What You Need to Know About Cybersecurity

In today’s sophisticated world, cybersecurity is an ever-growing concern. There isn’t a day that goes by that you don’t hear about cybersecurity breaches in the media. For example, in recent days, a private security company notified the U.S. Cybersecurity and Infrastructure Security Agency about a “major computer intrusion,” whereby federal, state, and local government computers, and thousands of private companies and organizations were hacked. And, what’s worse, this has been ongoing since March 2020 and continues to pose great risk.

So, what is cybersecurity? It protects computer systems and networks from theft or damage to hardware, software, or electronic data, as well as disruption or misdirection of the services they provide to businesses. An online breach can cripple a business and be very costly.

These security problems are compounded, because they affect each business differently, yet they touch every segment of a business and the risk factors associated with them. Protecting data privacy that each business is entrusted is a universal goal and includes:

  • Types of data your business have. Do they include credit card information, health information, criminal history, or biometrics?
  • Which departments have access to your data?
  • Who are your data service providers and what are their credentials?
  • Which personnel have access to your data?
  • What steps has your company taken to protect your data? Encryption? Back-up? Internal controls?

Protecting Your Data

Currently, there are no federal laws in place to protect your data; however, at least 31 states have established laws regulating the secure destruction or disposal of personal information. Of those, 12 states (Arkansas, California, Connecticut, Florida, Indiana, Maryland, Massachusetts, Nevada, Oregon, Rhode Island, Texas, and Utah) have imposed broader data security requirements, while others are considering legislation, including New York.

California, the home of Silicon Valley and many global technology companies, is a pioneer on the data privacy front. Plus, the California Consumer Privacy Act of 2018, which went into effect January 1, 2020, mirrors the General Data Protection Regulation (GDPR) instituted by the UK, commonly known as the Data Protection Act 2018. It’s the UK’s implementation of the General Data Protection Regulation (GDPR), meaning that everyone responsible for using personal data has to follow strict rules called “data protection principles.” They must make sure the information is used fairly, lawfully, and transparently.

Any company doing business in a nation that has adopted the GDPR must comply with its consumer protections regarding data privacy. The GDPR spans many types of data, such as:

  • Personal-identifiable data (e.g., names, addresses, birth dates, Social Security numbers)
  • Web-based data (e.g., user location, IP address, cookies, and RFID tags)
  • Health (HIPAA) and genetic data
  • Biometric data
  • Racial or ethnic data

This means that U.S. businesses that operate in multiple jurisdictions must consider these and other categories pertinent to their industry, as they segment data they’re holding, with the understanding that the data is essential to instituting the right level of privacy safeguards.

How to Safeguard Your Data

Cyber-attacks on payroll, especially for small businesses, can cause far-reaching and long-lasting damage, because they involve personal information and sensitive data. Your business risks losing employee trust, damaging your brand image, and facing possible penalties and legal action.

Your payroll department needs to securely store sensitive information on your employees, including bank account details, home addresses, health care information, Social Security numbers, and wage information. Employees who have their data compromised face ongoing attacks by cybercriminals, including re-routing their wages and even identity theft.

Okay, now that we’ve got your attention, here’s what you can do to protect your data.

  • Understanding your data is the first step to securing it.
  • Be knowledgeable of the relevant laws and regulations your business must comply with.
  • Stay alert for any indications of a breach. Unfortunately, many data breaches can go on for quite some time (as mentioned above) before being detected. Knowing the time lapse between when the data is hacked and when it’s discovered allows hackers to continue accessing vulnerable data. As a result, data must be constantly monitored for breaches. Watch for signs of a breach, which could include an unanticipated spike in bandwidth usage. It could represent a red flag and indicate a problem.

COVID-19 Poses New Cybersecurity Concerns

With the coronavirus, businesses have to pivot/adjust to their employees working from home. Despite this, employees still require technology to do their jobs and they need to be even more vigilant of cybersecurity. Businesses can’t function today without computers, the internet, and Wi-Fi to fulfill job responsibilities. However, employees working from home expose themselves to a host of cyber risks that are reduced when in the work environment.

As with any tragedy, COVID-19 has opened the door for hackers finding new ways to steal data from unsuspecting users, requiring employers to be even more vigilant, while constantly reminding employees to keep their computers secure. As an employer, here’s what you should know.

  • Make cybersecurity top of mind. It’s one thing to provide a safe and secure office environment and another when your employees work from home, because you can’t control all the factors in a home environment. Any breach can be devastating to your small business, so you need to be hypervigilant. According to Emil Sayegh, contributing writer at Forbes, “Today we are witnessing a rapid rise of opportunistic cybercriminal activity taking advantage of the chaos created by COVID-19.” And for businesses that are already fighting to remain afloat due to challenges faced during the virus, a cybersecurity breach could quickly shut them down. Sayegh warns that businesses navigating this “new normal” must address weaknesses in their IT strategies exposed by COVID-10 and consider implementing a better preparedness plan to avoid long-term damage.
  • Scams involving “masks” are a possibility. Not the masks you wear to avoid COVID, but scammers posing as wolves in sheep’s clothing. Instruct your employees not to click on suspect email, particularly if it relates to COVID-19. Computer criminals try to get people to click on malicious links that install ransomware, a type of malware that threatens to publish the victim’s data or perpetually blocks access unless a ransom is paid. An example is cities and towns that have had their sensitive data held ransom, crippling their operation until money has been paid.
  • Scammers use phishing to fool people into giving up money or sending credentials. It’s a fraudulent attempt to obtain sensitive information or data, such as usernames, passwords, banking, credit card details, and passwords by disguising themselves as trustworthy entities by featuring similar logos and other identifying information in an electronic communication. Targets are contacted by email, telephone, or text message by someone posing as a representative of a legitimate institution to lure individuals into providing this kind of data. This information is then used to access important accounts and can result in identity theft and financial loss.

Your employees shouldn’t open suspicious emails or links included in those emails. If unsure an email was sent by someone the employee trusts, it’s best to call the person to confirm they sent the email and/or attachment.

  • While numerous passwords are an inconvenience…to say the least, they provide another layer of protection from scammers. While it’s convenient to use the same password for multiple accounts or files, once a scammer gets hold of a password, they then have cart blanche to a broad range of files and sensitive information.

Stress the importance of using strong passwords consisting of upper and lower-case letters, numbers, and symbols, ideally, one that contains eight or more characters.

Finally, make sure your employees DO NOT share their passwords, either via email or text message.

  • Employees working from home using Wi-Fi pose a new level of risk for employers. Work computers should be exclusively dedicated to employees doing their jobs from home. They need to be protected from family members or visitors using them or anyone else entering the home, including service workers. And, updates or security patches need to be routinely installed immediately to protect them from malware, a software that’s placed on a computer or other device with the intention of doing harm.
  • When your employees use a website, have them look for “website certificates,” signs that indicate a site uses encryption to protect the user. There should be either a closed padlock, which, depending on your browser, is located in the status bar at the bottom of your browser window or at the top of the browser window between the address and search fields OR a Uniform Resource Locator (URL) that begins with “https:” rather than just “http:”.
  • Cybersecurity training is still a good idea for employees working from home. Knowledge is power in terms of what employees should look for on a daily basis. Plus, the training serves as a top-of-mind refresher.
  • Start with reminding your employees not to leave passwords or other confidential information out in the open.
  • If they use flash or thumb drives, they need to use make sure they have been approved prior to use.
  • Remind employees what websites are approved for use during working hours, make sure they deactivate pop-ups, and don’t download software from unreputable places.
  • Email is a portal into cybersecurity breaches. While email filters catch spam and suspicious email, employees still need to be vigilant in reporting suspicious email.
  • If visiting social media sites isn’t part of your employees work duties, it should be banned on work computers to protect them from phishing attacks.
  • Make sure all your employee software is update, secure, and routinely monitored for scams.
  • ALWAYS backup your data, use multi-factor authentication for additional security, and check that all systems have secure firewalls.
  • Keep IT support on standby, as needed. Employees need to know how to reach IT support, even if they have innocuous computer-related questions.
  • Consider purchasing cyber liability insurance. It can help to cover business’ liability if customers’ personal information is taken. If your business has been hacked, the cost can be very high, but cyber insurance can help your business recover from the incident. According to the International Risk Management Institute, cyber insurance can cover expenses, including the cost of notification and credit monitoring.

