Building a Business Case to Purchase an HRIS, Part 2

Building a Business Case, Part 2

In our last post, Building a Business Case to Purchase an HRIS (Part 1), we covered the first main reason to purchase an HRIS – elimination of costly errors.

In Part 2, we’ll be talking about Compliance.

Reduce risk by automating compliance

Compliance is a hot topic nowadays. It isn’t necessary to be willfully negligent to be confronted with serious and very expensive problems. Even the most compliance conscientious employer who meets the variant interpretations of specific regulations may encounter unexpected litigation and find their efforts fruitless. Many companies presume that they are adhering to strict regulation guidelines when in fact they’re at fault for violating a compliance specification located somewhere in the fine print.\

For instance, an average of 450 employment lawsuits are filed in the U.S. each day, and 57% of companies have been named as defendants in at least one employment related lawsuit in the past five years. A simple google search of the term “employment lawsuits” results in over 17 million results. Lawsuits by disgruntled employees are one problem. But nowadays, a company can face suits from candidates who were never hired, as well as from former employees months after termination.

Compliance with federal and state regulations involves a mind-boggling array of topics, most of which fall within the purview of the HR department. OSHA, FLSA, COBRA, EEO, VETS, SOX, and EDA all have minutely detailed requirements, many of which are open to individual interpretation, and they all have severe penalties for infraction. It is a never-ending, full-time task to keep up with these requirements, ensure corporate compliance, and follow the required reporting procedures. Human error is seldom seen as an acceptable defense in cases of compliance infraction.

Compliance automation plays a critical role in both preventing violations by ensuring that requirements are automatically monitored and fulfilled, and in defending alleged compliance violations. The best defense against an alleged violation is a watertight reporting system and automatic documentation of everything related to a specific case.
For example, in a case of proving OSHA compliance, an updated, organized on-line injury reporting system in the factory is going to carry more weight than the standard illegible notebook. In addition, some compliance authorities, such as VETS-100 and COBRA will waive strict reporting requirements if it can be proved that appropriate data collection and tracking systems are being used.

Ascentis HR can reduce the likelihood of error as well as reduce the workload for HR staff in collecting such compliance information by providing compliance automation. The powerful report wizard can quickly generate reports such as EEO-1, VETS-100 and OSHA incidents reducing time spent on generating these reports as well as covering any liabilities in case of lawsuit.

Curious about how to make your company more compliant? Ask for more information by filling out this form or call Ascentis at 800.229.2713.

What is it Worth to You?

When considering automating payroll and time and attendance, many employers balk when they ask themselves how much the system will cost to implement. In the current regulatory enforcement-focused and litigious business environment, the answer may be entirely pragmatic: how much money do you not want to pay in a wage and hour investigation or lawsuit?

The American Payroll Association (APA) perrformed a study in the early part of the last decade that has become a benchmark for return on investment estimates when automating payroll and time and attendance systems.

The APA study found that employee time theft, where employees clock in late, clock out early and take long lunches and breaks, averages 10 minutes per employee per day; payroll personnel take 5–6 minutes to reconcile and calculate each time card each pay period; human error costs 1%–8% of total annual gross payroll. Using these three statistics, a Washington Business Journal article estimated the annual savings of automating the payroll process for a 25 employee company that paid an average wage of $10 per hour amounted to $8,400.

A different study estimated that the cost of unearned paid time off (PTO) averaged a conservative estimate of half a day per employee per year. Unearned PTO occurs when employees take advantage of manual time off tracking systems to take time off they haven’t earned.

Combining this fact with the APA’s findings and assuming full-time work with no overtime, employers who use manual payroll processes may pay an estimated additional 3.4% in effective wages to each non-exempt employee compared with their raw hourly wage rate. So, an employee earning federal minimum wage of $7.25 per hour could effectively cost an employer $7.50 per hour.

These raw estimates make a very effective case for automating payroll and time and attendance. Once implemented, the savings compound. (See how much by using this webapp.) Employers get back most of the 5–6 minutes per timecard per pay period, which gives time back to payroll and HR to focus on other strategic initiatives that save more time and increase productivity.

Employee’s preparing for a wage and hour lawsuit? Now there’s an app for that.

Today, the DOL released an iPhone application geared at employees who want to independently track their own hours and wages, to make sure their employers are compliant with appropriate regular and overtime pay.

According to the iTunes page for this FREE application, “This is a timesheet to record the hours that you work and calculate the amount you may be owed by your employer. It also includes overtime pay calculations at a rate of one and one-half times (1.5) the regular rate of pay for all hours you work over 40 in a workweek.” The DOL adds a disclaimer for the application, stating “DOL is providing this App as a public service. The regulations and related materials reflected in this App are intended to enhance public access to information on DOL programs. This App is a service that is continually under development and it does not include every possible situation encountered in the workplace. The user should be aware that, while we try to keep the information timely and accurate, there will often be a delay between official publication of the materials and their appearance in or modification of this App.”

With an average of 450 employment related lawsuits every single day, and with 57% of companies being named as defendants in at least one employment related lawsuit in the last five years, applications like this make it even easier for employees to know if and when they are not being paid properly, and gives them easier access to report violations. This iPhone app is free to download, but for employers who don’t have a timekeeping solution in place, not having that solution could cost them millions.

STOPPING POTENTIAL VIOLATIONS IN THEIR TRACKS

Employers: It is critical that your company have in place a timekeeping solution like Ascentis Time which prevents violations of wage and hour laws by ensuring that requirements are automatically monitored and fulfilled. The best defense against an alleged violation is an accurate reporting system and automated documentation of everything related to each employee.

READ: Google Sued over unpaid overtime.

READ: AT&T settles class action misclassification suit for 12.5 MIL

READ: Apple settles Enginners FLSA suit for 1 MIL

Ascentis Time is a part of Ascentis’ full suite of fully integrated human capital management solutions, including Ascentis HR, Ascentis Payroll, Ascentis Recruiting (soon to be released), and Ascentis Self Service.

SWOT Away your Labor Issues

When you put together your annual business plan, you probably do a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis to determine how your company is different from your competition and what actions will keep your business going and growing. But, the biggest threat to your business may be the one thing to which you are paying the least attention.

Based on recent regulatory and court activity, wage and hour litigation is the single greatest threat to your continued business success according to this article on compensationcafe.com. Misclassification, wage theft and other issues require as much attention from businesses as product, pricing and promotion.

Wage and hour litigation is expensive – costing companies up to double and triple damages plus fines plus attorneys fees. While income from operations usually comes in incrementally, wage and hour settlement payouts are a large sum hit on the bottom line. This can not only devastate an organization it can bankrupt it, affecting every single member of that company.

So, how much attention are you paying to your employment practices? Have you performed a SWOT analysis? What are your strengths? Your weaknesses? Where do you have opportunities? What issues pose the greatest threat?

Conducting a compliance audit is a great opportunity to identify and eliminate your unwritten employment policies and practices. Research best practices through discussions with human resources professionals and your legal counsel and make a plan to implement them.

Stay informed about the latest in HR and payroll news, trends, best practices and evolving legislation. Sign up for the monthly Ascentis HR, Benefits and Payroll News.

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Tag Archives: Department of Labor