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  • You don’t need to run a big business to be a target for litigation. Small businesses across the country are targets for potential lawsuits, especially when it comes to wage and overtime compliance.

    Wage and hour litigation has grown into a major hazard for employers. Employees can pursue litigation if they feel that they weren’t paid for their work. These types of claims can stem from a variety of factors – an employee worked overtime that wasn’t approved, someone clocked in early when they weren’t supposed to, etc. These claims can wreak havoc on your business, so it’s essential to protect your business from these disputes.

    Why is Wage and Hour Litigation a Growing Trend?

    While wage and hour lawsuits have been around for decades, they’ve become more prominent in the past few decades. Fair Labor Standards Act (FLSA) lawsuits increased by a staggering 417% between 1997 and 2017, and the stakes have grown even higher in recent years due to complicated labor regulations and the impact of COVID-19.

    The Department of Labor’s Wage and Hour Division (WHD) has dedicated more time in recent years to achieve compliance with labor standards. The WHD conducted more outreach events in 2020 than any other year in history, capping off a three-year stretch of increased efforts. More employees also reached out to the WHD, as evidenced by the following numbers.

    • The WHD received more than 9,000 phone calls per day, an 350% increase from their previous average.
    • The WHD website received more than 45 million views since the passage of the Families First Coronavirus Response Act (FFCRA).
    • The WHD collected an average of $706,000 in back wages for workers per day in 2020.
    • WHD investigations in 2020 found that employees were owed an average of $1,120 in back wages.

    COVID-19 also created some new challenges for wage and hour compliance. More businesses were forced to have employees work from home, making it difficult for some employers to diligently track hours and account for overtime as they would have before.

    How to Protect Your Business from Wage and Hour Litigation

    Simply put, employers need to be increasingly careful about wage and hour violations. Even a small timekeeping error or miscommunication can turn into a lengthy, costly dispute.

    Here are some ways that you can protect your business against these lawsuits.

    Keep accurate employee payroll records

    Clean, accurate payroll documentation is a critical aspect of running a compliant business. The (FLSA) requires businesses to keep accurate payroll records for non-exempt employees, many of which can help you make your case if you ever face a wage and hour lawsuit. Some of those records include:

    • Time and day of week when employee’s workweek begins
    • Hours worked each day
    • Total hours worked each workweek
    • Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”)
    • Regular hourly pay rate
    • Total daily or weekly straight-time earnings
    • Total overtime earnings for the workweek

    It’s also important to maintain these records for extended periods of time. Payroll data should generally be stored for at least three years in case of future litigation or if the Department of Labor (DOL) ever wants to review your business.

    Audit your timekeeping practices and adjust policies as necessary

    One of the simplest ways to protect your business is to review your timekeeping practices. Maintaining outdated or poorly defined practices can lead to unpleasant surprises when it comes to wage and hour law. As such, you’ll want to audit your practices and make the necessary changes to help your business avoid any issues.

    A good place to start is to review the Society for Human Resource Management’s (SHRM) checklist for various timekeeping practices. This checklist highlights a few different issues that can clean up your practices and establish more definitive methods for timekeeping. Of course, there are some notable risk areas that you’ll need to address as well.

    Establish a timekeeping policy and communicate it to employees

    It’s essential to set some ground rules to makes sure everyone is on the same page about your timekeeping policy. Employees should have a clear understanding of how your timekeeping policy works and what they should do when it comes to recording time. For example, you may want to highlight the following policies.

    • Require employees to record and verify all time worked.
    • Break down what counts as hours worked (such as training and travel time).
    • Put controls in place to prevent employees from clocking in early without prior approval.
    • Prohibit off-the-clock work.
    • Clearly state that overtime must be pre-approved by a supervisor.

    You’ll also want to have your employees review and sign documentation that they acknowledge your practices. This measure will not only educate employees on your policies, but also serve as a key compliance document to defend your business against some off-the-clock claims.

