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  • In a progressive move towards promoting fair wages and transparency in the workplace, Illinois has set a significant precedent by passing pay transparency requirements. On August 11th, 2023, Governor J.B. Pritzker signed a bill that will reshape how employers communicate compensation details to potential hires. This transformative legislation, House Bill 3129, aims to bridge the information gap between employers and job seekers, ensuring that pay scales and benefits are clearly outlined in job postings, thus fostering a more equitable job market.

    The Path To Pay Transparency: A New Era Unveiled

    Starting January 1st, 2025, employers in Illinois with at least 15 employees will be obligated to disclose pay scales and benefits for positions within their job postings. This move echoes a broader societal shift towards greater transparency, emphasizing openness and fairness throughout employment.

    House Bill 3129 introduces a compelling requirement for employers to furnish the anticipated pay scale and benefits in their job postings. This provides job seekers with a comprehensive understanding of the potential compensation package, allowing them to make informed decisions about their career prospects. This fosters trust and honesty between employers and applicants and lays the groundwork for a more equitable job market where candidates have the knowledge they need to negotiate fairly.

    Inclusivity And Impact: Who And What Does It Apply To?

    The law’s reach extends to a broad spectrum of job positions. If a job is to be partially performed in Illinois or if the employee is expected to report to an Illinois-based supervisor, office, or work site, then the law’s provisions apply. This ensures that the information asymmetry between employers and employees is addressed consistently and uniformly.

    However, the legislation’s impact doesn’t just stop at pay scales. The definition of “benefits and other compensation” under House Bill 3129 includes various incentives, such as bonuses and stock options, reflecting the comprehensive nature of the law. Employers are tasked with providing a holistic view of the compensation package, fostering greater clarity for potential hires.

    Navigating Compliance And Implementation

    To meet the requirements of the law, employers can include a hyperlink within job postings, redirecting candidates to a publicly viewable webpage containing the pay scale and benefits information. This innovative approach marries technology with transparency, streamlining the communication of crucial details while maintaining the user-friendliness of the application process.

    For those employers utilizing third-party platforms for job postings, the responsibility of including the necessary information lies with both parties. Employers must provide the pay scale and benefits to the third party, which becomes accountable for its inclusion. This collaborative effort ensures that vital details are communicated accurately.

    Tori Moldovan, PHR, GMS’ Client Services Manager, expressed, “Pay transparency laws make you think differently when looking at your employee base. When you have to consider items such as the pay scale and benefits for the position, it forces you to look at your organization as a whole. These will be posted, so current employees will be able to see what you’re offering as well. If they aren’t at that mark with current employees, it could lead to other issues for employee retention and wage inequality that may be brought to light.

    From a compliance standpoint, employers that fail to adhere to pay transparency laws in Illinois can face up to $10,000 in penalties for repeat violators. It’s important to ensure you are following the guidelines set forth by the state.”

    Empowering Employees And The Role Of The Illinois Department Of Labor

    To strengthen employee empowerment, House Bill 3129 also mandates employers to notify current employees of all promotional opportunities arising within 14 days of external postings. This promotes internal growth and helps in fostering a motivated and loyal workforce.

    The Illinois Department of Labor (DOL) is a guardian of compliance, empowered to initiate investigations into potential violations. Whether triggered by individual complaints or the department’s discretion, this measure underscores the state’s commitment to upholding pay transparency and ensuring its effective implementation.

    The Road Ahead: A More Fair And Transparent Job Market

    Illinois’ stride towards pay transparency is a significant leap forward in reshaping the job market dynamics. By embracing open communication of pay scales and benefits, the state sets a powerful example for other jurisdictions to follow. With the law’s implementation set for January 1st, 2025, the coming years promise to be transformative, creating a job market characterized by equity, trust, and empowerment for all.

    As Illinois paves the way, it’s not just pay scales and benefits being illuminated; it’s a brighter future for employment, one built on the principles of transparency and fairness. The journey toward pay equality has just taken a giant stride, and the destination looks promising.

    How A PEO Can Be Your Partner In Pay Transparency

    Embracing pay transparency is a legal obligation and a strategic move towards a fairer and more attractive workplace. As Illinois businesses gear up to navigate the new era of pay disclosure, a professional employer organization (PEO) like GMS can be your guiding light.

    PEOs specialize in managing HR functions, ensuring compliance, and simplifying complex tasks such as pay scale communication. We help you seamlessly integrate the required pay transparency measures into your job postings, taking the weight off your shoulders and allowing you to focus on what you do best – running your business. By partnering with GMS, you ensure compliance and foster a culture of transparency and employee trust. As the Illinois pay transparency law approaches, GMS can be your trusted partner, providing you stride confidently into a future where fairness and openness define your workplace. Contact us today to learn more.

  • Get ready, Colorado; significant changes are coming your way. The Colorado legislature has recently passed Senate Bill 23-105, which clarifies existing employer obligations and introduces new requirements. Brace yourselves for an enhanced workplace equality landscape, as these amendments are set to take effect on January 1st, 2024.

    Understanding The New Law

    Let’s dive into the details of this groundbreaking law. Employers will now be required to make reasonable efforts to spread the word about job opportunities within their organizations. From now on, employers must “announce, post, or otherwise make known” these openings internally on the same day they’re advertised externally. In addition, this announcement must be made before the employer selects a candidate for the position. Transparency is the name of the game!

