The payroll landscape is in flux in the U.S., and not just because FinTech is reshaping the way employees get paid. Regulators, especially at the state level, are forcing companies to change their payroll software and strategies.
Even small tweaks in labor laws can lead to significant disruptions in the enterprise. Research from The Workforce Institute at Kronos released last month found that companies spend as much as $100,000 every time payroll and labor regulation changes across federal, state and local level authorities. From changing minimum wages to paid time off rules, to ongoing regulations impacting payroll cards, companies have to stay on their toes to remain compliant.
On top of following the rules, companies are also being forced to examine the way their employees want to be paid. In celebration of National Payroll Week last week, the American Payroll Association released the latest results from its yearly “Getting Paid in America” report.
According to researchers, employees have control over how their employers compensate them, and they should be diligent about their tax withholdings not only for compliance purposes, but to ensure they receive funds the way they want.
Surprisingly, the vast majority — nearly 94 percent — of survey respondents said they receive their paychecks via direct deposit. Coming in at a distant second is the paper paycheck, with only 4.3 percent of employees reporting they receive payroll this way.
Even less common are payroll cards and prepaid cards, which, combined, amount to less than 2 percent of payroll vehicles.
Nearly 40 percent of the nearly 35,000 professionals surveyed by the American Payroll Association (APA) said it would be “very difficult” to meet their current financial obligations if their paychecks were to be delayed by a week, with nearly 34 percent adding that it would be “somewhat difficult.”
Survey respondents also showed a clear prioritization of higher wages over better health benefits when it came to work compensation, with nearly two-thirds saying higher wages are more important than better health benefits. It’s an interesting result, considering the current legislation addressing healthcare reform.
Analysis by Paychex published last month identified healthcare reform as one of the top five issues impacting payroll in the U.S. today. According to Paychex, with ongoing uncertainty at the federal level over the future of the Affordable Care Act (ACA), state-level legislators have initiated efforts to either add flexibility to ACA compliance or to preserve some elements of the ACA law in the event of a full repeal, all making an impact on labor laws and how the enterprise compensates employees and extends health benefits to its workers.
Still, health insurance remains most important to U.S. workers, cited by more than 42 percent of survey respondents. While the U.S. workforce will surely be watching these changes, the APA’s survey suggests that professionals are less concerned with healthcare changes at their work as they are with getting paid as much as possible.
Luckily, most professionals surveyed said they were “very certain” that withholdings and the net amount of their paychecks were correct each payday (nearly 60 percent reported this certainty). Still, about 27 percent said they were only “somewhat certain,” while nearly 10 percent said they were either not very, or not at all, certain of the accuracy of their paychecks.
The data reflects earlier research, again, by The Workforce Institute at Kronos, which highlighted the confusing nature of information found on pay stubs. The report, published in March, found that 54 percent of Americans have encountered at least one problem with their paycheck in the last year, with more than a quarter saying the issue was that they were paid too little. Further, 15 percent said they were paid late (a frightening scenario considering the APA’s latest research). Nearly two-thirds told The Workforce Institute that their pay stubs were difficult to read.
Ensuring accurate paychecks — which includes accurate tax withholdings — is critical to meeting worker demands for getting paid as much as possible. While sentiment was split nearly 50-50, slightly more professionals surveyed by the APA found that they would prefer to receive their tax refund as added wages tacked on to their paychecks, as opposed to receiving one lump sum at tax return time (nearly a tenth said they didn’t know they had the option).
Most respondents (81.24 percent) said they believe the federal minimum wage should increase, another revealing sentiment as more state-level legislators take on this effort. And while the federal minimum wage currently stands at $7.25 an hour, more than a quarter believed it was $8.50 an hour, which could suggest a need for employee education on payroll legislation and their options for receiving their wages as well as tax returns.