The Basics: What is a Payroll Manager?

It seems simple enough. A payroll manager is the person in charge of maintaining a company’s payroll system and ensuring that all employees get the proper amount of pay and leave time. However, payroll management is not so easy. Depending on your company, there can be great complexity in the calculation of leave and other benefits, or the administration of overtime and work rules. All of this must be done, sometimes in rapidly, so that a payroll is distributed to employees accurately and on time. If payrolls are wrong or late there can be dire financial or legal consequences.

Being a payroll manager is often a thankless job. Your primary responsibility is to make sure things don't go wrong. No one pats you on the back when things go right. Finally, you must remain vigilent monitoring changing work, benefit and labor rules to make sure your employees are being paid properly, and that no one can come back later and sue your company with the claim of being shortchanged on a paycheck. 

The duties of a payroll manager seem straightforward enough. But there are nuances that create challenges.

Maybe you've thought timesheet fraud was a victimless crime. Think again.

For all we spent and committed to the Iraq war -

• 1.5 million soldiers deployed over eight years
• Nearly 4,500 dead
• 32,000 wounded
• More than 300,000 with post traumatic stress and brain injuries
• More than 3 Trillion plus dollars on equipment, materials, and
• An ever-growing price tag in the billions to be spent providing care for soliders' permanent disabilities over the remainder of their lives

The stakes were about as high as they get.

The story starts with ISIS (The Islamic State), a terrorist group so heinous that they've been DISAVOWED by Al-Qaeda, the folks who brought us the Twin Towers and Pentagon attacks.

Federal Labor Standards Act compliance has been a concern of employers since the Act was passed in 1938. But labor rules compliance didn't begin with FLSA compliance. The history of employee time tracking predates the Revolutionary War.

An employee forgets to properly log his sick time for when he was out on Monday. Because he’s in a rush on Friday he submits a timesheet that incorrectly says he worked on Monday. His supervisor is busy and signs the time card without checking. The time card information goes to payroll and gets processed. The employee gets a paycheck the next week showing a vacation balance that's 8 hours too high, and 8 hours of regular time he did not work. 

Companies Lose Money, Time and Productivity

Employee timesheet errors are rampant in some organizations. They can happen when employees take time off but code it as jury rather than vacation. They might receive a pay differential when they work in another cost center but fail to code their hours with the right cost center number. Employees can accidentally under report work hours, or when their supervisors are not paying attention, over-report work time. Once you process these errant hours and pay employees, you now must correct these mistakes and any additional errors they create.

How much does it cost to correct pay data errors? A lot.

First, all of these errors will create the need for FICA corrections, and in some cases you will need to file IRS Form F941x which requires detailed explanations of every correction. If your FICA underpayment is greater than or equal to 2% of your total FICA obligation, you will owe penalties and interest if you do not correct errors and make these adjustment payments with your next quarterly return. 

Another area where time card errors uncorrected will hurt is for hourly worker defined contribution amounts.  These are calculated based upon hours worked.  Any errors not fixed by year end will be even more expensive to correct. 

All of these errors cause even more damage to your business, not only rippling through an employee's entire paycheck, but infecting your accounting systems, accounting costs, billable hours and invoices. All of these errors need to fixed.

A new year has begun, and it's time to look at some of your business practices. Are you still using paper timesheets? If yes, then you are probably experiencing some of these problems:

Problem #1: Clerical errors

You spend a lot of time correcting errors.

Using paper timesheets means someone has to read everyone's handwriting, and has to enter numbers from a piece of paper to a computer, or hopefully not a paper ledger. Those errors can cost you time and money in reconciling with employees. Those errors can also cause you legal problems. There is a way to take care of all those errors.