    Employers must provide comprehensive information to potential applicants when publishing a job opportunity. This includes disclosing the following:

    • The hourly or salary compensation 
    • A general description of the benefits or other compensation applicable to the job opportunity 
    • The date the application window will close

    No more guessing games or hidden surprises for job seekers! Moreover, once an employer selects a candidate for a position, they must make an effort to keep the entire team informed. Sharing the candidate’s name, former job title (if applicable), and new job title is now mandatory. After all, open communication fosters a sense of community and transparency within the workplace.

    Employers must also inform employees on how they can express interest in similar job opportunities in the future. This means providing information on individuals or departments to whom employees can turn when they want to explore other career paths. All of this must be announced within 30 days of the candidate starting their new role.

    Additional Information Employers Should Be Aware Of

    Career progression is also in the spotlight with these amendments. Employers now have a responsibility to disclose vital information to all eligible employees regarding positions with advancement potential. Employees deserve to know the requirements for climbing the ladder, the terms of compensation and benefits for each position, whether full-time or part-time, the specific duties involved, and the opportunities for further growth.

    Now, here’s an essential update for businesses outside of Colorado. If you have fewer than 15 employees in Colorado working remotely, you’re not off the hook yet. You must still provide notice of remote job opportunities until July 1st, 2029.

    Mark your calendars because, by July 1st, 2024, the Colorado Division of Labor Standards and Statistics will be rolling out regulations to implement these exciting amendments. Stay tuned for more updates as the implementation date approaches.

    Embrace The Future With A PEO

    As a new era in workplace equality approaches with Colorado’s amended Equal Pay for Equal Work Act, businesses must stay ahead of the game. Fortunately, there’s a solution that can be your guiding light through this – partnering with a professional employer organization (PEO). A partnership with a PEO like Group Management Services (GMS) provides access to expert resources, comprehensive HR support, and a wealth of knowledge in navigating the intricacies of this law.

    With GMS by your side, you can effortlessly ensure compliance with the new requirements. From internal job postings and transparent compensation disclosures to facilitating career progression and promoting employee engagement, GMS can help you seamlessly implement the necessary changes. Our expertise and guidance will empower you to foster a culture of fairness, inclusivity, and growth within your organization. Contact us today to learn more.

  • When you own a business, salaries are a big deal. According to the Society for Human Resource Management, employees’ wages can account for 18% to 52% of your operating budget. Your employees play a key role in the success of your business and an efficient employee compensation plan is important for ensuring the pay structure of your business is working properly. A formal compensation structure can help your business manage salary expenditures and retain top talent that will help your company grow.

    What Is A Compensation Structure (And How Can It Help My Business)?

    A compensation structure, also known as a salary structure, is a framework that a business uses to determine compensation. A good structure sets pre-existing guidelines to delegate these pay increases in a fair, unbiased manner, as opposed to using inconsistent factors like negotiation or previous salary history. A formal structure typically includes standards for the following forms of compensation:

    • Starting salaries for various positions.
    • Managing when and how raises are addressed and awarded.
    • Distributing bonuses and commissions.

    Formalizing how you compensate your workers achieves a couple of goals for your business. To start, it creates a structure where you can create accurate staffing projections going into the hiring process, while allowing you to map out how future raises and bonuses will impact your total salary expenditures.

    A formal salary structure also gives employees more insight on how pay decisions are made. This information allows you to justify decisions with existing data and make the criteria for salary adjustments clear to everyone.

    Types Of Compensation Structures

    The good news about creating salary structures is that you don’t have to invent the wheel. There are some established compensation structures out there that you can adopt and adapt as needed. These include the following structures:

    • Broadband
    • Grade and range
    • Step
    • Market-based

    Broadband structures

    A broadband approach is a more traditional structure that was common for older companies. This type of structure creates “bands” of earnings that are based on seniority and position levels. As employees move up the hierarchy and stay with the company longer, they can move up to new bands.

    Broadband structures were very popular when people tended to stay in one job for most or all of their career. These structures typically have fewer bands, but each band has a broad salary range and multiple positions within each band.

    This type of system is good for rewarding employees who acquire new skills to advance from one band to another, or for companies who want extra flexibility in determining pay and promotions within a single band. However, the length of time it can take to move from one band to another may not appeal to ambitious young workers who want to be recognized for their achievements.

    Grade and range structures

    Grade and range structures are similar to broadband structures, but the “bands” are usually much smaller and are not tied to length of tenure. Every grade allows a company to group similar jobs together within and base that grade’s range on market rates, overall responsibilities, and organizational value. As employees advance to new higher grades, businesses can increase the salary range and earning potential to accommodate that level of value.

    The added bands allow for more flexibility to jump from one pay grade to another, rewarding employees that perform well. A series of grade levels allows business owners to visualize each level of responsibility and communicate them to employees. These qualities make grade and range structures a natural fit for larger businesses, companies with extended management hierarchies, and organizations with diverse roles who want more flexibility to promote employees earlier without as much of a commitment as broadband.