Hire a Payroll Provider You Can Trust

Your payroll data is very important to cybercriminals. While hackers continue to get better at personal engineering to obtain sensitive data, IT companies remain one step ahead by using the latest developments to keep businesses and their sensitive data secure. When you partner with ASAP Payroll Service, be assured they use a cloud computing service that’s agile and delivers fast results. Whether your business is large or small, ASAP Payroll Service can help you choose the development platform or programming model that makes the most sense for your business. And you can choose which services to use, one or several, and how you use them. This flexibility frees you to focus on innovation, not infrastructure. Plus the cloud computing service they use is a secure, durable technology platform with industry-recognized certifications and audits.

 

Plus, ASAP Payroll Service teams with an outside IT company that handles all the firewalls and constantly monitors for hackers.

 

Contact ASAP Payroll Service to learn how they can protect your business from cyber criminals and give you peace of mind. They can be reached at 317 887-2727 or by fax at 317 887-2741.

Keeping Up with the Growing Needs of HR

If you’re an HR professional, you know the volume of paperwork that comes with the job. HR is required to keep vast numbers of records on each employee; this can fill multiple file cabinets. Plus, keeping this data secure is another issue.

Then there’s the “democratization” of HR data, which means the demand for rapid expansion of access to such data by groups both inside and outside the organization. As recently as a few years ago, only HR staff members worked with personnel data. Today, employees, managers, health insurers, workers’ compensation carriers, senior executives, job applicants, and even regulatory agencies have/need access to it. As a result, each set of users requires different needs. For example, executives use summary data from the system to aid in strategic decision-making, while applicants derive initial impressions of the organization from the corporate recruiting website.

Solutions?

One solution is to manage your HR paperwork through technology and web-based applications. These can dramatically change how human resource management is handled, often resulting in cutting costs and expanding or improving services. Research has documented that businesses that adopt sophisticated HR technology far exceed their performance levels compared to those that do not. Your organization may already have automated basic HR administration in place; however, simple automation falls short of maintaining a competitive advantage. Today, businesses are challenged to take more aggressive steps in the form of “e-HR” technology to transform their practices and market their brand.

The term “e-HR” describes how HR service delivery uses web-based technology. Implementing e-HR requires a fundamental change in the way HR professionals view their roles. Now HR professionals must not only master traditional HR skills and knowledge, but they must also have the ability to apply that knowledge via technology.

A human resources management system, human resources information system (HRIS), or human capital management is a form of human resources software that combines a number of systems and processes to ensure easy management of human resources, business processes, and data. It involves the integration of hardware, software, and business processes used to implement an e-HR approach. HR departments often provide broader, more effective services when they operate via a web portal. For employees and applicants, this means having to rely on HRIS for most HR services. One potential downside to this approach is less interaction/personal relationships between the organization’s employees and its HR staff.

HRIS is flexible in terms of meeting the needs of a business. It can be as simple as employing a small employee database, developed internally by a company with a few employees, or as complex as fully integrated, multimillion-dollar Enterprise Resource Planning (ERP) software that offers economies-of-scale to large firms. Of course, there are many variations in-between.

The latest research regarding HRIS shows that it includes:

  • Implementation strategies available to HR executives who want to move toward e-HR.
  • Ways HR technology supports recruiting, selection, training, performance management, compensation, and benefits administration.
  • How effective e-HR is and the degree that employees embrace it.
  • Issues that influence the strategic use of e-HR technology.
  • Identifying common pitfalls in a technology-based HR delivery model and how to avoid them.

Taking an e-HR approach can have broad implications on core HR functions in a majority of organizations. While the following is not an exhaustive list of issues to consider, just know that some functions are not addressed in detail here, due to a lack independent research.

What are your options if you decide to implement HRIS?

Deciding to implement HRIS is a big step. In doing so, you have many options, such as deciding whether to develop your technology in-house or hire external vendors to handle it for you. If you go outside your organization, the advantages include the process being more cost-effective and, in all likelihood, providing a more complete HR solution. However, you could be overwhelmed with how to choose the right vendor and product for your business. To start with, you need to determine whether a single platform or an integrated solution is right for you. Are you looking to support multiple HR functions or use multiple smaller systems, sometimes referred to as “best of breed” solutions? Either way, each supports a different HR function.

Multiple HR Functions

An integrated HR solution deploys outsourcing strategies in the areas of human resources, workers’ compensation, employee benefits, benefits administration, and payroll to small businesses throughout the U.S. If you’re looking for an integrated solution, you’ll work with a single vendor to develop a platform that incorporates multiple HR functions. Frequently, these platforms are part of an enterprise-wide information system architecture that covers a variety of business functions, including a general ledger, customer relationship management, and logistics.

Option #2: “Best of Breed” Solution

A “Best-of-Breed” strategy acquires and deploys systems that offer the best possible capabilities in areas, such as payroll, recruiting, performance, onboarding, and more, and require an integration plan to “bolt together” each of these point solutions.

If a “Best of Breed” (BoB) solution is right for you, then you’ll consider multiple vendors and select the best applications for each functional area you’ve identified. In this case, you may find yourself working with one or more vendors to meet your HRIS needs. For example, you may find yourself employing a solution from one vendor, while a second handles your time and attendance issues, and a third is in charge of your payroll solutions. If you run a smaller business and lack the resources to purchase a single comprehensive solution, or you want to use technology selectively, this could work for you. However, whichever way you go, there are pros and cons.

Integrated vs. Best of Breed Solutions

Integrated solutions:

  • Feature a common interface “look and feel” across applications. This makes learning and transitions easier for users.
  • Use integrated data, technological infrastructure, and reduce the need to manage multiple technological architectures.
  • Offer greater ease of integrating data from multiple HR functions.
  • By only using one vendor, this lessens the complexity of vendor management.
  • Can be less costly per application to implement compared to BoB solutions.

On the negative side:

  • You have limited customization options. Due to the large scale and integrated nature of these solutions, they can be inordinately expensive to customize or maintain customizations when new versions are released.
  • You may not have the best solutions available in each functional area.
  • Upgrades can be challenging to handle, because of a possible domino effect: a change to one function may dramatically impact others.
  • You might be reluctant to introduce new features and upgrades, because of their complexity.

Best of Breed solutions:

  • Lets you develop a “best fit” solution for each functional area.
  • Provides quicker implementation: fewer employees are affected, because the system is simpler.
  • You’re not committed to a single vendor to meet all your needs.
  • In order to remain competitive, vendors need to be more responsive to your (user) needs.
  • You can purchase what you need in terms of functionality.

The cons of best of breed solutions include:

  • Difficulties integrating data across applications.
  • Each application poses a different interface. Your staff have to face increased learning curves.
  • Requires juggling management relationships with multiple vendors.
  • Different applications need to operate with each other, which, at times, can pose a challenge.

Delivering the Technology

Once you’ve chosen an integrated or best-of-breed solution, how will that technology be delivered? Three approaches are popular:

  1. Will you purchase and install hardware and software within your company and have your internal IT staff operate it? While this can be relatively time-consuming, in the past, it was the only approach available.
  2. In you decide on the hosted approach, you’ll purchase applications and have them installed, but they’ll be housed at your vendor’s site and will be supported by external IT staff.
  3. Software as a service (SaaS) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It’s sometimes referred to as “on-demand software.” When subscribing to SaaS, the software is developed and deployed remotely and is accessed via a web browser.
  4. Vendors may offer businesses access to the same software package (known as multitenancy). This term refers to a software architecture wherein a single instance of software runs on a server and serves multiple tenants. Systems designed in this manner are often referred to as shared. A tenant is a group of users who share a common access with specific privileges to the software. SaaS is not very attractive to organizations that already have invested heavily in HR technology, because their previous investments may not be salvageable. SaaS is also less attractive to firms looking for customized software, because these vendors offer multiple organizations the same software on a common platform and cannot customize the software to each organization’s individual needs.
  5. Both hosted and SaaS approaches can be effective for organizations that don’t have the resources or technical expertise to implement a large, integrated system. Too, many vendors are starting to market SaaS applications available to small and mid-size businesses that want to provide employees with HR services similar to those at larger competitors.

Want Help Choosing What’s Right for Your Business?

ASAP Payroll Services offers the HRIS solution AdvancedHR. It’s a fully-featured solution that offers a unique combination of employee communication and traditional workforce management, which enables managers and employees to easily access and update their information. With integrated applicant tracking, new hires can onboard by e-signing their I-9, W4, WH-4, and any company documents, including employee handbooks. AdvancedHR can also handle benefits administration and online benefit enrollment. It totally integrates with ASAP Payroll Service’s payroll system, Evolution Payroll, to become your “one-stop shop” for all of your human capital management needs.

