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Midwest Regional Payroll Conference 2018

Presented by Jo McClure, CPP

Axcet HR Solutions

As Director of Payroll Administration at Axcet HR Solutions, Jo McClure leads the development and implementation of strategic payroll goals. At Axcet, Jo manages a team of awesome experts in payroll administration, compliance and best practices who make her look really good.

Jo obtained her CPP in April of 2006 and has held several positions in the Greater Kansas City Chapter of the American Payroll Association including serving as President in 2009.

She has served as a guest speaker at the 2007, 2008, 2016 and 2017 Midwest Regional Payroll Conferences.

Jo has also published articles: "Are You on the Wrong Side of the Law" in the February 2018 issue of Thinking Bigger Business and "Selecting a New Payroll System" in the April 2008 issue of Kansas City Small Business Monthly magazine and she’s a regular contributor to the Axcet blog (hint- subscribe at blog.axcethr.com).

Jo currently lives in a newly emptied nest in Olathe, Kansas (a suburb of KC) with her husband and dogs. She becomes more of a KU Jayhawk fan with every tuition payment made on her son’s behalf.

Specialties: Implementation, payroll compliance auditing, payroll best practice recommendations

Ensure compliance with Federal, State and Local laws

•Ensure compliance with our company policies and procedures

Primary Purpose

• Form I-9 audits on the rise

• Increase in DOL audits (ERISA)

• Penalties being assessed

• Coordinated audits

• Publicity

Fair Labor Standards Act Enforcement Statistics

•PAID Program• Six-month voluntary pilot program which FLSA–

covered employers can participate in to self-audit their compliance with the overtime and minimum wage provisions of the FLSA.

•A merger?• According to the White House’s “Delivering

Government Solutions in the 21st Century Reform Plan and Reorganization Recommendations,” the Dept. of Labor (DOL) may be merging with the Dept. of Education.

Keep these on your radar…

• Ensure compliance with company policies and procedures

• Identify non-compliant policies and procedures

• Ensure enforcement of company policies

• Internal fraud

Increased efficiencies

Cross training

New, updated, improved, centralized

documentation

Education

Team moraleEmployee confidence

Get your head in the game

Get everyone on board

Setting a realistic timeframe

Identify your resources

Maintain objectivity

Audit policy and practice

Never assume

• We’re all in this together

• We are looking for our mistakes

• Give permission in advance

• Accuracy over speed

• Knowing when not to begin

• Payroll schedule

• Company schedule

• Commit and stick

• Your team

• Your tools

• Your policies and

procedures

• Primary sources

• Secondary sources

• Do the policy, process and the practice match?

• Is the policy compliant? The process? The practice?

• Does the company policy exceed federal, state or local requirements?

Create an internal audit checklistPrioritize:

I-9s

Exempt vs. Nonexempt

Hours worked

Regular rate of pay and overtime pay calculations

Compare regulations to the actual practice and then to the policy

Develop process in advance for: Reporting noncompliance issues as

they are found

Dealing with them as they arise

• A documented, comprehensive list of all payroll areas to be audited

• Include everything that could possibly be paid to or deducted from an employee

• Consider DOL and IRS (tax) implications

• Start with the highlights and break it down from there

• Regular rate of pay

• Overtime

• I-9 forms

• Withholding orders

• Exemption status

• Earning & deduction

codes

• Minimum wage

• Employee files

• Per Diem

• Supplemental pay

• Direct deposits

• Manual processes

• Time & attendance

• Fringe benefits

• Allowances

• Year-end processes

• Taxable wage limits

• Reimbursements

• New hires

• Terminations

• Paid time off

• Loans

• Overpayments

• Constructive receipt

• Employee data changes

• Reversals

• W-4s & withholding practices

• SSN verifications

• Gift cards

• Service awards

• Employee discounts

• Gym memberships

• Personal use of company vehicle

• Company paid benefit premiums for owners of S-corps

• And many, many more

• Notice of Inspection (NOI) received.

• Employers have three business days to produce their I-9s, along with any associated records requested (including names and hire dates of employees, payroll records and E-Verify info).

• ICE inspects then notifies employers of any potential issues. They have 10 business days to fix the problems before ICE assesses fines and other penalties. If no issues discovered- employer will receive a Notice of Inspection Results stating they’re in compliance.

• Self-audit guidelines can be found here: bit.ly/selfaudit560.

• IMAGE program ice.gov/image.

• This payroll audit item is NOT about determining exemption status

• It IS about payroll practices specific to exempt employees

On call time Travel time Waiting time

Rounding Training timeOff the clock

work

Cleaning pay Sleeping time Breaks

Prep/concluding activities

Paid time off Holidays

Bonuses Commissions

Shift differentials

Manual Calculations

Retro pay increases

Weighted averages

Hourly: time and a half over 40 hours

Salary: salary ÷ number of hours the salary is intended to compensate = regular rate

• Regular hours < 40: add regular rate for each hour up to 40, then pay time and a half for hours over 40

• Regular hours = 40: time and a half

• Regular hours > 40: pay hours from 40 up to regular schedule at half-time, then time and a half past that

• Irregular hours: regular rate = salary ÷ total hours, then pay half-time for all hours over 40

Other pay methods: regular rate = total pay ÷ total hours; add half the regular rate for each overtime hour

Audit topic and findings

Recommendations

Company policy

Supporting documentation

Manual processesPre/post open

enrollmentYear end

401(k) ACA Information security

Determine what level of auditing/testing is needed:

• Full system auditing• Limited auditing of the basics• Auditing/ testing of changes

(release notes)

Create your plan • Determine in advance- Who will take the lead from your

company? Will you proactively involve legal counsel? You’ll need to review and react to the request quickly .

• Be prepared to provide responsive existing documents; check your posters- employee rights & Family and Medical Leave Act rights (if the FMLA applies to your business).

• Expect employees (including terminated employees) to be interviewed.

• Expect DOL Follow-up through additional interviews or via requests for more information. The DOL may also conduct a debriefing discussion to cover legal issues that may exist and penalties or back wages if assessed/owed.

Keep learning

Keep listening

Keep training

Keep looking

for better ways