    Step structures

    While broadband and grade structures take increased skill or responsibility into account for promotions and hiring, step structures are much more focused on length of service. “Stepping” sets up a structure where employees receive fixed pay rate increases based on a pre-set schedule. For example, an employee with four years of experience would make more than one with two, depending on your stepping schedule.

    Step structures offer a couple of key advantages for both employers and employees: they’re easy understand and simple to manage. This type of compensation structure usually involves smaller increases per step, but employees will advance predictably up the ranks. Employees can very quickly understand what it takes to increase compensation, while employees can easily automate salary adjustment and forecast future expenditures based on set dates.

    These advantages make step structures a natural fit for businesses with smaller compensation budgets or those that want to ensure steady increases to company spending. Organizations that prefer to tie their compensation philosophy to tenure instead of individual performance will also find step structures appealing.

    Market-based structures

    Market-based salary structures are less about what is happening inside your company and more about external factors. Businesses with this type of philosophy will base salaries and proposed pay increases on data gathered from outside sources.

    This approach allows employers to benchmark starting salaries and promotions around what the market pays for similar positions. Businesses can then evaluate other external factors – cost of living, average compensation by location, etc. – to adjust their structure to their needs. For example, a business in a smaller market may offer slightly lower salaries than big cities because the cost of living is lower. By benchmarking salaries, businesses can be flexible enough to compete with the market for top talent.

    How To Create Your Salary Structure

    Now that you know the various salary structures, it’s time to create one that‘s best suited for your business. This process depends requires a few key steps to not only identify which type of structure is right, but also put that plan in motion.

    Identify the value of each position in your company

    Even though there may be salary data available for specific roles, they aren’t specific to your business. Take some time to evaluate just how essential each role is to the operations of your company. If a job is critical to your success, you may want to put that role in a higher pay grade or adjust your structure accordingly. This process will help you cater your structure to your exact needs so that you can attract and retain talent for pivotal positions while balancing your expenditures.

    Consider how your company stands compared to your market

    Your place in the market can dictate a lot about how you approach your employee compensation structure. This process involves asking yourself a lot of questions. For example, do you need to pay employees more than market-level wages to retain key talent? Do you need to adopt a lower-than-market strategy to stay within budget? Are employees in your market more likely to stay with your company for a long time?

    Each answer will help dictate which approach is right for your company. Identifying opportunities in your region and industry can help you balance what’s most valuable to your business with what you need to pay to compete with competitors.

    Formalize your compensation structure and align current employees with your strategy

    Once you have the answers you need, you can build a compensation strategy tailored to your needs. This compensation plan should include a detailed breakdown of each salary range, pay grade, or steps so that nothing is left unanswered. Document everything from minimum and maximum salaries for each position, timelines, and other details that pertain to your structure of choice.

    It’s also important to remember that this new structure applies to not only future hires, but also current employees. Take some time to evaluate your current employees’ salary rates and see how they compare to your new structure. You may find that some workers are behind – or ahead – of where they would be in the new system.

    Create a plan to have these outliers align with your new structure. For people behind schedule, that may call for greater increases to help them hit their expected minimum rate. Meanwhile, employees that are well ahead of schedule may call for a pay freeze or smaller increases until they match the compensation you identified as appropriate for your structure.

    Build a Compensation Structure That’s Right for Your Small Business

    Creating a new employee compensation plan is a daunting task for small businesses. It’s not just about money – these decisions also need to factor in the costs of hiring and training employees, navigating payroll, and the ever-present need for compliance. That’s why it’s helpful to go through these processes with the right partner.

    GMS works with small businesses to give them the tools and support they need to grow. Our experts can work with your company to implement salary structures that not only help you attract and retain key employees, but also work with your bottom line.

    Are your ready to make your business simpler, safer, and stronger? Contact GMS today to about how we can help you save time and money through payroll administration and other HR strategies.

  • 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.

  • From payroll to benefits to recruitment, human resources is an important function that keeps a business running. And like any other business function, the management and implementation of these HR responsibilities all incur costs that you’ll need to factor into your budget as you plan for the new year.

    Whether you’re basing your budget on last year’s expenditures or planning every budget item from scratch, it’s important to review your different HR needs, so you don’t come up short in the places where you need extra funds. The better you can understand these HR costs, the better you can plan what the next year will look like for your company. Done well, an HR budget will help to prevent over-hiring and understaffing and ensure you have the resources to keep your team engaged on the job. Here are some key HR components that you should consider when planning a yearly budget.

    Image of money set aside for HR budgeting items for next year.

    Recruitment

    There is one big question when it comes to employee recruitment: How many people do you expect to add next year? The answer to that question will dictate how much you’ll need to put into recruitment efforts for your business.

    Employee recruitment can be expensive. The Society for Human Resource Management (SHRM) writes that companies spend an average of $4,129 per hire in recruitment costs. These costs include attempts to find candidates and actions to help qualify those targeted recruits, such as:

    • Advertising
    • Travel and events (e.g., College job fairs)
    • Drug testing
    • Background checks
    • Agency fees
    • Relocation

    Not to mention, you’ll have to account for the time it takes to screen and interview candidates, which could take anywhere from a couple of weeks to a few months. Every hour spent during the hiring process is an hour taken away from other essential business tasks. 