For more information or to receive a quote on how ASAP Payroll Service’s Advanced HR and Evolution Payroll software can work for your business, contact  (317) 887-2727 or visit our website at: asappayroll.com.

Tracking the Health of Your Business Through a General Ledger

The General Ledger—How it Works
A general ledger account is an account or record that’s used to sort, store, and summarize your company’s transactions. It’s the lifeblood of your business and provides a report of how healthy it is.

General ledger categories include asset accounts, namely cash, accounts receivable (legally enforceable claims for payment held by a business for goods supplied and/or services rendered that customers/clients have ordered but have not paid for, generally in the form of invoices raised by a business and delivered to the customer for payment within an agreed timeframe); inventory investments (a component of the gross domestic product [GDP]. What’s produced in a certain country is eventually sold, but some of the goods produced in a given year may be sold in a subsequent year, rather than in the year they were produced); land, and equipment.

The general ledger is a master accounting document that provides a complete record of all the financial transactions of your business. It serves as a central repository for accounting data transferred from all subledgers.

Accounts arranged in a general ledger can be a grouping of as many as hundreds of accounts that are used to sort and store information from a company’s business transactions. They can be organized into balance sheet accounts, such as assets, liabilities, equity, and income statement accounts, which include revenue, expenses, gains, and losses; and the chart of accounts, a listing of general ledger accounts to which amounts can be posted. It’s a helpful tool for identifying the best account for recording a transaction. It includes balance sheet accounts, which report an organization’s financial position at the end of an accounting period; followed by income statement accounts, which report a summary of a company’s revenue, expenses, gains, losses, and resulting net income during a specific timeframe, such as year, quarter, or other specified time period.

In a nutshell, a general ledger helps you look at the bigger picture in terms of the financial health of your business. Accounts include assets (fixed and current), liabilities, revenue, expenses, gains, and losses.

Traditionally, in the past, accountants manually recorded financial transactions in a ledger, using the double-entry accounting method. However, with computers today, recording transactions has become easier. There’s no need to record and store the data in books by hand; business owners now use Excel® spreadsheets and other sophisticated accounting software.

Despite the advent of computers to track your business’s financial health, transactions still need to be recorded in a ledger. Accounting software can create financial reports, which are crucial for evaluating the health of your business.
Now that we’ve provided an overview of accounting, here’s a more detailed breakdown of how it works.

 

Double-entry Accounting
There are two primary types of accounting methods. Single-entry bookkeeping, where income and expense transactions are recorded in a cash register, compared to the double-entry system, which starts with a journal, followed by a ledger, a trial balance, and finally financial statements.

If you’re a solopreneur, the single-account method should work for you. However, the double-entry accounting method makes it easier to prepare financial statements and improve accountability. So, switching to the double-entry accounting method may be worth considering.

Regardless of which method you use for your business, general ledgers use the double entry accounting method, which means that an entry to one account requires an opposite entry to another account. Rephrased: every debit made on one account has a credit on another. Picture it as a positive canceling itself out in the negative column.
A debit is an accounting entry that results in either an increase in assets or a decrease in liabilities on a company’s balance sheet. A “credit” is the inverse—it’s an entry made on the right side of an account. It either increases equity, liability, or revenue accounts or decreases an asset or expense account.

Because credits and debits lead to the formation of an account that resembles the letter “T,” ledger accounts are also known as T-accounts; they’re called T-accounts, because the bookkeeping entries are laid out in such a way that resembles a T-shape and the account title appears just above the T. It’s an informal term for a set of financial records that use double-entry bookkeeping.

Journals

The term “journal” keeps a record of transactions; it isn’t a document that you log your personal life in. These transactions are first recorded before they’re transferred to ledgers. Ledgers look at the big picture in terms of the financial health of a business and serve as a master document, while a journal breaks down/analyzes the finer details of your business. And, comparable to a ledger, transactions are usually recorded on a daily basis and show a credit and a debit for each entry.

There are seven types of journals, the most common being sales, purchase, cash receipts, and cash payment. Below is a quick recap of each.

  • Sales Journal records credit sales. For example, customers (debtors) who buy goods on credit or account. It records the credit sale of merchandise only.
  • Purchase Journal records the credit purchase of merchandise, such as supplies and equipment. Since a purchase journal keeps track of merchandise purchased on credit, purchasing assets and other things on credit should not be recorded in a purchase journal; rather these entries should appear in a general journal.
  • Cash Receipts Journal records all cash inflow, such as cash for services rendered.
  • Cash Payments Journal records all cash outflows, also known as cash receipts, and is generally used in medium- and large-size businesses.

The Basic Accounting Equation

The purpose of double entry accounting is to make sure a basic accounting equation balances, meaning the relationship between assets, liabilities, and the owner’s equity of a business. It’s the foundation for the double-entry bookkeeping system. For each transaction, the total debits must equal the total credits.

If, at any time, the sum of debits for all accounts does not equal the sum of credits, the equation will not balance. Think of it like balancing your checkbook monthly.

Why Have a General Ledger?

You and your financial advisor need to decide what’s right for your small business when it comes to preparing a general ledger. While it’s not essential for a small business, here are compelling reasons why you should consider setting up a general ledger.

  • You’ll have an accurate record of all financial transactions.
  • It’ll help you compile a trial balance, so your books balance.
  • It makes filing tax returns easy, because you’ll have expenses and income in one place. No need to dump out a shoebox and sort through little pieces of paper.
  • It reports real revenue and expenses, which will help you stay on top of your spending.
  • You’ll be able to spot unusual transactions immediately and address them.
  • It helps you identify (and stop) fraud—something that’s important to all of us.
  • It’ll help you compile key financial statements, such as cash flow statements, income statements, and balance sheets, all which are crucial when evaluating your profitability, liquidity, and the overall financial health of your business.

Recap

To sum it up, a general ledger tracks all the financial transactions related to your business. If you’re new to managing a general ledger, you may find it a daunting process; however, it’s a valuable tool that provides a picture of where you stand with the finances of your business. Remember, you can’t run a successful business without knowing where you stand with it financially.

To help break things down, you need to understand the fundamental principles of double-entry accounting, the basic accounting equation, and how to transfer journal entries to the ledger.

Once you understand and start using the general ledger, you’ll realize how powerful a tool it is. It offers several compelling benefits for your business. Arguably, the most important is that it’s the foundation for creating financial statements that are critical for evaluating your financial affairs.

Now That You Have a General Ledger…the Next Step is Merging Your Payroll with Your Accounting Software

When you switch to accounting software, such as QuickBooks®, which automates your company’s financial functions and transactions with modules that include accounts payable, accounts receivable, payroll, billing, and the general ledger, you’ll find yourself entering fewer numbers, tracking fewer receipts, and spending less time keeping everything in line. Plus, when you use a payroll service, such as ASAP Payroll Service, you can either use the online version of QuickBooks® or the desktop version. The combination of QuickBooks® and a payroll service will enable you to focus on managing your business day-to-day. This will save you time by making sure your cash deposits are handled correctly.

When you choose a payroll service (such as ASAP Payroll Service) and an accounting package (such as QuickBooks), both will be able to “communicate” with each other. This frees you from making manual entries. And, integrating a payroll service with your accounting software is generally a straightforward process for businesses of all sizes.

Step One: Get everyone on the same page

Before moving your information between systems (accounting and payroll), you’ll need to let your payroll provider and your accounting software vendor know that you want to share your information. So, make sure you double-check access from each side of the equation before you start sharing information.

Step Two: Map things out

Next, depending on your system, this is where your payroll software, such as ASAP Payroll Service’s Evolution software, a SaaS-based payroll and tax management system, can provide features, flexibility, and best practices to handle nearly every type of payroll, regardless of complexity or uniqueness.

Whether it’s handling simple payroll for a small company or complex payroll for a large company with multiple locations, Evolution can handle nearly every type of payroll. It supports payroll entries from employers from anywhere in the world with internet access via Evolution’s proprietary SaaS-based system. It’s also easy to accommodate payroll and reconciliation for any company structure with Evolution’s Client, Company, and Organization Level setup.

