What is Statutory Compliance in Payroll?
A statutory compliance check is a routine process that payroll professionals use to ensure their company’s payroll and HR systems are compliant with all applicable federal and state employment laws and regulations.
One of the main purposes of a statutory compliance check is to ensure that employees are being paid correctly and on time, without violating any laws or regulations. This is a very important function of a payroll department, as it can prevent serious issues from arising in the future.
Top 10 Benefits of a Compliance Check:
- 1. Reduced risk of non-compliance with applicable laws/regulations.
- 2. Prevented interruptions to business operations due to non-compliance issues.
- 3. Streamlined processes to prevent future issues from occurring.
- 4. Improved employee morale as payroll issues is taken care of quickly and transparently.
- 5. Increased employee retention as employees has a higher level of trust in the organization and their managers.
- 6. Protection of company assets and reputation in the event of a legal issue.
- 7. Increased transparency of process and increased trust between management and employees.
- 8. Decreased time spent by management on non-core activities, allowing more time for the growth and profitability of the business.
- 9. Reduced cost of compliance activities, which can be quite costly without proper planning and control.
- 10. Minimized potential fines for non-compliance.
The main purpose of a compliance check is to help ensure that your company's payroll and HR systems comply with all applicable federal and state employment laws and regulations.
How Compliance Checks are done?
The criteria for evaluating whether a system is considered compliant is defined by both state and federal laws. Not all states are uniform in the way this is determined, however certain criteria are generally considered acceptable across most states:
- Data Security: To prevent unauthorized access or use of data, compliance with security protocols should be assessed.
- Employee Records: To verify proper maintenance of employee records to ensure compliance with state recordkeeping requirements.
- E-Payroll Services: To ensure all electronic transactions are fully compliant with applicable federal Electronic Fund Transfer Act (EFTA) guidelines
- Tax Payments: To determine if tax payments have been made properly by state and local tax laws.
- Time and Attendance Systems: To ensure that employee time and attendance records are properly recorded and maintained.
- Workers' Compensation: To determine whether workers' compensation claims have been filed properly to comply with state law requirements.
- Hiring Practices: To determine whether hiring practices comply with federal and state law requirements, including Title VII of the Civil Rights Act of 1964 and the Equal Pay Act.
Conclusion:
Compliance checks are a necessary part of maintaining an effective human resources department within your organization. Not only can they help protect against potential legal issues down the road, but they also help increase efficiency and productivity by allowing your management team to focus on other important matters without worrying about compliance issues.