    Whether you’re looking to expand your staff or work in a high turnover industry, you should create a budget for your planned recruiting efforts. If you’ve been keeping track of how much you’ve spent on recruiting in past years, extrapolate that number based on how many candidates you want to hire in the coming year so that you don’t come up short when you need to fill an important position.

    Training and Development

    Once you hire new employees, you’ll need to train them. Not only can training better prepare your new employees for their positions, “95 percent of hiring managers considered employee training as a key retention tool,” according to a study conducted by the Chartered Institute of Personnel and Development.

    Of course, training and development costs money. According to the Association for Talent Development, the average cost of training is $1,888 per employee for businesses with fewer than 500 workers. These costs can include:

    • Internal training programs
    • Event registration fees
    • Travel expenses
    • Educational materials
    • Consulting fees

    Employee Wages and Salaries

    Payroll is one of the biggest items that you’ll have in your HR budget. The Houston Chronicle estimates that the average business spends somewhere between 15 to 30 percent of its gross revenue on payroll, although companies in the service industry may be closer to the 50 percent range. Regardless of your industry, make sure to take employee salaries into account, plus any estimated costs for any new employees you expect to add on in the coming year.

    While salaries are a huge part of your compensation budget, there are other considerations as well, such as payroll management costs, potential overtime hours, and any incentive programs. This also includes any raises, whether you give employees raises that coincide with performance evaluations or annual cost of living raises to account for inflation.

    Employee Benefits

    In addition to employee pay, there’s also a wide variety of benefits, such as health insurance, 401(k) contributions, and any other ancillary benefits, that you may offer as part of your overall employee compensation package. These costs will require a portion of your HR budget, too. 

    If you offer health insurance, as many small businesses do, it will likely take up a sizable portion of that budget. According to SHRM, the “average cost of providing healthcare makes up 7.6 percent of a company’s annual operating budget.” As an employer, you can control some of these costs by electing how much of the health insurance premium you’ll contribute and how much will be your employees’ responsibility. As you go through the budgeting process, you’ll want to account for any possible increases for next year’s health insurance premium, as well as review your contribution strategy. Keep in mind, these healthcare costs don’t necessarily include other insurance benefits you may offer, such as dental, vision, and life insurance. 

    Additionally, if you contribute to your employees’ 401(k) retirement plans, you’ll need to factor these amounts in to your budget as well. Fortunately, this should be an easy line item to budget for next year. Since it’s a fixed percentage, you can estimate that all employees will receive a specific amount.

    Employee and Labor Relations

    While compensation, benefits, and training can go a long way toward improving employee morale, there are some other measures you can take to reward workers. These include:

    • Service awards
    • Recognition efforts
    • Performance and attendance incentives
    • Company events
    • Employee birthday perks and gifts

    These items may not make up a massive part of your budget compared to other key HR needs, but they can be important additions to your company culture. Also, you never want to find out that you have to cancel those service awards because you forgot to plan ahead for them in past budgeting meetings. 

    On the flip side, you may also want to consider setting aside a small portion of the budget in case you face any labor relations issues. Budgeting for outplacement or legal fees can help your business prepare in case you have any unexpected issues in the upcoming year. 

    Health, Safety, and Security

    HR budgeting also gives you a chance to invest in the well-being of your employees by making your work environment a safer, healthier place. By putting aside some of the budget for certain programs or initiatives, your business can reap the rewards of focusing on health, safety, and security.

    In terms of workplace safety, GMS’ own Jeff Costin notes that workplace safety programs can increase workplace productivity, improve retention rates, and reduce costs affiliated with injuries at work. Budgeting for safety training programs, new safety manuals, regular inspections, and other strategies can help you manage workers’ compensation claims costs and make your workplace safer in the coming year.

    Budgeting for health-related programs can also be a worthwhile expense to plan for the next year, as 75 percent of all healthcare costs are attributed to preventable conditions. A workplace wellness program can help your employees develop a healthier lifestyle through a variety of initiatives, such as:

    • Smoking cessation programs
    • The addition of a fitness facility or space
    • Health screenings
    • Lunch and learn events

    An HR Budgeting Partner

    Once you have your HR budget in place, you’ll need to have the support to move forward with all your plans and manage your HR administration needs. A Professional Employer Organization (PEO) like Group Management Services (GMS) can help businesses manage these HR functions, including payroll and benefits administration. 

    If you have any questions about how to get the most out of your HR budget or are worried about any compliance concerns associated with managing HR, contact GMS today to talk with one of our experts about how we can help your business prepare for the future.

  • Whether you have a single paid employee or run a small business with many employees, you need to pay attention to payroll. However, payroll involves more than cutting a few checks. Good payroll management is comprised of several different functions that help you properly pay your employees and keep your business compliant with government regulations.

    Payroll documents for a business handling payroll management. 

    Processing Paychecks

    While payroll management involves more than just paying people, proper paycheck processing is still a critical function. Employees don’t appreciate paycheck errors, so a payroll manager needs to verify several details that go into an employee’s compensation. This includes verifying salary and hourly rates while also accounting for regular and overtime hours. Additional compensation in the form of vacation time, holiday pay, and other factors may also apply.