    Avoid rounding for timekeeping if possible

    It’s not uncommon for employers to round hours during payroll, but that doesn’t mean it’s the safest approach. According to the DOL, “employee time from 1 to 7 minutes may be rounded down, and thus not counted as hours worked.” The problem with this approach is that it can still open your business up to legal grey areas. SHRM found that “courts have ruled in favor of employees where the employer’s rounding policy worked only to the employer’s advantage or failed to average out over time.” Some states also have their own rules for rounding time, adding an extra dimension of complexity to the issue.

    This grey area is why pay to the punch is the gold standard for timekeeping. This approach will not only help your company identify exactly how long your employees worked, but also avoid these potential complications that can lead to wage and hour lawsuits.

    Invest in payroll technology

    These days, a manual timekeeping system is just going to hold you and your company back. Whether you use paper records or some other form of offline time tracking, these methods are inconsistent and time consuming. That combination is only going to make matters worse if your company is ever hit with a dispute.

    Payroll technology is designed to simplify timekeeping and keep your business compliant with wage and hour regulations. Cloud-based timekeeping tools like GMS Connect offer a variety of key advantages for small business owners.

    For example, timekeeping software makes it easier to track exactly when employees clock in and out for work and avoid issues with rounding. Technology also helps you streamline payroll management, giving you real-time calculations of employees’ pay and allowing both you and your employees to access schedules, hours, and other details from anywhere with a secure connection.

    Work with payroll experts

    It’s not easy to manage payroll for a small business. A simple timekeeping mistake can lead to a serious compliance issue that turns into a lawsuit. That need for payroll expertise is exactly why small businesses shouldn’t face these threats alone.

    GMS partners with small businesses to help them take control of their payroll administration. We can provide your company with a comprehensive web-based payroll solution to not only keep your business compliant, but also save you both time and money. You’ll also have access to a dedicated GMS payroll processor and other experts who can answer your questions and help you stay on top of new regulations, state laws, and timekeeping trends.

    As a Professional Employer Organization, GMS is here to make your business simpler, safer, and stronger. Contact GMS today about how we can help you with payroll administration and other critical HR functions.

  • Do any of these sound familiar?

    • Losing good employees to competitors.
    • A cranky work environment.
    • Excessive workplace injuries.
    • Out-of-control healthcare costs.
    • Ridiculously high unemployment insurance costs.

    If you’ve been dealing with any of these issues, no doubt you’ve come to the conclusion that HR is more than just a luxury enjoyed at big corporations. HR is a necessity for small and medium-sized businesses, too.

    It’s possible that you have HR problems. What are you going to do?

    HR Outsourcing

    You’ve heard about HR outsourcing, but maybe you don’t know what it entails or how to learn more about it. How can you tell if it is right for your company?

    You’ve heard about Professional Employer Organizations (PEO). But maybe it sounds a little shaky since you don’t know of anyone who’s using a PEO. How popular are PEOs?

    You might be surprised.

    The HR outsourcing industry has grown from $61 billion in 2002 to $103 billion in 2007 and is projected to grow to $162 billion in 2015. The largest chunk of that is the PEO industry.

    Professional Employer Organizations (PEO)

    PEOs work with small businesses to help reduce time and cost when it comes to the things that an HR department would do at a large company. If you walked into a large corporation with thousands of employees and asked to see their HR department, what do you think you would see? The department would include a payroll department, a benefits department, a risk management department and actual HR manager or department. You might even find a wellness department to work hand-in-hand with the benefits department.

    These huge companies have tons of money to throw at problems and lots of high-priced attorneys to get them out of trouble. Yet they still keep all of these departments active. They know how important HR can be.

    Big corporations realize they need HR departments. It’s even more crucial that small businesses understand that they should have access to these essential HR services.

    Specializing in Small Business HR

    Not all small businesses have the means or the resources to keep all of these HR departments in-house, and that’s when they should begin looking at outsourcing their HR.

    A small business is already probably outsourcing their payroll, their benefits and their Worker’s Comp administration to different companies. All of those departments need to be able to share information with each other. If you can have one vendor do all of that for you, allowing you to focus on growing your business, wouldn’t you? What if you could do that while saving money as well? What if in addition to saving money, you could also offload a lot of your tax and employee liability in the process? Can you see why this industry is growing?