Beyond paying employees, keeping up with ever-changing federal, state, and local payroll taxes can be a complex and time-consuming task, but with Evolution’s integrated Tax Management engine, you’ll have the peace of mind that your business will remain compliant. Simply look for the button inside the payroll system on the ASAP Payroll Service website. It’ll take you to QuickBooks®.

Then, at some point, you’ll need to communicate to your accounting system how to handle the information that comes in from your payroll service. Sometimes this will appear on the accounting software side, at other times, you’ll tell the payroll service how to export the data.

Step Three: Completing the process

This isn’t a difficult system to setup or explain. You simply copy large quantities of your data from one location and paste it into another.

Final Thoughts

Nearly every system available today is a straightforward process. If you choose another option, it can be very time-consuming—where you’ll find yourself downloading a file and then uploading it into your accounting system.
Remember, your accounting software is a good place to start with integration.

Demystifying Employee vs. Independent Contractor

An employee and independent contractor (self-employed) may do comparable work for your company; however, there are distinct differences between the two. Whether you employ one or both classifications, you need to clearly understand the legal distinctions between them.

An employee works exclusively for a single company and will be compensated on a salaried or hourly basis. Employees are subordinate to employer authority to a greater extent than independent contractors. This means that employees will have to adhere to company policies and requirements as a contractual obligation of their employment.

When you hire an individual whom you classify an employee, your company must withhold their income tax, Social Security, and Medicare from the wages you pay them. Plus, as an employee, they’re protected under employment and labor laws.

Employees are bound by the value statement of their employer and they receive supervision, work hours, and requirements from their employer. If the work that’s accomplished and how it’s directed to be done is identified, and certain other relevant aspects of a worker’s job are directed and controlled, then the company exercises financial control.

Such control encompasses:

  • The extent of the worker’s investment in the facilities or tools used in performing services.
  • The extent to which the worker makes his or her services available to the relevant market.
  • How the business pays the worker.
  • The extent to which the worker can realize a profit or incur loss.

If the services provided are a key activity of the business, this dictates the extent to which services performed by the worker are seen as a key aspect of the regular business of the company.

Distinguishing Between Employee and Contractor

How you, the employer, and the worker perceive the relationship is also important for determining worker status. Key topics, according to the IRS, include:

  • Written contracts describing the relationship the parties intend to create.
  • Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation, or sick pay.
  • The permanency of the relationship.
  • The extent to which services performed by the worker are a key aspect of the regular business of the company,
  • The extent to which the worker has unreimbursed business expenses.

Contrast this to a business owner or contractor who provides services to your and other businesses. In this case, they’re generally considered self-employed/independent contractors and must handle all of the above on their own and more.

Think of your company’s relationship with an independent contractor as business-to-business. Independent contractors bring specialized expertise to a project or task. As their client, you’re not responsible for providing them with training and they can be a great way to fill your business needs.

Most independent contractors are highly skilled. They generally demonstrate a distinct level of specialization in their industry, claiming they get work assignments because they offer far reaching skills that often require certification, special training, or education.

Independent contractors work with multiple clients on a per-project basis OR with one company for a specified period of time. They are paid an hourly wage or per project and are responsible for securing (on their own) almost every benefit allocated to full-time employees.

They’re responsible for performing the services summarized in a contract, known as a Scope of Work (SOW), which outlines and executes a project through specific tasks, activities, deliverables, and timelines.

While independent contractors have freedoms, such as not being confined to working an eight-hour day, prior to COVID-19, nearly one in 10 Americans was classified as an independent contractor. They are responsible for the work and hours they keep. However, there are tradeoffs. The work might not be as steady, independent contractors provide their services to more than one company, they can subcontract with others, and they need to be sufficiently disciplined to keep scrupulous records of their earnings, because no taxes are withheld and employment and labor laws don’t apply.

While there are pros and cons to employees vs. independent contractors, below is a checklist to help you, the employer, decide which status works best for your company:

  • Does your company control or have the right to control what the worker does and how the job is performed? This means complete control over work method, work product, and training.
    According to the IRS, under common-law rules, anyone who performs services for you is your employee, provided you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
  • Are the business aspects of the worker’s job controlled by the payer, such as does your company control the business aspects of the worker’s job, including how the worker is paid, whether expenses are reimbursed, and who provides their tools and supplies?
  • Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor. Also, factors that are relevant in one situation may not be relevant in another.
  • Look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, document each of the factors used to come up with the determination.
  • Is there a written contract in place or employee benefits, such as a pension plan, insurance, or vacation pay? Although a contract may state that the worker is an employee or an independent contractor, this isn’t sufficient to determine the worker’s status. The IRS is not required to follow a contract stating that the worker is an independent contractor responsible for paying his or her own self-employment tax. How the parties work together determines whether the worker is an employee or an independent contractor.
  • Is the relationship ongoing and is the work a key aspect of the business? If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or time period, this is generally considered evidence that the intent was to create an employer-employee relationship. The permanency of the relationship plays a key role.
  • Are the services provided a key element of the company? This determines the extent to which the individual is viewed as an employee or independent contractor contributing to the regular business of the company.

The Internal Revenue Service uses a right-to-control test to assess a business’ tax liability. If you’ve determined that the person you’re paying is an independent contractor, then you must have the contractor complete a Form W-9, Request for Taxpayer Identification Number and Certification. This form can be used to request the correct name and Taxpayer Identification Number (TIN) of the worker. The W-9 should be kept in your files for four years for future reference in case of any inquiries from the worker or the IRS.

Each state also has tests to determine a person’s status under workers’ compensation and unemployment insurance laws. The economic realities test used in most states makes it difficult to classify a worker as an independent contractor, because, in addition to the degree of control test, it considers the degree the worker is economically dependent upon the business. For a list of state labor offices’ contact information, go to the U.S. Department of Labor’s state workforce agenciesvisit disclaimer page.

To further help employers distinguish between employees and independent contractors, the chart below depicts differences:

Employment Laws Covered by specific federal and state employment and labor laws Not applicable/covered by employment and labor laws
Hiring Practice Potential employee completes an application that’s handled by Human Resources. Once applicant receives and accepts a job offer, employer asks for additional information about the employee, such as date of birth, marital status, and citizenship status. Potential contractor normally interacts with an individual or department that seeks certain services or tasks completed. Potential contractors might be asked to submit a proposal. Contractor enters into a contract, which includes a Statement of Work, with the legal or procurement section of the business.
Tax Documents Employee must provide employer with name, address, Social Security number, tax filing status, and number of exemptions on a W-4 Contractor provides name, address, Taxpayer Identification Number, and certification about back up withholdingvisit disclaimer page on a W-9
Payer’s Tax Reporting Requirements Employer reports all money paid to employee during the tax year on a W-2 Must report payments of $600 or more in a calendar year on a Form 1099
Reporting to Other Agencies Employer files reports for state and federal unemployment insurance. None
Value of Work or Contract New employee is paid either hourly or a salary. A contract covers payment for the for total amount. Can cover an hourly, daily, or weekly amount that ends on a specific date or a total amount to be paid in full when the job is completed.
When Paid Employee must be paid consistently based on a pay schedule, as identified by employer, unless schedule is formally changed. Pay periods can vary from one week to one month; however, federal and state laws require an employee be paid on the normal pay date or earlier if the paycheck is not negotiable on the normal pay date, which can occur on holidays. Upon receipt of an invoice/statement of services, Accounts Payable pays the contractor. The terms of the contract or Statement of Work dictate when payments are made, such as upon completion of a task or in periodic amounts. Most businesses do not pay contractors via payroll staff.

The IRS mandates knowing the rules related to when to classify an individual as an employee vs. an independent contractor. It can help employers determine the status of their workers by using form Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer’s Supplemental Tax Guide, also serves as an excellent resource.

Mistaking an Employee for an Independent Contractor

If an employee is classified an independent contractor with no sound basis for doing so, the employer is liable for employment taxes. Some employers who can provide a reasonable basis for not treating a worker as an employee may avoid paying employment taxes. For more information, go to irs.gov/Publication 1976, Section 530, Employment Tax Relief Requirements.

Another option is to check the Voluntary Classification Settlement Program (VCSP) at irs.gov; it offers certain eligible businesses the option to reclassify their workers as employees with partial relief from federal employment taxes.

