Taxes, Wage and Hour Issues Are Top Concerns for 2017

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By Robert Combs

Payroll professionals juggle a multitude of tasks and face a variety of challenges, but they also feel valued by their organizations and supported in their efforts, a survey by Bloomberg BNA and the American Payroll Association shows.

Taxes and wage and hour compliance went hand in hand as critical areas of focus, said the survey of more than 1,000 APA members. About 83 percent identified taxes as a subject of focus, followed by 81 percent who said wage and hour compliance was at the top of their list. Wage deductions, including child support, levies and garnishments, were cited as an area of focus by 75 percent. Cited less frequently were unemployment insurance, 43 percent, and international payroll, 14 percent.

When payroll professionals were asked to rank certain payroll issues based on potential challenges for 2017, multistate payroll tax compliance topped the list at 32 percent while 25 percent listed wage and hour compliance. The biggest challenge for 17 percent was more practical: balancing costs while maintaining efficient payroll.

Federal tax changes and responses to data breaches were viewed as weak concerns, listed by 13 percent or respondents.

Much Support From Employers

When it comes to meeting these challenges, the good news is that payroll professionals generally said that their employers provided a lot of support. The survey asked if employers:

•invested in the professional development of payroll personnel;

•allowed payroll personnel to actively participate in strategic initiatives and

•invested primarily in outside services to implement payroll processes.

About 78 percent said their organizations invested in professional development for payroll personnel.

About 68 percent said their organizations included the payroll department in overall strategic initiatives.

Thirty percent said their organizations invested primarily in outside services to implement payroll, suggesting that employers remain reluctant to make outsourcing the centerpiece of a payroll strategy.

Smaller organizations were more likely than others to commit to outsourcing, the survey said. For example, 40 percent of respondents who worked in organizations with 101 to 500 employees said their companies put outsourcing first. The total was about double the 21 percent of organizations with 10 times as many employees.

Company size also may determine focus areas and challenges for payroll professionals. For example, companies with more than 5,000 employees were the least likely to say they focus on taxes, wage and hour compliance, wage deductions and unemployment insurance, the survey said. However, such companies were more likely to focus on international payroll issues, it said

When asked about the areas they found most challenging for 2017, the largest companies were significantly less likely than those with up to 1,000 employees to cite wage and hour compliance and federal tax changes as among their two highest-ranked challenges, the survey said.

Additionally, large employers were likely to cite multistate payroll compliance as a top-tier challenge, the survey said.

At the other end of the spectrum, respondents from companies with up to 100 employees were the most likely to say that data security was their biggest challenge in 2017.

Federal tax changes also revealed a split based on company size: Companies with up to 100 employees and those with 101 to 500 employees were more likely to list federal tax changes as a top challenge than respondents at companies with 5,000 or more employees.

UI, Global Payroll, Costs

In other areas, the survey found:

•Payroll professionals at private and public companies were more likely to focus on unemployment insurance (50 percent) and international payroll (20 percent) than their counterparts in other organizations.

•Respondents at organizations operating within only one state were more likely to see major challenges in wage and hour compliance (68 percent), federal tax changes (50 percent) and data security (37 percent) than respondents at multistate and multinational organizations.

•Government organizations (42 percent) were more concerned than any other type of group about the challenges presented by data security.

•Cost concerns are universal. Balancing costs was seldom seen as among the biggest challenges facing payroll in 2017—32 percent ranked it in the top two. However, the percentage generally held true for all organization, regardless of size, type or the number of states or countries where they conduct business. For example, 34 percent of multinationals 32 percent of single-state organizations and 31 percent of multistate organizations cited cost control as a top-two challenge for payroll.

•Respondents at consulting firms or service providers were the most likely to say that payroll actively participates in their organization’s strategic initiatives.

For More Information

The survey of APA members, sponsored by Bloomberg BNA, was conducted in February and March. A total of 1,269 participants responded to the email survey.

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