    What about compliancy issues? In the last five years, have you seen an increase or a decrease in the amount of regulations imposed on your business? What about the Affordable Care Act? Do you need to be compliant? If not now, will you someday? What does that mean to you? Do you know who to turn to find out?

    There are tons of HR questions that small businesses have, and PEOs—like GMS—have the answers. Ask us anything.

    ***

    “Footbridge to Canary Wharf,” © 2008 Stephen McKay, used under Creative Commons Attribution-Share Alike 2.0 Generic License.

  • Virtually every company in America is bound by the Federal Labor Standards Act of 1938 (FLSA).

    This law “regulates the status of employees (versus independent contractors) and provides for a minimum wage and overtime unless the employee meets an exempt classification.” However, the scope of this law is not simply limited to employees’ wages.

    Protecting Whistle Blowers

    Did you know that an added feature of the FLSA is the protection of employees who may be labeled “whistle blowers”?

    Under the FLSA, an employee cannot be retaliated against for filling an official complaint against their employer with a government agency. According to an article on JD Supra’s legal website, a recent 4th Circuit Court of Appeals ruling has expanded this law to include “intra-company” complaints. They have also stipulated that this complaint can be in written ororal form.

    Forming a Written Policy

    As with any kind of employee-related issue, the best protection for an employer is the proper documentation of any employee events. By documentation, I don’t just mean that a supervisor should write it down and file it. All the documentation in the world doesn’t mean a thing unless the employees know what the rules of the game are.

    That’s why every company should have a written policy on how to handle employee complaints—and every employee should know exactly what that policy is. The tricky part is knowing just how much is too little and when you may have gone too far in setting up your company rules.

    Avoiding FLSA Issues

    Companies with the strongest Human Resource infrastructures in place are the ones who are least susceptible to FLSA penalties or potential employee lawsuits. To help protect themselves from ever-evolving government regulations, companies are looking for assistance in employer liability management.

    For many companies, a Professional Employer Organization like GMS can help.

  • Effective September 1, new withholding tables will result in increased take-home pay for Ohio workers. Governor Kasich’s plan will lower the income tax rates 10% over the next three years with a majority of the decrease coming in 2013. In addition to the lower payroll withholding rates, small businesses will see tax savings of up to 50%. And while that’s great for payroll and businesses, Ohio will also see an increase in sales tax by .25%.

    A brief description of the withholding rate change was released by Tax Commissioner Joe Testa on August 26th, and can be found at: http://www.tax.ohio.gov/Portals/0/communications/news_releases/NR_TaxWithholdingCut.pdf.

    The Department of taxation released an update of the sales rates on their website at: http://www.tax.ohio.gov/sales_and_use/rate_changes.aspx.

    Have questions? Leave a comment below or contact us at 330-659-0100!

  • For several years, GMS has been paying Ohio local taxes via Ohio Business Gateway. This method has saved us from printing 1,500 checks annually and the paper forms to go along with them. In a single quarter, GMS will pay over 1.2 million dollars in local tax payments to 180 jurisdictions. But what’s more exciting is that we uploaded and processed our first live electronic returns & payments to the ODJFS (Ohio Department of Job and Family Services) for Q2, 2013.

    What does this really mean?

    • We sent the agency a deposit that exceeded 1 million dollars.
    • We avoided printing over 700 checks and the accompanying 1,800 sheets of additional paper.
    • We avoided the extravagant shipping charges for such a large package and secured the payments by uploading rather than the standard delivery method.
    • We also no longer need to wait the typical 2-4 weeks for our returns to post, they are posted almost immediately.
    • And best of all, we were the first TPA contacted to work with ODJFS on this filing method.

    We’re very proud of the relationship we have with ODJFS and are happy to announce that we are now completely electronic with them. We get automated rate adjustments, automated tax notices and now electronic returns. If you have questions about your ODJFS account, please feel free to contact us at taxmail@groupmgmt.com.

  • Are you looking for a way to reduce administration costs for your small business? Have you considered how much time (and money) you would save if you didn’t have to prepare and process your payroll and payroll taxes?

    When you outsource payroll services, there are a number of benefits. The most essential for small businesses is that you can take the time you used to spend on payroll and devote it to building your business.