Small Business and ACA Compliance

Defining Small Business

We’re all familiar with the term “small business.” Under this umbrella, the Small Business Administration (SBA) states there are 27 million small businesses in the U.S.; but, depending on who’s using the term, it has different meanings. As mentioned, the SBA defines “small business” as any actively operating company with 500 or less employees. Contrast this to how the Internal Revenue Service (IRS) defines the term in conjunction with the Affordable Care Act (ACA)— fewer than 50 full-time and full-time equivalent employees—though there are exceptions to this rule. Confused?

This confusion is compounded by employer layoffs in 2020 due to COVID-19. How do you, as an employer, determine whether it’s appropriate to lay-off your employees, keep up-to-date with state and local ordinances that change weekly, and figure out how to fund your next payroll cycle.

Then, there’s the question of how to juggle compliance with the ACA and learn the ramifications if you don’t. Once the economy becomes more stabilized and you think you’re out of the woods, you could be notified by the IRS that you’re subject to penalties for not remaining ACA-compliant during the pandemic. And, ACA penalties aren’t small.

Does Your Business Qualify as a Small Business?
For starters, there are two sets of rules that classify as a small business, as identified by the ACA and as outlined in the ACA section of the IRS website:

“…generally those with fewer than 50 full-time employees, including full-time equivalent employees.
If you have fewer than 50 employees but are a member of a group with a certain level of common or related ownership with 50 or more full-time employees, including full-time equivalent employees, then you’re subject to the rules for large employers.”

According to the ACA:

  • As a self-employed sole small business proprietor with no employees, you’re exempt from penalties, referred to as Employer Shared Responsibility Payment (ESRP), which falls under the ACA.
  • If you have approximately 50 employees, both part-time and full-time, and they meet this threshold, then the ACA applies to you. Note that “full-time equivalent” generally means your employees work 30 or more hours weekly. Plus, the hours your part-time employees work must be configured to determine the number of Full-Time Equivalent employees.
  • If you have a member-owned business, one that the members govern, and it has fewer than 50 employees, you’re exempt. However, if those employees are part of a larger group under common ownership, which, together employ 50 or more full-time equivalent employees, then your business is considered a large business and the ACA rules apply.
  • To report information regarding your employees’ health care coverage to the IRS, use forms 1094-C and 1095-C, irrespective of whether you offer coverage to your full-time employees or not.
  • Give your full-time employees a copy of Form 1095-C, the same information you’re reporting to the IRS.

Options and Responsibilities

If you fall under the classification of a small business, according to the ACA, here are your options and responsibilities:

  • You can purchase health and dental insurance through the Small Business Health Options Program (SHOP). It offers plans through an insurance company or with the assistance of a SHOP-registered agent or broker. The site provides a graphic that helps you work through the pros and cons of a SHOP plan and an HRA to determine which is right for your small business and your employees. Check out HealthCare.gov for more information.
  • In 2013, the IRS issued final regulations implementing the Additional Medicare Tax as added by the ACA. The Additional Medicare Tax applies to wages, railroad retirement (RRTA) compensation, and self-employment income over certain thresholds. Employers are responsible for withholding this tax in certain circumstances. The amount you will need to withhold is an additional 0.9 percent of employee wages or compensation when it exceeds $200,000 in a tax year.
  • Once your company offers health insurance, you are obliged to offer it to all eligible employees within 90 days of the start date of their employment.

Avoid Penalties

As an employer, you can face penalties if:

  • under 4980H(a), you fail to offer minimum essential coverage (MEC) to at least 95% of your full-time employees (and their dependents), and at least one of your full-time employees was certified, as allowed by the Premium Tax Credit (PTC).
  • under 4980H(b), you offer MEC to at least 95% of your full-time employees (and their dependents), but at least one of your full-time employees was certified as being allowed the PTC (because the coverage was unaffordable or did not provide minimum value, or the full-time employee was not offered coverage).
  • You need to be particularly diligent when completing the 1095C-form related to ACA Compliance, especially lines 14, 15, and 16. Lines 14 and 16 require you, as the employer, to select the most accurate “Indicator Code” that expresses the offer of coverage and subsequent safe harbor relief that was or was not made to the employee. This form needs to be submitted both to your employee and the IRS, because it ultimately determines noncompliance by the IRS and is used to calculate penalties that you, as an employer, may owe.

To further confuse matters, until recently, there were 10 choices that you needed to pick from among the Indicator Codes to complete Line 14. Recently, eight additional Indicator Codes have been added to Line 14, which further complicates things and makes it easier to make an error, which you would be held responsible for.

These eight new Indicator Codes were prompted as a result of the Trump administration’s expansion of Health Reimbursement Arrangements (HRAs). In 2019, the administration finalized new rules that let HRA’s that met certain conditions be considered for minimum essential and affordable coverage related to ACA compliance. Check for more information and guidance from the IRS on Indicator Codes and all aspects of the draft forms. Note that these new updates can compound the confusion related to what already exists for employers.

There are other practical issues related to COVID-19 that are expected to create problems for employers, as they try to keep compliant. An example is employers who furlough employees or reduce their hours may need to properly identify the change in status in the tracking process, and subsequently, in what is reported to the IRS. While some of these nuances existed before, they will be magnified as things keep evolving and changing, possibly increasing the chance of employers making errors. It’s important that you, as the employer, are prepared to handle this in order to remain compliant.

Remaining ACA Compliant

Keeping abreast of ACA-compliance issues can be a full-time job. For example:

  • Performing all legally required IRS and employee reporting.
  • Documenting that you offer your employees health insurance.
  • Accurately tracking payroll deductions.
  • Checking for employee eligibility.
  • Determining your employees’ affordability.

It’s critical that you know how to navigate through these stormy waters. Check out the compliance tool at business.USA.gov/healthcare for more information. Remember, non-compliance can result in penalties.

If you need help maneuvering through all this reporting, ASAP Payroll Service can help. We can assist with:

  • handling all legally required IRS and employee reporting.
  • tracking all employer-provided health care offers.
  • documenting employee health care options, including waiving offers.
  • bridging health care options to employee payroll deductions, resulting in easy maintenance.
  • handling scheduled status updates to monitor health care eligibility for new and variable-hour employees.
  • utilizing payroll data to track employee eligibility for health care offers going to ongoing employees.
  • gathering employee wage information and using it to determine affordability of health care offers for each full-time employee.
  • handling additional HR reporting, such as OSHA, EEO, and Veteran reporting, provided education/required education tracking, performance evaluation tracking, property tracking, document storage, and more.

The Importance of Tracking and Reporting
While these 2020 form changes were expected, they were still a surprise in terms of the extent they have been proposed in draft forms by the IRS. Plus, the pandemic has created problems for employers who are working on being compliant. For example, if you have furloughed employees or reduced their hours, you may need to properly identify their change in status in the tracking process, and subsequently, in what you report to the IRS. As an employer, if you lay-off employees and rehire them again when the economy picks back up, know that this, too, can have an impact on an employee’s status related to employee tracking. There are very specific rules related to rehiring and how you treat those employees, based on a timeframe. This references breaks in service and the 13-week rehire rule. While this rule has been in place prior to COVID-19, now it will be magnified during this ongoing pandemic, thus opening up the possibility of increased errors in reporting. Juggling all these requirements is challenging to say the least, but necessary to remain compliant.

Recap

As we head into the last quarter of 2020, to date, it’s been a year replete with employer challenges and is expected to continue through December. As an employer, you need to be smart and diligent about keeping apprised of any and all changes that occur, including changes to state and local ordinances; legislative opportunities, such as new SBA loans; and compliance changes, such as 2020 draft 1095-C forms. As an employer, rely on your service provider to help you navigate through these changes and remain compliant. Your service provider (hopefully, ASAP Payroll Service) can play a major role in keeping you on track and helping you avoid major penalties.

Making Employee Onboarding a Win-Win

While it’s imperative that you recruit the best candidates for positions within your company, screening, interviewing, and offering the job are only the start in terms of building a quality team. The onboarding process, which takes up to a year, assures that the new hire becomes a contributing member of the team and adapts to the work culture in the briefest, most efficient way, thus increasing their chances of acclimating to the new environment and feeling productive sooner.

The difference between orientation and onboarding is that orientation is a stage of onboarding, where new employees learn about the company and what’s expected of them in terms of their job responsibilities and reviewing the employee handbook. Orientation refers to paperwork and other routine tasks that must be completed.

