Payroll Fraud – Are you a victim or a perpetrator?

According to Forbes payroll fraud happens in 27 percent of all businesses.  There are basically three main kinds of payroll fraud and different ways of avoiding each of them.

  1. Employee Fraud:  Time card falsification is an obvious form of payroll fraud.  Certainly Time and Attendance software can help keep employees honest and give supervisors some oversight.  Real-time software is particularly helpful in keeping everyone honest.
  2. Payroll Administrator Fraud:  It is never a good idea to have one person completely completely responsible for payroll without assistance or oversight.  Aside from the danger of losing that person and their expertise, there is also the danger of pretend employees being entered into the system (who coincidentally share a bank account with the payroll person), or duplicate checks being created.  A system of checks and balances, such as audit trails and periodic payroll reconciliations from another source or department can help protect company assets.
  3. Employer Fraud:  The third type of payroll fraud is actually committed by employers.  It involves the incorrect classification of employees as contractors, or hourly employees as exempt salaried.  These types of violations can be intentional, or due to a failure to understand Wage and Hour laws.  Either way they can be expensive.  In the state of California the penalties for classification of a worker can result in back payroll taxes and penalties, plus fines of $25,000 per occurrence.

No one wins with payroll fraud, whether intentional or inadvertent.  Make sure your systems protect you and your employees.

Automation Can Help

If you have never thought you needed an HRMS system, now may be the time to reconsider.  There is a lot of work ahead for HR professionals and benefit managers to comply with new laws, especially the Affordable Care Act.  An HRMS system is designed to centralize HR and benefits information so you can more easily access the data and run the reports you need for compliance.  In addition to compliance with the Affordable Care Act your HRMS solution would help keep your company in compliance with EEO-1, EEO-4, I-9 Citizenship Verification, Vets-100, Family and Medical Leave Act (FMLA) and OSHA record-keeping requirements.

Although HR compliance is at the heart of your base HRMS system, it can also become the center of a more fully featured system that can include payroll, Employee Self Service, Paperless HR Forms, Org Charts, Recruiting, Training Management , Timekeeping and more.  Imagine entering employee information only one time and knowing that all of your employee-related information is up-to-date and available to the people who need it most.  No spreadheets with conflicting information, or duplication of data.

So if you never thought and HR system was for your company, maybe now is the time to take a look and see what you have been missing.



These ACA Reports

It’s a fact.  It is time to start thinking about reporting requirements for the ACA for your 2015 information.  So what do you need to know?

  1. You may be a “large employer” for ACA purposes even if you don’t have 50 full time employees.  A full-time employee is considered someone who averages 30 hours per week.  The IRS looks at your prior year employee count and looks at full-time equivalents.  That means that having 100 part time employees working an average of 15 hours per week is the same as having 50 full-time employees.
  2. If you have multiple entities with the same ownership, they must be combined for purposes of the ACA.  So having one company with 30 employees and another company with 20 employees means the combined organization is a “large employer.”
  3. Just providing insurance is not enough.  You will have new reporting requirements for 2015 data due in 2016:  the 1095-C and the 1094-C.  Information needed for these forms include:
    • Who is a full-time employee for each month,
    • Name and address for each employee,
    • Information about health coverage offered by month,
    • The employee’s share of the monthly premium for lowest-cost self-only minimum value coverage,
    • Months the employee was enrolled in your coverage,
    • Months the employer met an affordability safe harbor with respect to an employee and whether other relief applies for an employee for each month
    • If you offer a self-insured plan, information about the covered individuals enrolled in the plan, by month.
    • Information about whether you offered coverage to 70% of your full-time employees and their dependents in 2015 (95% for years after 2015)
    • Total number of Forms 1095-C you issued to employees
    • Full time employee counts by month,
    • Total employee counts by month,
    • Whether you are eligible for certain transition relief as an employer.
  4. If you are hoping that your broker can prepare these forms for you, it is pretty obvious that you will still have to provide a lot of information.
  5. Trying to come up with all of this information at year end is obviously not the best approach.  It would be like trying to piece together W-2 forms working from copies of pay stubs.

Stay up-to-date with what is required and how you can deal with the administrivia.  Check out

What ACA Reports?

Lots of people are assuming that they will not be affected by the new employer reporting requirements for the Affordable Care Act. Here are some of the comments that I hear from people:

1. We don’t have 50 full time employees so we are not affected.

2. Each of our companies is smaller than 50 employees so we don’t care.

3. All of our employees have insurance, so we don’t need to track anything special.

4. Our broker is doing the reports for us.

5. Reports? What reports?

If you have heard any of those comments and thought they were reasonable, stay tuned. We will be discussing the reporting requirements for the Affordable Care Act in greater detail and what will be needed to ensure compliance.