: Does the state allow the frequency itself?Examples: NE and PA leave it up to the employer CA says a minimum of semimonthly RI demands weekly Chart from DOL http://www.dol.gov/whd/state/payday.htm 2016 The Payroll Advisor

Permitted Payroll Frequencies26Connecticut will now permit biweekly 2016 The Payroll Advisor

Max Period Permitted for Nonexempt Employees for PrivateSector XLAFLWeeklyBiweeklySemi-monthlyEither Biweekly or Semi-monthlyMonthlyNone specified/designated by employerHIAK27 2016 The Payroll Advisor

Compliance Issues28Second question that must be answered: Will state allow the frequency under its “permitteddays between paydays” rules? Number of days the state allows to go by before theemployee must be paid again Example: AZ & ME: not more than 16 days apart CA is 10 (actually lists dates in code) 2016 The Payroll Advisor

Not More Than 16 DaysApartLists Dates in CodeWeekly PaydaysMonthly PaydaysNo RequirementsArizonaCalifornia – 10 daysConnecticut—will permitbiweeklyColoradoArkansasGeorgia (must divide monthinto equal parts)Michigan –15 daysNew HampshireDelawareFloridaHawaii – 15 daysOhio—1st & 15thRhode IslandIdahoNebraskaIllinoisPennsylvania 15th & LastVermontKansasNorth CarolinaIndianaTennessee—20th & 5thMinnesotaNorth DakotaIowaTexas—Split monthOregonSouth CarolinaKentuckyWyoming—15th & 1stSouth sachusettsMississippiMissouriMontanaNevadaNew JerseyNew MexicoNew YorkOklahomaUtahVermontVirginiaWest Virginia29 2016 The Payroll Advisor

Compliance Issues30The next question that needs to be answered: How many days will pass from end of pay period topay day? This is known as “lag time”. Will the stateallow this time frame? If not paying through payday this needs to beaddressed Example: AZallows 5 for in state employers and 10 for out ofstate CA, DE, HI, NY, and WA allow 7 days 2016 The Payroll Advisor

Compliance Issues31Even if the states have the samepayroll frequency requirementsdoes not mean they have the samelag time.For example: TN which requires asemi-monthly pay frequencydictates the following lag time: 2016 The Payroll Advisor

TN Example32All wages or compensation earned and unpaid prior to the firstday of any month shall be due and payable not later than the20th day of the month following the one in which the wages wereearned.All wages or compensation earned and unpaid prior to the 16thday of any month shall be due and payable not later than thefifth day of the succeeding month.TN therefore permits a 20-day lag or processingtime for the employer 2016 The Payroll Advisor

Compliance Issues33But OH which also requires a semi-monthly payfrequency dictates the following lag time:Every employer doing business in the state shall, on or before the first day ofeach month, pay all its employees the wages earned by them during the firsthalf of the preceding month ending with the fifteenth day therefor, and shall,on or before the fifteenth day of each month, pay such employees the wagesearned by them during the last half of the preceding calendar month.So OH, though semi-monthly, only permits a 15day lag time for processing the payroll. 2016 The Payroll Advisor

Within 5DaysArizonaWithin 6DaysVermontWithin 7 DaysWithin 8 Days Within 9DaysRhodeIslandWithin dianaHawaiiNew sissippiMontanaNew YorkWashingtonNew JerseyNew Mexico-instateUtahIllinois: If biweekly or semimonthly within 13 daysWisconsin: 31 days34 2016 The Payroll Advisor

Within 11DaysOklahoma35Within Within 1412DaysDaysIowaWithin 15DaysWithin Within 20No16 eeAlaskaVirginiaIdahoArkansasWest VirginiaKansasGeorgiaNevadaMarylandNew Mexico-out ofstateMinnesotaOhioNebraskaPennsylvaniaNorth CarolinaTexasNorth DakotaVirginiaOregonWyomingSouth Carolina 2016 The Payroll Advisor

Compliance Issues36Final question that needs to be answered: Is there any employee notification requirement? Some states require employees to be notified inwriting if the payroll frequency is going to be changed. Some also require postings be done prior to change Examples include CT, DE, HI and IL 2016 The Payroll Advisor

Items to Consider37 The impact on payrollThe impact on employeesAre there additional costs?Make up of the transition teamPreparing the planTesting the plan 2016 The Payroll Advisor

Impact on Payroll38 Change will increase/decrease number of payrolls in a yearAre any earnings impacted?How will deductions be handled?Changes to benefits such as PTOWhat about GL accruals?What about tax deposits?Department impact on staffing needs and system supportTimekeeping issues 2016 The Payroll Advisor

