Cutting Down On Payroll Mistakes

May 16 2014 - Compensation, Meal and Rest Break, Minimum Wage - Brad Sterling

Employers keep an eye on payroll because it’s a significant operating cost, but employers may not pay as much attention to actual payroll practices.

That could be a big mistake:

  • More than 50 percent of a human resource department’s time is spent processing employee information and answering questions (Forrester Research);
  • Payroll clerical errors and poor recordkeeping average nearly 1.2 percent of total payroll costs, according to one report by Nucleus Research; and
  • On average, employers experienced a 0.72 percent “payroll inflation rate” stemming from overstated worker hours.

California employers must keep accurate, up-to-date records of actual hours worked, including meal breaks and amounts paid for those hours worked, and must maintain payroll and timekeeping records.
Employers can maximize payroll efficiency and minimize payroll errors by taking simple steps, such as:

  • Avoiding manual calculations and processes;
  • Staying current with new payroll technologies and best practices;
  • Processing payroll in a timely manner and enforcing payroll deadlines (submission of time records and expense sheets, etc.) at all levels: employees, managers and departments;
  • Relying on expert information relating to tax principles and wage-and-hour laws;
  • Instituting controls to monitor accuracy of payroll and timekeeping; and
  • Regularly auditing payroll practices.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

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