    Another part of processing paychecks is applying any necessary deductions. Some of these deductions, such as federal income tax, are mandatory. Other are optional depending on the employee. For example, an employee who has opted into a company’s group health insurance and 401(k) plans will have insurance premiums and retirement contributions deducted from his or her paycheck.

    Handling Payroll Taxes

    Your employees aren’t going to be the only people upset if you don’t correctly process payroll. Roughly 70 percent of the IRS’ annual revenue is made up of payroll taxes. This means failing to pay payroll taxes can be a costly mistake, as businesses are hit with billions of dollars in payroll tax penalties each year. 

    Payroll managers need to weigh several factors to determine tax deductions, as different regions will have different tax rates. Then they must complete several forms documenting payroll taxes, which includes filing W-2s for each employee by Jan. 31 and completing a 941 form that reports the employment taxes an employer withholds and contributes each quarter. Not only do these files need to be filed accurately, they need to be filed on time, which can be difficult for someone without any training in payroll tax management.

    Keeping Records

    In addition to payroll tax compliance, payroll management also includes a great deal of recordkeeping. The Fair Labor Standards Act (FLSA) requires employers to keep accurate records for every non-exempt worker. These records include:

    1. Employee’s full name and social security number
    2. Address, including zip code
    3. Birth date, if younger than 19
    4. Sex and occupation
    5. Time and day of week when employee’s workweek begins
    6. Hours worked each day
    7. Total hours worked each workweek
    8. Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”)
    9. Regular hourly pay rate
    10. Total daily or weekly straight-time earnings
    11. Total overtime earnings for the workweek
    12. All additions to or deductions from the employee’s wages
    13. Total wages paid each pay period
    14. Date of payment and the pay period covered by the payment

    The FLSA also states that payroll data should be kept on file for three years. Records that involve wage computations should be kept for two years, such as work schedules, time cards, and other related documents. A payroll manager can ensure that these documents are stored electronically in case the Department of Labor [DOL] ever decides to check in on a business.

    Employee Accessibility

    It’s important to have financial documents readily available for the DOL, but employees should also be able to access key payroll information. An online employee portal like GMS Connect gives workers a secure online place where they can access personal information, such as:

    • Benefits summaries
    • 401(k) summaries
    • Check history and deduction totals
    • Direct deposit details
    • Time clocks
    • Paid time off 

    In addition, GMS Connect allows employees to download and print out important documents such as W-2s, change tax settings, and make payroll inquiries, which gives your employees the power to answer their own questions come tax season.

    Simplify Payroll Management with the Help of a PEO

    Payroll isn’t easy. As a small business owner, you may not have an HR department to deal with the responsibilities and liabilities of payroll management. However, that doesn’t mean you need to manage payroll on your own.

    Outsourcing payroll administration to a Professional Employer Organization can help you ease the burden of managing payroll for your business. GMS can help you handle all the important financial details, allowing your business to effectively manage payroll and stay compliant. Contact GMS today to talk to one of our experts about how outsourcing payroll administration can benefit your business.

  • Who doesn’t love payday? For many employees, payday makes them feel better than Christmas. As a small business owner, you have the freedom to decide how to handle payroll at your organization. Talk about a huge responsibility. It’s important to get it right, as payroll done wrong can cost a small business owner time and money. 

    There are a few different methods for distributing employee pay, but savvy business owners find that electronic payroll methods like direct deposit and payroll cards streamline the process and keep employees satisfied. We explored the different types of payment methods to help you determine the best payroll solution for your business.

     Small business owner determining employee pay.

    Direct Deposit

    Direct deposit lets you put your employees’ wages directly into their checking or savings account. Because everything is handled digitally, employees don’t need to be present to receive their pay. The convenience of direct deposit for both employers and employees has made it the most common payment method in the U.S., with 82 percent of employees receiving their pay this way, according to a survey by the National Automated Clearing House Association (NACHA). 

    Direct deposit can help save time since you don’t have to fill out and distribute checks each pay period. Online payroll software can further help streamline this process and save money. With software, payroll simply needs to be reviewed before submitting it to be deposited in your employees’ bank accounts. Without software, small business owners are responsible for paying fees for setup and for every transaction.

    For direct deposit, you’ll need to gather your employees’ banking information at the time of hire. Of course, it only works if employees have bank accounts. According to the Federal Deposit Insurance Corporation (FDIC), nearly 20 percent of American households are “underbanked,” meaning they either don’t have or actively use a bank account. If you choose direct deposit as your primary payment method, you’ll need to provide an alternative option for those who don’t bank.

    Payroll Card

    Payroll cards are another form of electronic payment that lets you automatically load an employee’s wages directly onto a prepaid card at each pay period. Employees can then either use the card directly to make purchases or withdraw cash at ATMs.

    With payroll cards, employees don’t need to have a banking account, making it a viable alternative to direct deposit. It also helps save businesses time and money compared to writing or printing paychecks. The benefits for both employers and employees are why payroll cards have become a growing trend, with the use of payroll cards expected to increase by about 43 percent by 2022, according to a study by Aite Group.

    Other Types of Payment Methods

    Paychecks and cash are two outdated forms of payment methods that simply aren’t worth the hassle or added costs. For employers, writing or printing paychecks can be an extremely time-consuming task, especially depending on the frequency of your payroll. 

