Ascentis Blog

Information to help HR and payroll managers, recruiters, and compliance officers become more effective.

Tag Archives: payroll processing

The Long Road to Compliance

On March 18th, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. The act allows employers to hire qualified employees and not pay the employer part of the social security tax. As a payroll professional you may dread the new complications that will be inflicted on you but saving 6.2% may be worth the effort. So “Who qualifies?” you ask.

President Obama Signing Bill

Qualified employees are those hired after February 3rd, previously unemployed for at least 60 days and of course not replacing existing employees. It sounds relatively simple, right? Just track these employees as they are hired and don’t pay the social security tax on their wages.

Not so fast. For starters, the bill is retroactive so unless you were politically prescient, you probably don’t have a list of qualified employees. Once you have assembled that list, you need to determine the portion of the wages that will be exempt from employer tax. To make things more complicated, only wages paid after March 19th are exempt and only up to the maximum $106,800. The 19th was a Friday, so with a little luck, if you have weekly or bi-weekly employees, this will match the end of a pay period and will make it easier to determine eligible wages. If not, tough luck! Be prepared to do some manual prorating or just forego a few days of tax exemption and start counting at the beginning of the next pay period. The latter is a good solution especially if you consider the time it will take for the seemingly small benefit you will get.

You now have a list of employees and you know the exempt amount of wages. So what’s next? Well at this point no one knows exactly: that is while the IRS works on the issue. It will probably come in the form of a change of the 941 to adjust what you’ve paid in excess in the second quarter. In all cases, don’t change anything for your first quarter payments!

Hey Ascentis said it would be easy, what’s in store for me?

We hear you. All this may sound complicated, but really at the moment your job comes down to determining who’s eligible* so that when the time comes adjustment will be a breeze. Ascentis Payroll will be updated soon to let you track qualified employees. We will then provide you with ways to compute eligible wages. As usual, your client support rep will be the most helpful contact if you have any questions.

The healthcare reform just signed into law will add many other challenges. We’re following that closely to be sure you always have tools to stay compliant. This will be the same process again:

  • Read the law and prepare for change
  • Wait for the IRS (in most cases)
  • Implement changes in the system
  • Explain changes to our clients and make sure everyone is happy.

Next time you hear that a law has 1,990 pages, keep us in your thoughts!

*Eligible employees will have to sign an affidavit stating that they haven’t worked more than 40 hours during the 60-day period preceding employment. IRS is working on a form just for that, stay tuned.

What to look for in an HRIS

To be a practical investment choice for a mid-tier organization, a satisfactory HRIS solution must have its HR and benefits functions highly integrated. It must be both agile and robust so it can easily be kept abreast of constant change, and it must be built on a tried and true foundation that is easy to use and maintain, such as a modern database like SQL Server or Access for smaller companies.

Ease of use is a vitally important feature for an HRIS. The learning curve on any new software is often a challenge for people whose primary function is non-technical, such as the average HR consultant. It is important that if the investment is made in a product, it is accepted to the extent that it becomes part of the fabric of the department. There are three things to look for that will make an HRIS easier to use and more accepted by staff:

• Wizards: Wizard-based technology makes it easy for staff to enter or import information and make changes and updates, by following through a set of simple instructional, fill-in the blanks forms on the screen, rather than their having to learn to program or call in the consultants.

• Strong HR facilities combined with flexible benefit capabilities: The system should be able to handle compensation, attendance and recruitment, and legal requirements such as FMLA and OSHA, while integrating them with benefits issues such as COBRA.

• Role-based operation: A good HRIS solution should be able to cater to the needs of a wide range of people and functions within the organization, and should appear seamlessly tailored to their requirements. Role based administration is becoming increasingly important in the HRIS marketplace. With this feature, HR administrators can define what an individual can see in the system, allowing managers access to the information they need about their particular team, while locking them out of information that is not pertinent to them. Role-based administration can extend further into proactive alerting—a particular manager or management level can be automatically alerted by the system that it is time to conduct a review, for instance, with those alerts being based on the specific mangers role and needs within the organization.

Ascentis provides fully integrated HRIS, self-service and payroll solutions that are especially designed for small to mid-sized organizations. For more information, visit www.Ascentis.com.

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