Onboarding, on the other hand, is designed to build engagement from the initial contact until the employee becomes established within the organization. Onboarding acclimates the new employee to becoming a contributing member of the staff in the briefest time possible, while engaging the employee in enhancing their productivity and improving the company’s opportunity to retain that employee. Plus, depending on the company’s size, industry, and organizational culture, it may adapt or modify the onboarding process to best meet the new hire’s needs.

Why is Onboarding Important?

It’s critical to set the right tone starting on the first day of employment in order to engage the new hire in making a long-term investment. A solid onboarding process plays a significant role. It can help to capture the employee’s commitment within the first six months and avoid up to a 20% turnover during the first 45 days, which is costly to an organization. Direct replacement costs can be as high as 50%–60% of a departing employee’s annual salary, with the total costs associated with turnover ranging from 90%–200% of the employee’s salary.

Before and After Hiring

There are organizations that break up the onboarding process into pre- and post-employment. For example, prior to joining the company, a portal can be set up for the new employee. This helps acclimate them to the organization by way of learning its history and culture, reading articles, watching company videos, and completing necessary paperwork. It also includes social onboarding: helping the new hire acclimate to the team, social dynamics, and technical onboarding, all which address learning the new job. This affords them the opportunity to wind down responsibilities from their previous job and easily transition into the new position.

Investing in the New Hire

As mentioned earlier, the ongoing process of onboarding is an investment in the new hire becoming a productive team member as quickly as possible and learning the specific role they will play in achieving team or company goals. The rewards make it worth the investment, because onboarding equips new employees with the knowledge and skills they need to succeed at their job. They also need to learn what the company plans to provide in terms of management support, access to resources, or performance reviews.

It’s a Mutual Responsibility

Human resources or organizational development (HR/OD) professionals, instructional designers, trainers, managers, and the new employee all have a responsibility when it comes to onboarding:

  • HR generally sends the offer letter and makes sure that the new hire completes the necessary paperwork.
  • Depending on the size of the organization, HR or OD professionals create and deliver the general orientation session. Other organizations might have instructional designers and trainers handle this.
  • The employee’s direct manager will be responsible for going over the employee’s training plan: a plan that outlines what the new hire is expected to complete over a stated period of time. Each training plan pertains to a single company or learning environment and can be designed to meet one or more high-level learning objectives.
  • Managers should routinely check with their new employees and be available to answer questions and help them acclimate to the position, making sure their onboarding assignments have been completed.
  • In turn, it’s the new employee’s responsibility to ask questions, complete benefits paperwork, create necessary new user profiles, and complete all onboarding tasks and training assignments in a timely manner.

As stated earlier, hidden costs of replacing an employee, in terms of turnover, can be as much as 150% of the employee’s annual salary. This encompasses fees paid to recruiters, the cost of interviewing, and the dollars invested in training the new employee. These costs often show up in lower productivity and diminished morale among the remaining employees who are expected to do more and identify the special knowledge or experience the departing employee knew.
To better assure the new hire’s success:

  • Prepare a detailed outline of what’s expected in terms of their responsibilities to the company. If possible, share these expectations with the candidate during the interviewing process to establish clear communication and avoid any misunderstanding.
  • Make sure the new hire’s work area is set up and ready upon their arrival on the first day. Give the new hire their phone extension, make sure their computer is operational, and double-check that the workspace makes them feel welcome and is clutter free. If that workspace previously served as storage, make sure there are no hints of its previous role. The IT, Finance, and Customer Service departments may play a role in the onboarding process by setting up the new employee’s computer, their financial records, or being ready to train the new employee on customer service protocol.
  • Notify the employees within the department at least one day in advance by email or memo that the new employee will be joining the team. It’s imperative that the new hire be properly greeted by his or her fellow employees on the first day. This helps them feel welcome and avoids any embarrassment.
  • If time permits, invite the entire team to join the new hire for lunch on the first day. This fosters establishing socialization and gives the new employee an opportunity to more quickly feel comfortable with his or her new co-workers. Be sure to continue that good will for the first week or two by having members of the team take turns accompanying the new hire to lunch as a way to help him or her become more comfortable with the new environment.
  • Select a peer who will be working with the new hire and ask him or her to help orient and acclimate the new employee once onboard. Select a current employee who’s a good role model and has a positive attitude about the assignment they’ve been given.
  • To help make the first days of a new employee’s transition easier, ask current employees to share their experiences when they first joined the company. Was there anything they would have appreciated initially that would have made them feel more welcome? This feedback can be very valuable and doesn’t require the manager second guessing what a new hire would need at the outset.
  • Early on, it’s important for supervisors and managers to be part of the onboarding process. This helps set the right tone and conveys to the new hire that they’re respected, valued, and appreciated; it offers encouragement and helps to establish a solid rapport. This can significantly deter any dissatisfaction down the line with the immediate manager or supervisor. After a reasonable time, managers should routinely offer support and encouragement, review the employee’s progress, and provide feedback.

Onboarding sets the tone for the relationship between engaged employees and the company’s success in terms of profitability, safety, turnover, absenteeism, product quality, and customer satisfaction. Successful onboarding can boost employee engagement and morale. This includes the company’s commitment to professional growth or management acknowledging the employee’s skills and talent.

When Onboarding Programs Fall Short

Onboarding programs typically fail due to insufficient planning, time, and resources, according to the Association for Planning and Development. Other not-so-obvious reasons can make a difference between a successful and unsuccessful outcome, including:

  • Failure to match what’s perceived in the onboarding process and reality
  • Lack of employee engagement with the onboarding program
  • No compelling business case for the onboarding program
  • The employee misfits with the company
  • Ignoring diverse needs, metrics, and accountability
  • Having a “do-it-yourself” mentality, where no one assumes responsibility or ownership for onboarding
  • Programs that only focus on employee benefits
  • Managers’ unavailability, lack of involvement, and lack of guidance
  • Information overload at a fast pace
  • Misconstruing onboarding as a checklist or carving out time to complete orientation paperwork
  • Skipping defining and discussing company expectations, and delaying explanations about how the employee will contribute to the business
  • Assuming new employees will understand how their roles fit within the organization without providing detailed information
  • Taking for granted that unwritten rules are self-evident
  • Believing there’s no need for a full agenda of activities and events that the employee is expected to meet, including being introduced to key people
  • Waiting to explain how performance will be evaluated only at review times
  • Expecting employees to perform their role in the department/company without enough time for them to develop a basic level of role mastery

A benefit to onboarding is that it affords work teams the opportunity to reinvent themselves and break down barriers. It can provide a valuable opportunity to see the organization through the new hire’s eyes and learn/benefit from their perspective.

Successfully onboarding a new employee requires clear, consistent communication throughout the process. Research shows that new employees’ value clear, consistent communication from their new organization. Knowing when and where to show up on the first day, what to expect upon arrival, knowing whom they will be working with, and what their role will consist of, are important components of a good onboarding experience. Welcome aboard!

Maximizing Your Human Capital Management

Human Capital Management (HCM) transforms the traditional administrative functions of human resources (HR) departments (recruiting, training, payroll, compensation, and performance management) into opportunities to drive engagement, productivity, and business value.

It’s an organization’s comprehensive set of practices used to hire, orient, train, and retain employees (as an intangible asset) through strategic and tactical practices, processes, and applications to maximize business value, which should be focused on organizational need to provide specific competencies.

Strategic and tactical competencies may include:

Administrative Support

  • Personnel, benefits, payroll, and rules and procedures administration
  • Employee self-service portal
  • Employee information management
  • Employee service center

Strategic and Tactical Support

  • Organization visualization
  • Workforce planning and contingent workforce management
  • Recruitment and hiring
  • Onboarding
  • Compensation planning
  • Competency, performance, and time and expense management
  • Workflow
  • Education and training
  • Reporting and analytics

 

Why Value HCM?
Employees spend considerable time each day contributing to the success of your organization. They can make or break the organization. Therefore, it’s essential to acquire and retain high-performing employees.

Human resource professionals are responsible for creating and implementing ways to hire, orient, train, motivate, and engage employees. HCM plays a key role in helping your organization’s human resources department increase the overall productivity and happiness of employees. And, when employees are happy and feel productive, they work harder and care more about the success of the organization.

What Are Some Challenges HCM Can Pose?

Organizations struggling with poor performance management, non-strategic workforce planning, weak usage of workforce analytics, mismanagement of organizational change, and the high cost of failing to solve challenges need to be driven by an overall purpose—fusing together strategic and tactical approaches.0

HCM needs to ensure that your organization is best prepared to anticipate challenges and quickly adapt to them.

