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Ways remote work impacts payroll

Saturday, December 13, 2014

Payroll related considerations for remote jobs and remote team members

As the workplace continues to evolve from the pandemic, remote work remains commonplace for many businesses of all sizes. Organizations and companies are adjusting their processes to meet the demand for remote employees, shifting how timesheets are completed, altering how human resources classifies workers, and how communication skills are developed for the team at-large. Remote work will continue to exist for the long-term, even beyond the pandemic, so it is critical that remote payroll processes are clear and efficient -- particularly for teams that have a global payroll.

A major impact of remote work is how the payroll system operates at a specific business. Payroll processes look different for teams with remote workers, especially in how a payroll specialist might process payroll, whether the employee is part-time or full-time. Payroll frequency, such as biweekly or weekly payroll, may also change as the payroll data is collected.

This article will explore how remote work impacts payroll and considerations that payroll support team members should keep in mind when it comes to payroll services for remote employees.

What is remote work?

Remote work, also known as “telework” or “work from home”, refers to an arrangement where employees do not commute to a central business location. The work can be done off location and often involves the implementation of technological tools such as computers, software, and other digital systems.

Remote work began as early as the late 1970’s, right before the concept of a personal computer was commonplace in homes across the United States. As startups and entrepreneurial enterprises gained traction in the 1990’s, the concept of telecommuting or remote work was born. Larger corporations, especially in the technology industry, maintained a remote workforce for many years prior to the pandemic, however, telework exploded across many industries over the last few years as a result of COVID-19.

A recent study showed that 80% of workers in the United States expect their employers to allow them to work remotely at least several days of the workweek. Increased flexibility is becoming a desirable benefit for job alerts and job postings, drawing in employees who want to work from a different location than where the business is based. With this increased demand, it is important for payroll teams to anticipate the ongoing growth of this work structure and know how remote work can impact an organization’s entire system of payroll.

How does remote work impact payroll?

Below are the most significant ways that remote work structures can impact the payroll department at your company or organization.

  • Tax implications. Tax laws vary from state to state as well as for various countries around the world. As such, payroll administrators need to be knowledgeable of the different laws as they relate to withholdings, tax liabilities, and labor laws that can impact the data entry process for each employee. Generally, employees' tax implications or tax situation is in the context for where they are completing their work. For any location where you have a team member working, your team will need to be aware of the regulations in place for that locality. For example, states have different payroll tax rates that will need to be processed uniquely for each employee in a different location than your business. As you expand your operations in different states due to increased remote workers, it is critical to complete research ahead of time so that you understand the implications for a multi-state entity.
  • Compliance. Every state has a specific regulation around what is required for business registration if the business operates in a specific state or locality. For example, if you have an employee working in the state of Nebraska but your business is based in Ohio, you may still need to register your business in Nebraska since you have an employee operating from that location. Compliance concerns also extend into the actual classification of your workers. Often, remote workers are classified as exempt, however, should you have a non-exempt remote worker, you will need to make sure that there are payroll functions to track attendance and time data related to employee work schedules. Digital tracking tools are often a helpful solution for these types of situations.
  • Data privacy and fraud prevention. When payroll data needs to extend across a wider range of networks, it is important to recognize the increased need for security. It is important to have payroll systems that offer additional encryption and security options, especially if you have employees accessing this data remotely. Global teams often benefit from using employee portals that have multi-factor authentication built into the system with additional integrations for employee use. Extra security measures can also prevent fraud from taking place, such as sensitive payroll data or employee information being hacked or stolen.
  • Changes in actual payroll systems or payroll processes. With remote workers, how payroll is issued may undergo significant changes. Some of the systemic changes include:
    • Paychecks. Instead of issuing physical checks to be sent across various locations, your business will need to shift or emphasize direct deposit so that digital transactions can take place. This will require that your business integrates technology that can process digital payroll systems and provide compensation in a timely manner.
    • Communication. Traditional payroll or human resource teams can issue announcements or communications at in-person meetings. As meetings move remotely, it is necessary to allocate time for remote workers to receive these communications. Alternatively, updates can be communicated via email or through employee portal communication streams
    • Onboarding. Typically, onboarding involves a great deal of paperwork for employees to complete to get set-up within the payroll system. Forms can include direct deposit forms, W4s or W2s, as well as benefits information. For remote employees, it is important to have a digital system that can collect this paperwork from employees, no matter where they are located. Robust human resources software systems can customize this type of paperwork so that employees can seamlessly fill it out, return it to the payroll manager, and have all of their information available for the parties who need it.
    • Service hours. With employees located in different time zones, your business operation hours may need to be adjusted depending on the industry you work within. This could impact time tracking systems and include employees from different areas working at different times or schedules. Creative methods for tracking hours are important for these situations. Many world class companies have operated remotely for years and have established operational strategies that may be worth researching or exploring for use at your business.
    • Integration with human resources. Payroll teams will need to work closely with human resources teams to make sure all issues or considerations that remote work requires are covered. Payroll teams may need to consult with human resources teams to ensure that compliance is maintained and that all required documentation has been collected and kept within employee and organizational records. Within the payroll team, it may be worth having various positions to maintain responsibility over certain parts of the payroll system. Positions may include a payroll accountant, a payroll clerk, a payroll analyst, and an overall accounting manager to verify proper calculations and processes within the payroll system.

Building a new way for payroll

Changes to payroll don’t necessarily happen overnight. It may take time and a clear strategy to make these adjustments to your team and company processes. However, with these shifts, your payroll teams have a unique opportunity to assist your organization in providing a more diverse range of work structures and roles. Ultimately, this will draw more candidates to your business who can bring qualified skill sets, no matter where they might be based.

Technology can assist in these adaptations, enhancing your business’ ability to modernize and provide automation across each department and team. Moreover, your payroll team can support your business in maintaining compliance, no matter where your operations may land.

Next steps

Are you ready to adapt your payroll systems for increased remote workers at your business? Are you ready to consider ways in which remote work can impact the payroll process at your business?

Heartland is ready to help.

Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us