Friday, May 21, 2010

Payroll Is Human and So We Should Be

First let me apologize for missing the blog yesterday. I was working on a deadline for the Payroll Manager’s Report and just did not have time to get the blog posted. I have to be honest with you that will happen from time to time. Why? Because believe it or not even though I am a payroll professional I am also human. And as a human being I am subject to the same exhaustion after a long day, the same illnesses and the same malaise that affect all of human kind.

Why am I using today’s blog to point out that payroll professionals are human? Because sometimes, let’s face it most times, we don’t think of ourselves that way and others rarely see us that way. I mean how many of you have put your payroll before your health? I know I have on dozens of occasions. I had to have emergency surgery one time. Not life threatening just had to be done that day. But you better be sure that I dropped off the direct deposit (we had to take it to the bank in those days) and made the tax deposit on the way to the hospital. What did my husband say as he was driving me? Absolutely nothing. He had been married to a payroll person for a number of years by that time so knew better than to protest. In fact when I was in the doctor’s office the Doctor asked if I wanted to have the surgery that morning or in the afternoon. I said the afternoon, he argued for the morning until I told him I was the payroll clerk and I had to get the checks out. Then he totally understood and scheduled the surgery for that afternoon. See what I mean about how others see us. Would he have reacted the same way for accounts payable or marketing? I don’t think so.

My point is how many other professions do that when it isn’t a matter of actually life and death. Firefighters have to put the fire out or people will die, property will be destroyed. But payroll, where is the matter of life and death? Yea people want their checks and they do have to pay bills. But does the payroll clerk have to die or endanger their health for it?

I always thought that my devotion to my payroll was just me. And I have to take time out to mention that it is really only payroll people who use the term “my” when referring to their job. Pay attention some time. Most people use “the”. I have to get the checks out. But payroll people use “my”. I have to do my deposits, my garnishments, my checks, process my payroll. And I am no different. It wasn’t until I started attending APA meetings in the middle 80’s that I found out I was not different than other payroll professionals. We all seemed fanatical about getting the payroll out.

So for years I accepted as normal my reaction of utter dismay and shock when HR would take off on vacation during open enrollment. Why that’s like leaving during year end! How could they do that? Their attitude was normal for other employees. It will be covered while I am gone or will wait until I get back. But not in payroll, oh no. I, like so many other payroll professionals I know, check my processing calendar before agreeing to attend parties, schedule surgery or doctor appointments, or any other event in my life. I want to make sure it’s not on a payroll week. Oh I may still do it but I will know to work extra the day before so as to leave nothing undone. And yes, my payroll was finished before I went into labor to have my daughter 28 years ago.

But now I wonder if perhaps this is not such a good thing for payroll people to do. Do we sacrifice our efficiency if we work when ill? Do we sacrifice our careers because we don’t want anyone else doing our payroll? I am going to be returning to this topic for the next several weeks. I think it is important to discuss this as it is the very core of the profession.

So let me know what you think? Have you ever put payroll first? I bet you have.

Wednesday, May 19, 2010

Cranky About Benchmarking

I think Wednesdays are going to be interesting days for the blog. Best practices is an area where we can agree to disagree and maybe even be a little “cranky” sometimes. I think this is one of those “cranky” days. I am in the process of conducting a survey of 200 or so payroll professionals on benchmarking. Benchmarking is a best practice by all means and one that is very much in vogue right now. I am doing the survey for an annual benchmarking report for which I am the editor. But why am I cranky about this best practice? I am cranky because I am actually getting e-mails saying that the survey is much too long, or too much work, or a lot of trouble. You see I think some people in payroll are not getting the concept of benchmarking and best practices. It appears they think that all you have to do to benchmark your payroll department is answer a few quick questions and abra cadabera you are benchmarked!

