2016 has come up with various rules and regulations coming into effect and a whole lot of extra complications in legal mandates for employers. The additional day in February isn’t just anywhere behind in increasing the complications for business owners. So, are you sure you are ready?

I know it’s not as daunting as preparing for Y2K but yes still you need to be sure that you don’t run into any payroll complications.

This extra day in February can significantly prove to be a big headache for HR and payroll professionals. Thus, not having a proper plan ahead might get those employers into trouble. Here are certain aspects that an employer must keep track of to prepare ahead and avoid the havoc.

Handling Variably Paid Employees

While there will be no problem in calculating the compensation of hourly employees, but they are sure to enjoy an extra day to log hours. On the other hand, salaried employees, including those who are paid weekly or biweekly, will surely receive an extra paycheck for 2016.

Alterations in Employee Benefits

To avoid the exceeding caps, benefits offered to employees are required to be calculated again. Take the example of employees’ withholding of the maximum amount for HSA. They might need to modify those per paycheck amount so that they can easily reach the exact limit without exceeding it by the end of the year.

Effect on Employee Morale

The approach an organization adopts to handle this paycheck difference can significantly affect employees’ morale, mostly in a negative manner as most of the employers decides to adjust the paychecks in a downward manner. This aspect is often overlooked as other take its place very quickly and are always kept on priority, thereby forcing employees to part their ways with the organization.

Other Effects

The changes in paychecks also put an adverse effect on income tax withholdings, alimony claims, child support or debt repayments, which are often calculated based on the number of paychecks issued during the year.

How to make the process simple?

To combat the changes, the best thing an organization can do is to partner with an ideal time and attendance management solution like TeemWurk. A system of such kind will help payroll administrators and HRs to easily

- Calculate employee working hours regardless of their employee type (full-time, part-time, hourly, etc.)
- Analyze absenteeism pattern and find ways to reduce this significantly.
- Cut the cost & time in collecting and managing payroll data manually including additional costs like labor charges, overpayment issues, time abuse, absenteeism, etc.
- Minimize the risk of manual errors and errors in calculation.

Other than having a right technology partner, you need to do some forethought and planning. Have your pay policies and employment contracts thoroughly reviewed by a payroll expert. In case you have employee contracts wherein it is specified that you are paying your employees a certain amount each pay period, or your state laws puts a restriction on how you make changes in pay or notify the same to the employees, you might be prohibited to make any paycheck adjustments. When in doubt, don’t hesitate in getting an expert’s opinion. Remember, violating an employment agreement is far more expensive than creating an extra paycheck.