While HR professionals may agree that strong workforce analytics are important to an organization, some fall short by not using meaningful metrics, such as Quality of Movement and Quality of Attrition. Workforce analytics involve identifying the current and anticipated future supply of labor and skills; recognizing what you need now and into the future in terms of labor, skills, and naming competencies (demand analysis); then identifying gaps between current and future supply and demand.

Mismanaging organizational change is another shortcoming. It’s more important for HR to be proactive, rather than reactive, to avoid falling behind or failing to keep pace with sudden changes. Poorly handled change management causes employees’ frustration, discomfort, disengagement, and a hasty search to reconnect with other, more meaningful frameworks in their lives. A fast-growing company can ill-afford the halting and even paralyzing effects of poorly-managed change.

Change management incorporates the organizational tools that can be utilized to help individuals make successful personal transitions, resulting in the adoption and realization of change. It’s the process, tools, and techniques used to manage the people side of change to achieve required business outcomes. It is the systematic management of employee engagement and adoption when the organization changes—in other words, how the work will be done.

There’s a high cost to unsolved challenges. By failing to identify them early, HCM is prone to gaps between its current leadership and human capital capabilities, and the leadership and capabilities required to reach future organizational goals.

Weak change management has its ramifications. Today, more revenue than ever is spent on organizational change. With such high stakes, organizations cannot afford to fail. Enormous investments are made each year related to large scale, complex business and health care changes, such as Enterprise Resource Implementations (ERP) to new patient care models, mergers, and acquisitions. Sadly, though, the statistics around unsuccessful implementation remain high. Approximately 70% of business and health care initiatives still fall short of achieving what has been promised on time and to spec.

Such failed implementation occurs for reasons such as organizations not applying the same business-discipline when managing the human elements of change as they prepare the timeline, budget, and technical objectives of a project. Put another way, weak or poor change management exists. To get the business results and return-on-investment you identified as your goal, remain diligent with the process, rigor, and discipline that surrounds the people side of implementing change.

Weak Change Management—the Pitfalls

  • Implementing change requires sponsorship. It’s the most critical success factor to ensure a fast, successful launch of any type of business change. It’s important to not only attempt change, but to actually carry it out; otherwise, change is destined for failure.
  • Don’t let activity seduce you. Activity (referred to as busywork) doesn’t always mean that things are on track. Change management is not about keeping busy; it’s about the discipline of focusing on the right actions at the right time.
  • Change Management needs to seamlessly blend with Project Management at the start of the project.
  • Change doesn’t occur in a vacuum. It should be implemented in a climate that’s based on what’s currently going on, in conjunction with perceptions of past experiences.
  • Don’t confuse a communications plan with an implementation plan. An implementation plan clearly identifies the responsible groups that will be completing the major tasks for each recommendation; whereas, a communication plan exclusively addresses communication expectations among various stakeholders.
  • Tools and checklists aren’t the be all-end all. Principles need to drive/guide change, not simply complete checklists and templates.

Be Aware of Failure…Learn From It!

  • When an organization implements a weak change management process, money in the form of both short- and long-term direct and indirect costs to the organization are affected. When the business’s objectives haven’t been achieved, the short-term, direct costs are somewhat obvious. Wasted resources include money, time, and people. And, long-term, direct costs, while more subtle, encompass low morale, lack of confidence in leadership and resistance to change. Based on these factors, the next round of changes is less likely to launch.

How to Use Change Management to Win

  • How can the problem be fixed? Employ a structured change management model that’s not a lock-step protocol (lose adherence to and emulation of another’s actions). The goal of change management shouldn’t be “to do” a process. Instead, it’s to have core principles guide you on what you should be doing, given the day-to-day realities and challenges of the project. There’s no time to do things that fail to drive you toward system optimization.
  • Leaders must equally understand how change is implemented and to what gets implemented.
  • People need to be enrolled in the change that’s being implemented. When the people side is mismanaged through poor change management, it becomes a costly decision. Is that decision worth taking the chance?

Using HCM Software
HCM software refers to applications an organization can use to track, manage, and maintain its workforce. It’s very effective at integrating an organization’s HCM applications into one user-friendly platform and the software may be installed locally or through an online subscription service.

HCM software can help with:

  • Recruiting/tracking applicants
  • Onboarding forms
  • Employee profiles, performance reviews, history
  • Integrating with payroll, tax processing, and benefits administration systems
  • Employee self-service
  • Events dashboard
  • Report writing
  • Access 24/7 from anywhere
  • Secure data encryption

Implementing cloud-based HCM software saves time. Benefits include:

  • Easy updates and added new features.
  • Fewer internal technology and server resources.
  • Maintenance even when organizational hardware changes.
  • Reduced human errors that can occur when inputting data into multiple HR systems.

HCM software functions are generally organized as follows:

  • Core HR, includes payroll, benefits administration, onboarding, compliance management, and maintenance of employee data.
  • Talent management—the collective term for recruiting, developing, and retaining employees. Talent management suites consist of distinct, yet integrated modules for recruitment, performance management, compensation management, learning, and succession planning.
  • Workforce management—set of functions to deploy employees with the necessary skills for particular regions, departments, or projects. Includes time- and attendance-management, workforce planning, labor scheduling, and budgeting.
  • Service delivery, such as HR help desks, intranet portals, employee self-service, and manager self-service.

HCM suites also typically have technologies that cut across functional areas, notably analytics, social media, collaboration, and employee engagement. Many also allow mobile access to HR data and applications, especially self-service features.

In terms of technology, HCM and human resource management system (HRMS) software features are blending, blurring the function of each. The terms may soon become interchangeable; many software vendors tend to confuse or intermingle them.

Incorporate both cloud computing, databases, and other elements to handle workforce management, and include most elements found in a standard HRIS system.

HCM systems include:

  • HRIS capabilities and features
  • Employee performance and goal tracking
  • Onboarding
  • Analytics
  • Position control and salary planning
  • Access to company databases, policies and procedures, documentation, and data
  • Global capabilities, including multi-lingual, multi-currency, and country-specific formatting

And, HRMS products include:

  • Features and capabilities offered in both HRIS and HCM systems
  • Time and labor management (TLM)

HCM continues to transform HR, as technology-driven business models take center stage. Automating repetitive HR tasks and technologies, such as artificial intelligence (AI) and machine learning (ML), will allow HR professionals to expend less time addressing routine employee questions and more time engaging with employees and candidates.
Ultimately, whether you’re looking to outsource your entire payroll and HR function, handoff some components, such as tax filing and COBRA administration, or prefer to do it all in-house, ASAP Payroll Service has a solution for you.

Taking on Union Workers?

Collective Bargaining

A controversial Supreme Court ruling was issued in late June 2018 stating government employees who elect to opt out of joining a labor union aren’t obligated to help fund collective bargaining.

This means that government workers aren’t required to finance union activity; forcing them to do so violates the First Amendment, as it requires payments to unions that negotiate with the government and forces workers to endorse political messages that could disagree with their beliefs. In contrast is the belief that government employees who choose not to join a union are entitled to refunds of their dues spent on political activities, such as promotional advertising that supports a political candidate.

What’s Involved with Hiring Union Workers?

Before taking on a project that uses union employees, research the union’s requirements. The local union’s business manager can assist you with:

  • What are the effective dates for payment and dues?
  • How and when will union workers get paid?
  • Are there any rate changes within the union?

Tracking union payroll can keep contractors up at night. Meticulous records need to be kept. Errors, such as incomplete reporting, late payments, and delayed distribution of paychecks, can result in expensive fines, lost contracts, or being removed from a union. The outcome can seriously strain HR and payroll departments when it comes to deductions that have to be tracked on union workers.

Depending on the union, either online submission or check deposits are required. Keep track of payment dates made to the union and your union workers. If you miss a deadline, you can be charged for each hour a union employee’s paycheck is past due.