Change to Number of Payrolls In the Year 39 Must pick most opportunetime to changeIs it January 1? Or end of aquarter? Or fiscal year end?What is best for your companyAvoid system change tie in ifpossible 2016 The Payroll Advisor

Are Any Earnings Impacted?40 If not Jan 1 what about salaried employees? Example: 6 months at semimonthly and nowbiweeklySalaried paid so far vs. rest of annual salary has to betaken into accountMay have to make a change at beginning of followingyear to salary amounts as well 2016 The Payroll Advisor

How Will Deductions Be Handled?41 Health Insurance premiums may have to berecalculatedFlexible spending amounts or Cafeteria plans may beaffectedGarnishments, especially child support hardest hitIf going semimonthly to biweekly keep at 24 deductionswith 2 “free” paydays or; Notify agencies for new IWOs 2016 The Payroll Advisor

Benefit Changes—PTO?42 How are they currentlycalculated? By the hour? By the pay period? By the month?May need to adjust accruals forvacation or sick pay 2016 The Payroll Advisor

What About G/L Accruals43 Which items are accrued? Wages, Payroll Taxes, Liabilities to employees,Liabilities to vendors, Cost and managerial dataWhen are accruals made? Each pay period, Monthly, Quarterly, Annually 2016 The Payroll Advisor

What About G/L Accruals44 Why are accruals made? Cash basis to accrual basis – financial reporting GAAP, SOX – effect on estimates Cash basis to accrual basis – managerial reporting Cost assignment or allocation Variance analysis Cash flow analysis and planning 2016 The Payroll Advisor

What About Tax Withholding andDeposits-Federal?45 Will it increase the tax deposit frequency? May need to go from semiweekly to next daydepending on liability Employees using different charts? They will havedifferent amounts this could increase or decreasetotal amount of taxes per payrollIncrease number of payrolls increases number ofdeposits 2016 The Payroll Advisor

What About Tax Withholding andDeposits-State(s)?46 Will it increase the tax deposit frequency? May need to go from semiweekly to next daydepending on liability Employees using different charts? They will havedifferent amountsIncrease number of payrolls increases number ofdepositsAre there withholding implications for localjurisdictions? 2016 The Payroll Advisor

Department Impact-Staffing47 Increased payrolls may mean increased staff isneededIf changing to semimonthly may need more time forovertime calculationsInterfaces with vendors—FTP drops done moreoften? Reports submitted more often?How are these files created? Will more payrolls meanmore time to create them is needed? 2016 The Payroll Advisor

Department Impact—System48 Is the system support there to actually handle thechange? In house Outside serviceTables need updating?Changing calendars and schedules for processingMay need to adjust for holidays if going tosemimonthly from biweekly 2016 The Payroll Advisor

From a Timekeeping Perspective49 What will the new pay period be Any overlapping days from prior pay period?Will employees be paid current (through pay day) orthrough end of pay period?How will OT be tracked and paid?Will the timekeeping system need to be changed?Need to change export frequency?Applies to paper as well 2016 The Payroll Advisor

Impact on Employees50 How will employees be affected?Hardship loansBridge longer-than-usual gap between paychecks Cash in vacation, sick or PTO time Bridge loans to be paid back in small increments over thecourse of the year Phase inEvery employee all at once? Section by section, state by state? 2016 The Payroll Advisor

Impact on Employees-Communication51 Ask – start asking early Managers—Employees—Influencers--DoersPositive – information seeking Be positive – plant seeds Welcome objections –forewarned is forearmed Welcome additional ideas 2016 The Payroll Advisor

Additional Cost Considerations52 Vendor/Bank Fees Increased number ofpayrolls and processesincrease fees with vendorsIncreasing tax depositingfrequency If using outside service takethis into account as well 2016 The Payroll Advisor

Additional Cost Considerations53 Interfaces Charges for more in a month?Reports need to be rewritten topull correct dataNeed to map it all out onspreadsheet 2016 The Payroll Advisor

The Decision is Made – How to Plan54Form a team Payroll Accounting Benefits Finance Human Resources ITUnionVendorsLegalCommunications 2016 The Payroll Advisor

Make Up of the Transition Team55 Recruit from influencers anddoersTry for stakeholderrepresentationRumor controlCore team v. peripheral team 2016 The Payroll Advisor