    “Women operators at Midvale Company payroll machine in Time Office, April 29, 1949” by Kheel Center, Cornell University

    Benefits to Outsourcing Payroll Functions

    Greater business focus

    Your focus should be about growing your business and strengthening your core business strategy, not administrative details.

    Reduced costs

    Using a professional employer organization (PEO) isn’t free, but many companies find significant cost savings by outsourcing their payroll. And, with a PEO like GMS, you can rest easier knowing that a team of payroll experts will protect you from risks like payroll tax penalties that directly impact your bottom line.

    More time

    If you’ve handled payroll or HR you understand how time consuming it can be. Calculating taxes, filing forms, and trying to keep up with different labor and tax laws could end up taking up large parts of your day.

    Time order pink payroll record before leaving for WWII. Glenn Gaskins last payroll recod before entering WWII by wcgaskins59 is licensed under CC BY 2.0

    Maybe it’s time to consider a PEO

    As a professional employer organization, or PEO, our services and comprehensive solutions can provide options that will help effectively manage your payroll needs for you. Think about the time you will save by streamlining your system.

    GMS’s payroll services include:

    • Full-service, Internet-based payroll processing
    • Payroll tax payment & filing
    • Time keeping systems
    • Workers comp calculations & filing
    • Electronic new hire reporting
    • Online payroll services available 24/7

    Read more about our what our team of payroll experts can provide for your payroll services.

    Still have questions about our payroll services or how working with a PEO can save you money? We thought you might, so we added a Payroll Services FAQ section.

    Still not convinced? You don’t have to take our word for it, you can read the testimonials about our payroll & tax services.

    What are your top payroll frustrations? Find yourself wishing you could spend your time at work doing other things than payroll administration? Let us know in the comments below.

  • The end of the year is an extremely busy time for most business owners and your attention is pulled from managing one task to the next. One of the most important responsibilities business owners face – and one of the most stressful to manage – is payroll tax management.

    Let’s take a minute to review two major tax obligations that are of critical importance as the calendar year comes to a close.

    Prior to the last payroll of the calendar year

    Verify employee data: Accuracy is critical when preparing your payroll taxes. Confirm all active and terminated employee data is correct, especially his or her social security number. Check to ensure all wage figures, benefits, sick time and vacation time has been accurately reported.

    Check the wage, tax and benefits information: Ensure special tax information has been collected and correct withholdings have been made for taxable fringe benefits like third-party sick pay, tips, bonuses and any non-cash payments.

    Check for special considerations: Schedule any payments for bonuses, track and confirm that all checks are accounted for in the system. Have your employees complete a new Form W-4 if their situation has changed. Now is also a good time to restock your payroll supplies like blank checks, payroll forms and blank W-2.

    Prior to the first payroll of the next calendar year

    Verify employee data: Correct any discrepancies including a missing or incorrect mailing address or social security number. Ensure any employees who are no longer with the company have been removed from the database.

    Check the wage, tax and benefits information: Verify the new state tax rates for disability insurance, unemployment insurance and the taxable wage limit. Compare your payroll register totals to form W-3 totals and verify if the Earned Income Credit (EIC) coding has been submitted correctly.

    Check for special considerations: Ensure the new year’s month-end close-out dates are accurate and that all necessary management reports are scheduled. Confirm the schedule of pay dates, period end dates and quarterly closing dates. While you check these schedule of dates, make sure they do not fall on any holidays or during weekends and make any adjustments as needed.

    Tax management can be time consuming and complicated. But utilizing automated payroll management services can eliminate some of your burden and can help reduce the time you spend generating the reports you need for tax filing.

    If you find yourself facing end-of-year payroll challenges, understand that you don’t have to face it alone. Turning to a PEO like GMS – which offers online, 24/7 automated payroll management support, can reduce your payroll burden and save you time and money you would have otherwise spent trying to remain compliant with various (potentially confusing) tax laws.

  • According to a recent article in Bloomberg’s Business News, HR departments are going to become increasingly busy over the next 12 to 18 months. Why? Because of a recent memorandum that was issued by the White House to the Department of Labor to “modernize and streamline overtime regulations and make more workers eligible under federal law.”

