People Operations

CHAPTER 8Step 3: Automate Time and Pay

There's more to payroll than just issuing checks.

You've got to wrangle time sheets, validate the accuracy of time worked, ensure the proper withholdings from each person's paycheck, and deliver checks to employees … all while staying in compliance with federal, state, and local tax codes and employer regulations.

What's more, time and pay are the basis of your employee contract with your workers. When you consider how much payday means to your employees, it makes sense that it's one of the most critical touch points between a company and its people. Get pay wrong once and you'll tarnish your trustworthiness as an employer. Get pay wrong twice, and your employees will start looking for another job (Bolden‐Barrett 2017).

Employers have a legal responsibility to the federal and local governments to withhold and pay taxes from employee wages, too. These employment taxes include federal income tax, Social Security, and Medicare taxes. Too often, businesses fail to pay accurate taxes, which has resulted in the IRS's Tax Division naming criminal tax enforcement one of its “highest priorities” seeking “money judgments, permanent injunctions, and criminal convictions that often carry substantial prison sentences, restitution, and financial penalties” for those found in violation (US Department of Justice 2018).

There are also hundreds of compliance requirements to know and follow—the number of which quickly balloon when you employ people in multiple ...