    Additionally, you’ll have to factor in the cost of purchasing blank checks, and/or printing supplies like check stock, ink, and a printer that has the capability to print with magnetic ink to read, process, and print bank account and routing numbers on the checks.  Switching to paperless can cut these costs. A report in Business News Daily states that “businesses save between $2.87 and $3.15 per pay run by paying employees electronically, such as via direct deposit, instead of via paper check.” The report also points out that online pay stubs save an additional $1.20.

    The amount of recordkeeping that comes with paying in cash can also be a nightmare for small businesses. Cash payments could make the IRS suspicious that you aren’t taking out the correct tax amounts, making you susceptible to an audit. Even if you are in compliance, IRS audits cost significant time and money.

    For both methods, employees need to be present in order to receive pay, which could be a problem if employees are out sick or on vacation. According to CareerBuilder, nearly 80 percent of Americans live paycheck to paycheck, so a delay in pay could really hurt your employees financially.

    Save Time Through Payroll Services

    While we’re thankful electronic payment methods have replaced checks and cash, managing payroll and tax filings can still be a time-consuming and challenging task for small business owners. 

    Need assistance? Outsourcing payroll administration to a professional employer organization (PEO) like Group Management Services (GMS) can help save you time and give you peace of mind. From electronic payroll processing to software to taxes, GMS takes an active approach managing payroll, so you can spend the extra, time, money, and energy growing your business. In addition to payroll services, GMS offers a full suite of HR services that compliment payroll administration, including human resources, risk management, employee benefits, and more.

    Contact GMS today to see how we can help manage payroll at your organization.

  • Ever wonder the reasoning behind a paycheck? As in, why does one employee make a certain amount, while another earns more or less? It all comes down to an organization’s compensation philosophy. 

    Does your organization have a compensation philosophy? A WorldatWork survey found that more than nine in 10 companies have a compensation philosophy; however, that doesn’t mean their compensation philosophies are any good. Nearly one in three compensation philosophies aren’t in writing, while about half of employees don’t even know or understand them. This presents a huge missed opportunity for companies, as there are many benefits to pay transparency. 

    Intrigued? Read on to learn what compensation philosophy is and how your organization can benefit from having a good compensation strategy in place.

     A small business owner handing out a paycheck that was based in compensation philosophy.

    What is Compensation Philosophy?

    A compensation philosophy answers the “why” behind employee pay. In a formal, written statement, a compensation philosophy should identify the organization’s pay programs and reward strategies and create a framework for consistency. This basis will serve as the guiding principles that drive decision making regarding compensation at a company.

    Compensation philosophies are typically created by your company’s human resource professionals. That may be a dedicated employee or yourself, depending on the makeup of your business. When developing a compensation philosophy, the Society for Human Resource Management (SHRM) says several factors should be taken into consideration, including:

    • Company’s financial position
    • Size of the organization
    • Industry
    • Business objectives
    • Market salary data
    • Level of difficulty finding qualified talent

    A good compensation philosophy should support the organization’s business goals and objectives, while still being competitive in the market. A reward system for raises and bonuses should also be factored into a compensation philosophy.

    Why is Compensation Philosophy Necessary?

    Compensation philosophies are used to attract, retain, and motivate employees. There are several reasons why your organization should be transparent about your compensation philosophy.

    Demonstrate commitment

    By taking the time to ensure fair compensation strategies, your organization can help employees feel appreciated. According to a survey by the American Psychological Association, 93 percent of employees said they are motivated to do their best work when they feel valued. Sharing your compensation philosophy will show your employees that you care and are invested in their wellbeing.

    Retain employees

    The way you approach compensation can have a direct impact on employee satisfaction. In fact, how they feel about your pay process can be even more important than how much they’re paid. According to a PayScale survey, an employee’s perception of your payroll process is “5.4 times more impactful on how satisfied they are than how they’re paid relative to market.” That suggests that if your organization is fair and transparent about compensation, employee satisfaction and retention rates could increase.

    Attract talent

    Payroll transparency can impact more than just your current employees. Publishing or sharing your compensation philosophy with job candidates should attract more talent and help find the right people whose needs and values align with your philosophy. As SMART Recruit Online found, job listings with a compensation listed increased the total number of candidates by 30 percent. Candidates appreciate companies that are transparent about pay, and the number of applicants an organization receives will likely reflect that.

    Ensure equal pay

    While there are allowable pay differences based on factors not prohibited by law, your compensation philosophy should show equal pay for equal work. Feeling underpaid is a top reason why employees quit their jobs, so ensuring equal pay through your compensation philosophy will help increase retention rate.

    How to Write a Compensation Philosophy

    There are many different types of compensation philosophy. For example, financial services company Citi and predictive marketing platform Windsor Circle are two very different, yet good compensation philosophy examples. Citi takes a more philosophical approach to its compensation philosophy by laying out guidelines rather than fixed numbers, whereas Windsor Circle delves into the details of its compensation package. Despite their different approaches, both compensation philosophies hit the marks on fairness, transparency, and commitment.

    Small business management blog BizFluent laid out four different ways you can write a compensation philosophy.