Create the Written Project Plan56 Budget for the change Include communication Testing ContingenciesDetermine timing—set the date in stoneCreate test system—well before testing is neededDevelop a test planHave status meetings—weekly if need be 2016 The Payroll Advisor

The Test Plan57 2 tests should be conductedUse only “playground” or testing site on your payrollsystemFirst test finds all the errorsSecond test is error free or keep testingTest vendor exports as well—set up as test!Test NACHA, check printing, electronic statementsand all reportsKeep all testing documentation 2016 The Payroll Advisor

Test Plan Continues 58 DeductionsKnow what you are looking for test, should be increase ordecrease from previous frequency Actually do manual calculations first to compare Test all deductions not a sample Earnings Taxes Same applies as deductionsSame applies as deductionsPTO accruals Same applies as deductions 2016 The Payroll Advisor

Test Plan Continues 59 GL accruals Timing Adjustments for pay period amounts Based on days or hours Feedback on reports (run by users)Interfaces Will frequency change or notChild support/garnishments Test calculations Test interfaces to banks, vendors etc. 2016 The Payroll Advisor

Communication Strategy60 Notify employeesNotify other departmentsNotify vendorsNotify child support agenciesDon’t forget other types of garnishmentsNotify early and oftenEspecially on the actual payroll change run 2016 The Payroll Advisor

Notify Employees61 Let employees know well in advanceCommunicate oftenProvide samplesWill loans be an option Rumor control Continue to gather feedback 2016 The Payroll Advisor

Notify Employees62Determine the best methodsfor communicating (Caution:check state laws) E-mail Letters Meetings Sample stuffed ngs 2016 The Payroll Advisor

Sample From SHRM63 2016 The Payroll Advisor

Notify Other Departments64 They will be notified individually as employeesNeed to relate the change to their department nottheir paycheckHow it affects reports or information received ortransferred to payroll Backup for testing team notices Examples: New hireinput or paperwork AP checks 2016 The Payroll Advisor

Notify Vendors65 Minimum 2 month notice if you have it to giveAll vendors no matter how smallInsurance Pension 401(k) Credit union NACHA, ACH or bank for direct deposit Portal vendors for self service Vendor meetings may be neededAsk what the vendor needs to be successful 2016 The Payroll Advisor

Notify Child Support Agencies66 Contact each agency you have on record of thechange in writingGet any compliance issues between withholdingorder and new pay frequency corrected prior to firstpayroll of new frequencyReview all payment set up such as ACH or webportals that you use to make payments for changesneeded 2016 The Payroll Advisor

Other Garnishments67 IRS is a vendor and needs toknow in writing as wellCreditor garnishments may beaffectedStudent loansBankruptcy courts need to benotified 2016 The Payroll Advisor

Implementation Day68 Be prepared with sufficient staffing needs to answerphones, e-mails, in person linesNo vacations or sick permitted if possible Especially at lunch times Come in early and stay late if needed Be prepared for the bridge loans on this day even ifyou told them it needed to be done in advance 2016 The Payroll Advisor

Implementation Day69Be prepared to explain ALL THE MATH How deductions were arrived at for garnishments,fringe benefits, etc. How taxes are changed due to change of IRS taxcharts How PTO or accruals are now handled if theywere changed 2016 The Payroll Advisor

Beyond Implementation Day70 Still be prepared to explain ALL THE MATHWill get questions for up to two payrolls for itemslike PTO, fringe benefits, garnishments etc.Be prepared to explain to vendors and handle theirquestions when the first payroll is runBe prepared to explain to A/P, Human Resources,Finance etc. on accruals, interfaces, etc. 2016 The Payroll Advisor

Are There Any Questions?71 2016 The Payroll Advisor

How Can Ascentis Help Me?72Process payroll Real time flexible processing 100% accuracy Reduce processing time byup to 30%Employee portal Paycheck dataPaystubsTax formsPaycheck simulation tools

To earn RCH credit you must73Stay on thewebinar, online forthe full 60 minutesBe watching usingyour unique URLCertificatesdelivered by email,to registered email,by October 14th 2016 The Payroll Advisor

On-Demand Webinars74Watch from anywhere, at anytime, at no costto you! 2016 The Payroll Advisor

Download Slides? Watch again?75 2016 The Payroll Advisor

Sharing the Education76 2016 The Payroll Advisor

Contact [email protected] 2016 The Payroll Advisor

2016 The Payroll Advisor 6 Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor , a firm specializing in payroll education and training. The company’s website www.thepayrolladvisor.com offers a subscription payroll news service which keeps payroll prof