But the survey is asking for the cost of manual checks, how long between getting new hire or termination paperwork and the payment, or how many errors occur on average in the payroll department. These are the processes that have to be benchmarked so you can determine best practices and make improvements. You have to know what goes on with every process or procedure in your department to know what needs to be improved. And it takes a lot of work to get to the point where you can say “it costs this much money to cut a manual check” or “we have three errors on average per payroll of 10k checks”. In other words it takes months of work just to determine where you stand so you can improve from there.

I guess my worry or the cause of my crankiness or angst is that there are some in payroll who still feel that just pushing paper around to pay people is good enough to run the department. That having to know the inner workings, the actual numbers, the essence of the department is too much work. And it shouldn’t be.

What do you think? Are you benchmarking?

Tuesday, May 18, 2010

Mileage is Mileage and Needs to Be Tracked No Matter What You Call It

Whenever I am holding an audio seminar or webinar on fringe benefits one question I can always count on deals with auto allowances. It seems that a lot of people think that because they are giving the employee the money to cover the business use of a personal vehicle that it is all nontaxable to the employee no matter how much they give them. Unfortunately, that ain’t so.

Every year the IRS sets the mileage rate. This year it is 50¢ per mile. That means that as an employer you can reimburse an employee up to that amount for every mile they drive their own car on company business. But the IRS isn’t going to take your word for it on the mileage. There must be records and logs to show the nature of the trip, the amount of miles driven etc before reimbursement can be done. Then it is number of miles driven times the current rate for mileage. Anything else is taxable income. And that’s where the disconnect seems to be with auto allowances.

Employers tend to give flat amounts to employees such as sales staff for the business use of their personal car and then drop the ball thinking that as long as it’s for mileage that should be it. But what actually has to happen is that the employee must put down all miles driven and the nature of the trip in a log. Then the total miles has to be multiplied by 50¢ for this year. That is what you can reimburse the employee. If you give a flat amount each month, you have to compare the amount you gave against the actual mileage log calculation for the same month. If it is less than the amount you gave the employee, then the employee has to give that overage back or be taxed on it.

And no it doesn’t even out over time. Once you calculate the miles in the log it goes against the month the monies were paid. For example I gave a member of the sales staff $500 for the month of June as an auto allowance. He drove, according to the log he gave me, 952 miles for business reasons. Do the math: 952 miles x $.50 = $476.00. He had to give back $24 or I have to run it through payroll. It is that simple.

Now trying to get sales people to keep the logs accurately, and turn them in on time, now there’s something that ain’t so simple!

How do you do it on your payroll?

Monday, May 17, 2010

As Long as the Check Doesn’t Bounce…

As I was going through the news updates for my website today (thepayrolladvisor.com) I came across a news item that struck a nerve for today’s blog. The item? Tennessee is now allowing employers to pay their employees via payroll card with the usual restrictions. These restrictions include no fees for one time withdrawal of all monies, etc. This news items simply adds the state to the long growing list of states that permit payroll cards as a method of payment. So what was it that caught my eye? Well, why do the states have to address this issue at all? I just have to question why each state has to address an issue that is obviously universal to all workers within this country. So therefore it should be a national law not a state by state one. All employees have to be paid, whether in Tennessee or New York. All workers have access to banks whether in Tennessee or New York. We don’t do local checking in this country anymore. We use our debit cards or credit cards or even cash as well as checking accounts. So what is wrong with having there be one law in this country on the federal level to state how employees need to be paid?

We can start off with the universal standard of “employees must be paid in cash, or by negotiable instrument payable upon demand without discount.” Then just state that payroll cards or direct deposit are included as negotiable instruments. We can add that there can be no fees if the employee is paid electronically. They have one withdrawal of all monies at no cost. No one can force an employee to have a bank account if they don’t want to or are no longer eligible. And the check has to be good. Why 50 different laws in 50 different states to have to research and worry about when one would be more efficient and more universal. And it will protect the worker in those states that don’t address the issue at all or haven’t gotten around to noticing that we are now in the 21st century when it comes to wage and hour laws and paying employees.

What do you think?