    Percentile-based

    Some organizations will use percentiles in their compensation philosophy. Percentiles spell out where wages will fall in relation to the regional wage market. For example, a company might pay its employees at the 60th percentile of the regional wage market. This means that employees will earn more than the bottom 60 percent of your market, but less than the top 40 percent of that same population.

    Fixed numbers

    A compensation philosophy that uses specific numbers will detail exactly what each employee makes. For example, an entry-level employee might make $25,000 during their first year, and $30,000 during their second year, dependent upon good performance. Listing a fixed number or range can also help attract more candidates when it comes time to hire.

    Compensation package breakdown

    A compensation structure is a great place to include items apart from salary that make up an employee’s compensation package. This will include base pay, health insurance, and other forms of indirect compensation and even non-monetary rewards like recognition and achievements.

    Non-specific

    A non-specific compensation philosophy won’t provide percentiles, hard numbers, or even a breakdown of what the compensation package includes. Instead, the compensation philosophy will focus more on the guiding principles that help the organization determine how it will pay its employees. The philosophy, using Citi as an example, might say that one of its objectives is to “attract and retain the best talent to lead the company to success.” Citi’s philosophy aims to do this by providing competitive compensation programs and compensating employees based on ability, contributions, and performance.

    How to Review Your Compensation Philosophy

    Compensation philosophies should be reviewed regularly and updated when necessary. When reviewing your compensation philosophy, SHRM says you want to be able to answer “yes” to the following questions.

    Is the compensation philosophy equitable? 

    HR is the neutral department in an organization, so it’s your duty to make sure all rules, including employee pay, are fair and impartial. One department or employee shouldn’t get preferential treatment over another unless there is a justifiable reason behind it.

    Is the compensation philosophy defensible and perceived by employees as fair?

    There will be times when you need to defend your compensation philosophy like when an employee asks for a raise you can’t give. A good compensation strategy will retain talent by motivating employees to perform to their full potential and rewarding those that do. It will also attract candidates with the right salary requirements. Make sure wages are competitive with market value, or an employee or potential candidate may seek an opportunity that pays better elsewhere.

    Is the compensation philosophy fiscally sensitive?

    It’s important to define the competitive market position of the organization as it applies to base pay, variable compensation, and benefits opportunities. Make sure the compensation strategy supports the business strategy, competitive outlook, operating objectives, and human capital needs.

    Are the programs included in the compensation philosophy legally compliant?

    The rights of employees to be free from compensation discrimination is protected under several federal laws, including the Equal Pay Act, Title VII, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities of Act (ADA). The Fair Labor Standards Act (FLSA) also dictates minimum wage, overtime pay, recordkeeping, and child labor practices.

    Does the organization effectively communicate the compensation philosophy to employees?

    Communicating the compensation philosophy to employees can create a sense of fairness so no one feels cheated or underpaid. The WorldatWork survey found that 46 percent of organizations share minimal pay information with their employees, and the ones that do say more than half of their employees don’t understand it. When you share your compensation philosophy with your employees, opt for an “open door” policy so employees feel comfortable asking questions.

    Does the compensation strategy attract new hires?

    It’s a good idea to make job candidates aware of a company’s compensation philosophy, as it can help attract top talent. Does your compensation philosophy include salary listings, fair market pay, and language that makes employees feel valued? Applying these strategies can help attract more new hires to your business. 

    Attract and Retain Good Employees with the Right Compensation Philosophy

    Simply having a compensation philosophy isn’t enough. Understanding what makes a good compensation philosophy and being transparent about pay will help your organization attract, retain, and motivate employees. 

    Group Management Services offers a variety of payroll, risk management and human resources services, including national and local compensation strategies for businesses looking to hire. Contact GMS today to talk with one of our experts about how you can define compensation philosophy at your organization.

  • The first wave of minimum wage increases hit New Jersey employers July 1 after state legislators reached the deal earlier in the year. However, business owners need to prepare themselves for more than just this initial wage boost. Here’s what New Jersey employers need to know about New Jersey’s plan to raise the minimum wage to $15 – and why business owners across the country should pay attention.

    A small business owner accounting for increasing minimum wage.

    Breaking Down New Jersey’s New Minimum Wage Deal

    As of July 1, 2019, the minimum wage in New Jersey is now $10 per hour, but it won’t stay there. The new minimum wage deal instituted regular intervals for wage increases. The current $10 rate is set to increase to $11 starting Jan. 1, 2020. From there, it will go up by $1 every subsequent Jan. 1 until capping out at $15 in 2024.

    That’s not necessarily the end of any potential minimum wage increases, however. After 2024, any additional increases are “tied to the consumer price index for all urban wage earners and clerical workers, or CPI-W,” per NorthJersey.com. These changes would go into effect Jan. 1 of every year after 2024.

    Of course, there’s more to the new deal than just one set of minimum wage rollouts. There are some exceptions where certain types of workers will follow an alternative rollout. These include the following groups:

    Seasonal workers or employees with five or fewer workers

    The minimum wage rate is drawn out for these groups compared to the normal rollout. These types of employees are still currently at $8.85 per hour and follow a modified timeline.

