Paying the Employee

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					 Paying the Employee
Payroll Source
Review Course Spring 2011

                Presented by:
                Mary Kazmierczak, CPP
Chapter 5-- Objectives
• Pay Frequency
• Payment on Termination
• Payment Methods
    Cash or Check
    Direct Deposit (EFT)
    Electronic Paycards
    – Branded vs. Non-branded
•   Pay Statements
•   Unclaimed Paychecks ( Escheatment)
•   Wages owed deceased Employees
•   Extra Pay Periods (53rd pay period)
Certification is based on Federal not State Laws
Content of Chapter Five is a wonderful resource for State
  Regulations on Employee Payment- Check for updates
• Good State Reference Charts:
• State by State Pay Frequency
• State by State Payment upon Termination
• State by State rules on Direct Deposit
• Paycard State Compliance issues
• State by State Pay Stub Information
• Escheatment
• State by State wages to deceased employees
Chapter 5- Paying the Employee

Payroll Frequency &
Payment on Termination
Bonus $$$$

• What law governs how often employers must pay their
  employees ?

• True or False??
• FLSA regulates the allowable duration of time after
  services are performed that employees must be paid.
Bonus $$$$

• Are there separate regulations for employment
  separation, dependent on whether the separation is
  voluntary or involuntary?

• If so, what are some possible impacts to other payroll
Chapter 5- Paying the Employee

Payment Methods
Payment Methods

•   Cash
•   Check
•   Direct Deposit ( Electronic Funds Transfer)
•   PayCards
Show me the money!
Cash or Check

• Generally all 50 states allow payment by cash or
  check without additional law or regulations regarding
  this payment option
• General regulations may require ease in tendering
  the negotiable payments by:
• Financial institution must be convenient / or even
  located in state of company’s operations
• No additional fees are imposed for tendering the
  payment option
Considerations for Payment via Check
• Security –
   – Signatures required
   – Internal audit and checks & balances

• Be mindful of the impact that a voided or manual
  check issuance causes to other departments processes
   – GL
   – Tax
   – Benefits
Chapter 5 – Paying the Employee

Direct Deposit (EFT)
Direct Deposit (EFT)
•   Safe and secure means of payment
•   Alleviates lost or stolen checks
•   Unclaimed wages(Escheatment)
•   Storage of documents
•   Employee time allotment for tendering payment
Bonus $$

• The conception that Direct Deposit is a ―Green‖
  option is only applicable when what is offered?

• Let’s elaborate on this concept of payment . .
   Direct Deposit (EFT)

Federal Reserve Board- Regulation E

• NACHA– National Automated Clearing House
• ACH– Automated Clearing House
• State Law Regulations

• Bi-Partisan efforts between Federal and State agencies
Team DD. . .
     Our team will be comprised of 6 players. . .
       Each team player has a specific job to make the
                     team successful.
 Explain your role. . .

Team DD. . .
• Okay Now we all know what our roles are.

                    It’s Game time!

       Players to the Field. . .Payroll Processed!!

 Let’s go through the innings and come up with a WIN!

 What player was kicked off the team, but should always
                     be considered?
   Instant Replay – Off sides call
    Full Payroll Reversals vs. Single entry reversal

Regardless these requirements are mandatory
• Amount of reversal must match the amount of credit
• Must be reversed within 5 days of settlement date
• No employee authorization necessary
   Instant Replay– Late Direct Deposits
• Troubleshooting
Funds must be posted by 9:00 am on paydate
• Verify routing and account numbers
• RDFI posting schedule
• Federal Holiday Impact in processing

Additional resources can be found in communications
  with the ODFI for internal challenges

Regardless of delay– funds should be honored without
  penalty to employee.. Based on voucher verification.
Direct Deposit Employee
Advantages / Disadvantages
Advantages                    Disadvantages
• Immediate availability of   • No Bank account
  funds on payday               establishment
• No bank interaction         • Comfort level in payment
• No delay in constructive
  receipt of pay
Direct Deposit Employer
Advantages / Disadvantages
Advantages                   Disadvantages
• No lost or stolen checks   • Not truly ―Green‖
• Reduction in paper flow    • Loss of float
• Cost effective             • Additional processing
• Ease for reconciliation      fees
• Reduction in escheatment   • Challenges for stopping
                               and reversals
Chapter 5- Paying the Employee

Pay Cards
• Paycards are similar to debit cards
• Prefunded , host based cards providing employees
  access to their net pay via a bank, ATM (Automatic
  Teller Machine) or POS (Point of Sale) purchase.

• Payrcards are similar to direct deposit

• Funding process for the employer is same as for direct
• Process subject to the same NACHA regulations
• New frontier for payment
• Many variable options in the plans
• Many competitors vying for business- ensure
• Verify with legal for implications from plan
• Cardholder security
• Employee age and turnover consideration

• Understand the difference between branded vs. non-
Branded vs. Non-Branded
Branded                     Non-Branded
• VISA/ MC/ Discover        • Network Logo
• Employee signature only   • PIN required for all
• ATM—PIN                     transactions
• Personalized              • Most reliable –safer
• Parental approval < 18    • Host computer
Employee & Employer Benefits
Employee                    Employer
• Reduced costs             • Reduced costs
• Increased independence    • Enhanced efficiency
• Improved credit status    • All employees eligible
• Financial safety          • Increases employee
• Ease of use                 productivity time
• Replenishment if lost     • Escheatment reduction
• No time or geographical
Implementing a program
•   Financial Institution agreement and offering
•   Anticipation program for employees
•   Establish a funding pool with the bank
•   Institution establishes employee account cards
•   Funding by wire or ACH
•   Adjustments are done via web app

• Reversals :
• Based on card policy– talking points when researching
• Bank notification for reversal and refunding
Bonus $$$
• You are the payroll manager and decision maker for
  a fast food establishment. The economy has driven
  sales down. You need to pay your employees in the
  most cost effective way possible and accommodating
  to the employees. Many of these employees do not
  have bank accounts.
• What means would you choose as the medium for
• What additional factors need to be considered?
• Escheatment is the unclaimed wages process governed
  by State Law

•   State regulated
•   Length of time payment held (generally 1 yr)
•   Notification process
•   Wage turnover process

• Best practice is to utilize direct deposit and paycards
  as wage payment methods
Wages owed Deceased Employees

• Payments, payee and taxation are based on when the
  employee passes.

• Federal regulates the taxation

• State law regulates the payee and payment amount in
  accordance with the current situation.
The infamous              53 rd   pay period
• Years affected with the 53rd pay period
• 2007 2008 2009 2010 2011 2012

• Payroll must anticipate and plan for proper processing
  and compliance
• Salaried employees can be adjusted
• Hourly employees must be paid all wages

• Best Practice is to maintain pay structure and
  schedule without deviation. .. Keeps relations good
  with employees good.
• Verify contracts if applicable
  Thank You! The Pleasure was mine!
  You all will be CPP’s!

If you need additional assistance. . ..

  Mary Kazmierczak, CPP

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