Recognizing the Bad News Bear(er)s


Payroll professionals across the country host and participate in activities to highlight National Payroll Week, which starts every year on Labor Day.

The American Payroll Association launched the annual event in 1996 and the organization plays a leadership role in promoting programs during the week. The activities include outreach to local schools, where payroll professionals educate students on how they are paid when working.  

This is all fine and good, except that the payroll presenters have to deliver a big downer to the students: Despite what one earns by the hour, not all of it appears in the paycheck.  So possibly the first takeaway for many workers of the payroll function is that part of the money earned is taken away before payday. And payroll is responsible.

This is where the process starts for payroll professionals, who often have to explain the bad news about what otherwise should be something worth celebrating: Wages paid accurately and on time.

Other issues that payroll folks must attend to include telling colleagues that gift cards used as spot bonuses are taxable, that additional employment taxes may need to be withheld for work done outside the home state, that overtime compensation must be paid to nonexempt workers who exceed 40 hours in a work week, that nonresident alien workers may be subject to taxes under the Federal Insurance Contributions Act and that travel expense reimbursements are taxable unless done through an accountable plan. The list goes on.

But instead of being seen as bearers of bad news, payroll professionals should be recognized for their importance to the health of the economy and for employees’ economic well-being. That is a big part of National Payroll Week.

How important is payroll? About 66 percent of all federal revenue is collected through the payroll process, or more than $2 trillion a year. The federal total does not include collections done through payroll for thousands of state and local jurisdictions.

When it comes to child support, payroll has a role. Before the mid-1990s, when new-hire reporting took effect and payroll was involved in the process, noncustodial parents could go for years without making support payments and having their pay garnished. Today, payroll processing of income withholding orders for child-support accounts for about 75 percent of all child-support collections nationwide, the federal Office of Child Support Enforcement said. 

During the recent recession, payroll was called on to implement the temporary FICA tax credit and to help account for subsidizing the cost of health plans for laid-off workers. Employers leaned heavily on payroll departments to implement the changes, which were done timely and with little fanfare.

New technology allows policymakers for employers and government agencies to see the potential of the payroll function to apply changes that can positively affect the corporate bottom line and the economy. 

There has been the integration of payroll data into fulfilling requirements for required employer-provided health care. A proposal recently was introduced to include scrubbed W-2 information on EEO-1 reports submitted to the Equal Employment Opportunity Commission.  

Faster, more-efficient and accurate payment mechanisms are being developed and mastered by payroll professionals. Strategies for business continuity post-disaster include contingencies developed by payroll departments. Full coordination and control of payrolls across borders is quickly becoming a reality.  

Through all this, we observe the American payroll professional during National Payroll Week. When enlightened to the comprehensive role of payroll, a one-week recognition of payroll’s positive affect on all our lives really is not enough, is it?

Take a free trial to Bloomberg BNA’s  Payroll Library, your one-stop resource for reliable, up-to-date guidance and analysis in every area of payroll administration and compliance.

Follow Michael on Twitter @MichaelTBaer and join the Bloomberg BNA U.S. and Global Payroll group on LinkedIn.