    • $10.30 – Jan. 1, 2020
    • $11.10 – Jan. 1, 2021
    • $11.90 – Jan. 1, 2022
    • $12.70 – Jan. 1, 2023
    • $13.50 – Jan. 1, 2024
    • $14.30 – Jan. 1, 2025
    • $15 – Jan. 1, 2026
    • CPI-W-based increases plus parity to make up any remaining difference between standard minimum wage

    Tipped workers

    The take-home pay for these workers follows the same structure as the normal minimum wage rollout, although the how they’re paid is different. Tipped employees must receive at least minimum wage through the combination of salary and tips. The new rollout updates the salary floor for these workers accordingly:

    • $2.63 – July 1, 2019
    • $3.13 – Jan. 1, 2020
    • $4.13 – Jan. 1, 2021
    • $5.13 – Jan. 1, 2022
    • CPI-W-based increases starting 2025

    Agricultural workers

    Unlike other groups, agricultural workers will cap out at $12.50 before being tied to CPI-W. Like seasonal employees, these workers are still at $8.85 and follow an adjusted timeline

    • $10.30 – Jan. 1, 2020
    • $10.90 – Jan. 1, 2022
    • $11.70 – Jan. 1, 2023
    • $12.50 – Jan. 1, 2024
    • Any further changes depend on future wage raises

    How Employees Can Prepare for Minimum Wage Increases

    When it comes to minimum wage, there’s not much you can do as a business owner except prepare your business for the future. The first step for this is to convert your payroll every time minimum wage increases. If you don’t, the state of New Jersey can dole out fines of up to $1,000 and an “administrative fee equal to not less than 10 percent or more than 25 percent of any payment due to employees.”

    You’ll also need to evaluate how the slate of minimum wage increases affect your employees and what it will do to your profitability. This can mean planning out price adjustments for products and services over the next several years to account for the set wage increases. Meanwhile, you can potentially use the new rates to find better employees if you have the financial wiggle room to do so. Offering a little more than minimum wage may make your business more attractive and give you more interested candidates. From there, you can choose the best employees if you struggle to find good talent.

    Prepare for the Future with Proper HR Management

    The new minimum wage deal is a big change for business owners in New Jersey. However, employers outside of the state should also take notice. New Jersey, along with California and New York, serve as a sort of testing ground for changes like this. If the minimum wage increases do well in New Jersey, other states may look to adopt similar increases as well.

    Whether you own a business in New Jersey or some other state, it’s important to make sure you keep up with current and future legislature. As a Professional Employer Organization, GMS not only helps you stay compliant, we can save you time and stress by managing key business functions like payroll, benefits administration, and other important services.

    Ready to prepare your business for the future? Contact our New York office or one of our many other locations today to talk to one of our experts about how we can help you make your business simpler, safer, and stronger.

  • When you’re thinking of starting a business, your passion is ultimately what drives you to provide the best product or service. The first thing that comes to your head is not about the technology you need for payroll, or how you are going to recruit top talent. Need an employee handbook? “I’ll type something up real quick.” 

    These are just a few of the many human resource topics you can easily put on the backburner without realizing the full scope of responsibilities you now carry as a business owner. As for the future of HR, it’s only getting more crucial for businesses to stay compliant with laws and stay protected.

    Two small business owners responsible for many HR functions, including payroll and taxes. 

    HR Responsibilities for New Business Owners

    The U.S. Small Business Administration puts the followings tasks under human resources:

    • Recruitment and hiring
    • Payroll and benefits
    • Employee retention and compensation
    • Laws and regulations

    Recruiting can be a difficult and frustrating process. Doing it the right way, the first time, will save you time and money to produce the best results down the line. This can result in hiring committed, talented, and loyal employees that will benefit your company and your bottom line. “Where do I even start,” you may ask. A job description and an employee handbook can get the ball rolling, but you must write both correctly to save yourself in the long run. According to HR Dive, 72 percent of hiring managers say they provide clear job descriptions, while only 36 percent of candidates agree.

    Once you have employees, you must have a system for payroll. Again, you may not know where to start. You know how much you want to pay your employees, but now you must log hours, file taxes, and keep up with your own finances. This is where retention and compensation come into play as well. Keeping up with workers’ compensation, healthcare, 401k, and all other benefits go hand in hand with retention and compensation. According to MetLife, 51 percent of employers say using health and wellness benefits to maintain employee loyalty and retain talent will become even more important in the next three to five years.

    Lastly, staying on top of laws and regulations can be overwhelming because of how often they change. Failing to put these new regulations into place can result in legal issues, which is why it is essential to stay on top of them. Dozens of new laws take effect yearly and as an owner, you are responsible for making sure your company is compliant. 

    Set Your Business up for HR Success

    Preparing for the future of HR can be simple with the right resources. Being able to embrace change, technology and the new workforce is essential. Now what can GMS do for you? GMS is a Professional Employer Organization that puts all of your HR responsibilities under one roof for your company. We have the HR experts who will keep your organization up to date with the latest regulations, making sure you and your workforce are protected. 

    GMS has you covered when it comes to areas like payroll, tax, human resources, risk management, benefits, and healthcare. We help you reduce costs, limit your business risk, and save time and money when it comes to HR administration. Contact GMS to see how we can help manage and benefit your organization!