And follow the same protocol when working outside your local union’s jurisdiction, as you could be responsible for a different set of wage, fringe, and deduction requirements and rates.
HR departments not familiar with union regulations may be surprised to learn how this affects members who work in certain areas of a business. For example, unions need to closely track workers’ time to make sure their employees don’t work more hours than contracted or their hours worked align with their schedules.
When processing union workers’ payroll, also keep in mind that union deductions are handled differently from non-union employees. A predetermined portion of each union worker’s paycheck needs to be set aside for union dues. If your business employs union and non-union workers, this can be challenging to track.
ASAP Payroll Service can simplify union payroll processing, despite it varying, based on each job and contractor. While there’s no universal answer that streamlines the process, you can reduce stress related to reporting by accurately tracking and recording, or by investing in a construction-specific payroll system (for example, ASAP Payroll Service) that will do it for you. ASAP has software that automates deductions related to union, open, and agency shop agreements between employers and organized labor unions, so that proper deductions are always handled on time and in full. Tracking time and attendance or mobile punching functionality can simplify the process, so workers don’t have to clock in from outside a building or geographic area designated by the employer.

Union, Agency, and Open Shops

As mentioned earlier, there are union, agency, and open shops. Closed shops aren’t included here, because they’re prohibited according to national law (the Taft-Hartley Act). In a union shop, it’s not mandatory for employees to join a union as a condition of being hired; however, they’re required to join within a specified amount of time, generally after 30 days. Technically, though, employers aren’t allowed to fire employees who refuse to join the union, provided those employees pay union fees and dues.

In an agency shop, employees must pay union fees and dues; however, they’re not required to participate as members. And, with an open shop, employees don’t have to join a union or pay dues and fees. Generally, open shops are found in right-to-work states where laws prohibit both union and agency shop agreements.

When dealing with these different kinds of shops, remember that, if your payroll solution automates calculations, this reduces human-error and saves you from getting bogged down with manual processing and correcting errors. ASAP Payroll Service’s time and attendance software can track union employees’ hours worked, vacation time taken, and can gather said data for purposes of creating quick and accurate reports. Each is tracked through Evolution Advanced HR, one of the top HCM systems on the market.

Processing Payroll
ASAP can help you process payroll across collective-bargaining union contracts and maintain accurate week-to-week payroll. We track different pay rates, shift differentials, deductions, and overtime rules. If you’re looking for a more audit-proof, scalable solution to process payroll across collective-bargaining employees, we can also help.
ASAP customizes differential rules; if the employer chooses to offer shift differential pay (extra compensation for employees who work less preferred shifts, such as evening or night), rather than make manual adjustments to employees’ paychecks each pay period, union employers can benefit from ASAP Payroll Service’s technology that records and runs shift differential rules and automatically makes adjustments to pay statements. Because shift differential rules and rates can vary among different bargaining units, our software can customize and run these rules according to each bargaining unit.

Tracking Collective Bargaining Agreements
Accrued time off, sick pay, and other employer-specific types of leave may require different rules based on collective bargaining agreements. Variations in the maximum time an employee earns, based on the union contract, might also need to be addressed. For example, maximum time, tenure changes, waiting periods, and how often the time needs to be processed. ASAP Payroll Service can monitor these through its payroll or time-keeping software. In addition, enhanced tenure changes can be tracked. We also offer mobile tracking through an app that can “geo tag” employees’ locations.
Akin to shift differentials, an employer can customize accrual calculation profiles that can then be applied separately to each collective-bargaining group. And, in terms of audits or grievances, employers with automated accrual systems can rapidly validate or amend accrual calculation disputes.
ASAP Payroll Service also uses one of the top payroll products on the market, Evolution Advanced HR. It’s a dynamic payroll, HR, and tax management system developed by payroll and HR service bureau veterans for the Human Capital Management (HCM) industry. It’s designed to reduce payroll errors. Check out the Human Capital Management page on our website: asappayroll.com.

Why Background Checks?

You’ve found a job candidate whom you think is perfect for the position you’re filling. However, hiring employees is a risky proposition. You might be bringing aboard underqualified candidates who could damage your brand’s reputation, or risk liabilities that you assume for that individual’s behavior once they’re on your payroll. Conducting employee background checks can help to minimize these risks, because they can uncover inaccuracies on candidates’ resumes, identify a history of bad behavior, or spotlight candidates who could put your company at risk for legal violations, such as disclosing a candidate’s criminal record, education, employment history, civil records, references, and more.

The benefits of conducting background checks include:

  • Increased confidence in hiring high-caliber candidates.
  • Seeing reduced employee turnover (along with related expenses).
  • Limiting exposure to claims of negligent hiring practices.

A background check is often a final step before hiring to help ensure you’re making a sound decision and protecting you (the employer) from these kinds of potential risks. For many employers, it’s a reliable way to verify claims job seekers make during the hiring process.

Human resources managers want to ensure job candidates are telling the truth about their past. Also, federal and state laws require background checks be conducted for certain jobs. And, background checks help ensure that applicants can do what they claim through employment and education verification and confirm they’re not wanted by the international authorities.

Overall, background checks help protect your company, your employees, and your clients.

Types of Background Checks
Common types of background checks include checking for criminal records, work-status validation, and reviews of social media accounts. You may also ask the candidate to take a drug test, a physical evaluation, or inquire about additional financial information (such as bankruptcies).

Criminal History Check

Arrests show on background checks, depending on the state. Some state laws prohibit employers from asking a candidate about arrest records or using them to make employment-related decisions. However, because arrests are not proof of guilt, they’re unreliable and can be considered unfair when used as a barrier to employment.

Nationwide, 35 states and over 150 cities and counties have adopted what is widely known as “ban the box” laws so that employers consider a job candidate’s qualifications first on an application—without the stigma of the candidate having a conviction or arrest record.

You’ll also need to determine how thorough a background check you want conducted. Fingerprint background checks are an option; however, traditional background checks that confirm names, birthdates, and Social Security numbers, are equally as thorough.

Social Media Screenings

Social media background checks are another option. They can reveal additional information about a potential candidate, such as how they represent themselves online. A social media background check would involve reviewing a candidate’s social media profiles, and it could help to determine whether the candidate would be a good cultural fit within your organization. However, keep in mind that social media only presents one aspect of a candidate’s background and should be seen as offering some valuable insights.

Be Aware of Discrimination
Sometimes it’s within an employer’s legal limits not to hire or to fire a candidate or current employee, because of information found in their background. However, it’s illegal when the employer has different background requirements, depending on the candidate’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, an employer who rejects applicants of one ethnicity who have criminal records, but not other applicants with the same criminal history, irrespective of whether or not the information was disclosed in a background report.
Even if the employer treated the candidate equally, as everyone else, using background information can still be considered illegal discrimination. For example, employers should avoid using policies or practices that exclude people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or other protected characteristic, and doesn’t accurately predict who will be a responsible, reliable, or safe employee. Legally speaking, the policy or practice has what’s considered a “disparate impact,” which refers to practices in employment, etc., that adversely affect one group of people of a protected characteristic more than another, even though rules applied by employers are formally neutral and are not “job related and consistent with business necessity,” irrespective of whether or not the information was in a background report.

FRCA and EEOC

As the employer, become familiar with the laws and guidelines that dictate what you can do with the information you obtain from a background check. This is where you’ll want to rely on the Fair Credit Reporting Act (FCRA), enacted in 1971, to ensure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy. This act protects the subject of a report by putting limits on what consumer reporting agencies can reveal. You’ll also want to refer to the Equal Employment Opportunity Commission (EEOC) (eeoc.gov), which states that it is unlawful for employers to implement a screening policy that disproportionately affects minorities, unless there’s a valid business reason to have that policy in place.

Then, too, it’s important that you also clearly communicate to the job candidate what a background investigation involves. Compliance with FCRA regulations requires you gain the consent of the candidate to run an employment background check. The candidate needs to know which screens will be run when being presented with and signing a clear, concise form giving authorization to the potential employer to run the background check. For example, the candidate could have a similar name or other identifying information as that of another individual. This poses a problem for the candidate. Then, too, the credit reporting bureaus could have erroneously reported the candidate’s status. The candidate’s identity could have been stolen and used by another. If information is amiss, the potential employer is required to send a pre-adverse action notification to the candidate informing him or her of the findings.

The job candidate has rights, too. The FCRA states that the candidate will have the opportunity to dispute any inaccurate information found on their records. First, as a hiring manager, you need to assure the candidate that the job offer will not be rescinded immediately, based on background findings. However, if the candidate can’t explain such findings, you, as the employer, can proceed with your decision not to hire. But before taking this action, it’s wise to seek legal counsel to protect against any exposure to litigation or violations of state or federal law.

Finally, be sure to dispose of findings and records related to the background search. According to the Fair and Accurate Credit Transactions Act (FACTA), as the employer, you are required to properly dispose of the findings of background reports and records to guard against unauthorized access to or use of the information.