    At the base of this memo is the administration’s desire to transform employees exempt from overtime hours (salaried employees mostly) into non-exempt employees. This will have enormous financial repercussions on businesses everywhere. If a salaried manager is working 50-60 hours/week and suddenly becomes a non-exempt employee, one of two things will have to happen. The employer will have to either cut that employee’s hours to save money (making him/her less productive) or will have to swallow the increased costs associated with more overtime. A third option would be to hire additional help, potentially adding additional employee-related costs.

    Unlike the initial rules for the Affordable Care Act, there is no exemption based on a company’s size. This could create extra pressure on small businesses. Not only would there be the cost of additional overtime, but there would also be the additional costs associated with the auditing employers will have to undertake to make sure they’re compliant with the new regulations.

    Of course, larger employers already have many of the mechanisms in place to take on this added regulatory burden. What about small businesses? Where can they go for help?

    You guessed it. GMS. Give us a call at 330-659-0100 or contact us online to learn more.

  • It’s always good to research your options before making a business decision. The questions may differ depending on the industry your company is in, but payroll plays a factor in every business, and it sure isn’t cheap.

    Statistics show that it costs small- to mid-size companies an average of $2,000 per employee per year to handle payroll. Even if you’re a small- or mid-size company, a Professional Employer Organization like Group Management Services may be a good fit to help streamline your payroll needs.

    Of course, working with a PEO is a big decision, so you’ll want to find out what they can offer your business. Here are some ways to find out if a PEO is good fit to handle your payroll.

    Payroll services from a professional employment organization.

    Determine Your Payroll Needs

    One big reason why businesses struggle to make their HR process both efficient and cost-effective is because many people aren’t trained to handle things like payroll or employee benefits. GMS is, and we can offer you several services to help, including:

    • Web-based software

    • Simplified payroll management

    • Payroll tax administration

    • Management of tax records

    • Simplified deduction tracking

    If you’re losing time and money trying to handle payroll, it may be time to consider working with a PEO.

    Ask Questions

    Don’t be afraid to see if a PEO can match your business needs. Want to find out how your accountant would play into a partnership with GMS? Wondering about time-keeping systems? Worried about account accessibility? These are all questions that may make a difference in your PEO decision.

    We are happy to answer any questions you may have when it comes to how a PEO can impact your payroll. In fact, some may even be answered in our Payroll FAQs.

    Learn More

    Working with a PEO is an important decision for your business. Even if you’re a small- or mid-sized company, GMS can provide you with top-quality payroll services.

    Want to learn more? Find out how GMS meets your needs and get a quote today if you think a PEO is the way to go.

  • It’s expensive to pay employees, and I’m not just talking about salaries and benefits.

    The payroll process is pricier than many business owners realize. It costs an average of $2,000 per employee per year for a small or mid-sized company to handle payroll. In addition, up to 40 percent of businesses in the United States are given an average of $845 in IRS penalties each year.

    These costs add up and can really hurt a company’s cashflow. We’ve already discussed how loss prevention and cost containment can help your business, but a professional employer organization (PEO) can also save you money and time by handling your payroll.

    Payroll costs you more than just your employees wages.

    Preventing Penalties

    You probably didn’t go to school to be an HR professional, so you shouldn’t be expected to understand all of the payroll penalty risks you face each day. But the people who work for PEOs are experienced HR professionals who can make your business simpler, safer, and stronger.

    For example, many PEOs assign a team of HR experts to your account. These professionals will help manage tax records and the storage of necessary payroll documentation, reducing your responsibility and liability in the process.

    Saving Time

    Many PEOs like Group Management Services also provide you and your employees with anytime, anywhere access to tax and payroll information. Plus, you can realize efficiencies in tracking paid time off and in direct-depositing paychecks that you never thought possible when you did it on your own.

    Yes, you’re still involved in the payroll process; PEOs just make it much faster and easier.

    Making Payroll Easy

    Saving money is great. It’s even better when you can cut costs while streamlining a part of your business. Contact us today if you have any questions about payroll.