Finding a fit for the right employee can be hard. However, the really difficult part is keeping your trusted employees in the company. Almost half of the American workforce will start a new job search after experiencing just two problems with their paycheck.
For the good of your organization and its’ employees, it’s better to avoid payroll issues. Below, we discuss the most common payroll mistakes:
Running payroll too late
And some ways to prevent them ?
How can this be one of the most common mistakes – you may think. Multiply the number of overtime hours by 1.5 and hourly pay and there you go, you’ve got your overtime calculated, huh?
Turns out it’s not as simple as we may wish and there are three most common mistakes that may occur during the calculation of overtime in your company:
Misclassifying an employee exempt
As you may already know, exempt employees do not receive overtime pay. However, to be classified as an exempt employee, one must meet specific criteria for one of those four groups:
Executive employees are those who have the authority to hire, direct and fire other employees as well as direct work assignments. These are the people who manage the business and they must earn more than $913/week or $47,476/year.
This category includes such positions as for example insurance agent, marketing specialist or office manager. To classify as an administrator, the employee must perform non-manual work related to management or business operations, operate discretion and judgment according to significant matters and receive more than $913/week or $47,476/year.
Professionals’ primary duties include work based on intellectual performance and require advanced knowledge in a specific area of study from an educational institution. They, as well as two previously described categories, have to earn more than $913/week or $47,476/year
This categories only qualification is to produce sales outside of the office. This is the only category that has no salary qualifications.
Miscalculating hourly wages
It’s crucial to know and remember that regular pay includes not only hourly pay, but also bonuses tied to achieving a certain result or working certain hours, incentives, and longevity pay.
Miscalculating hours worked
You also cannot forget the most important factor in calculating overtime. This is the hours worked. It’s important to notice, that every minute spent on work or work-related tasks count. Activities that often are being overlooked in timesheets are for example travel time for worksites, training, working before or after actual hours or working from home.
To help you track every second worked, we’ve created a tool that is TimeCamp. Make sure to check out all its amazing features for 14 days for free.
Running payroll too late
There’s not much that can be done when you’re late with payroll, but to say “sorry” to your employees, and make sure not to make any further mistakes while you rush through your payroll. Underpaying and overpaying can be detrimental not only to your companies finances but also to your relationship with the employees.
You’re required to keep all payroll records for at least three years. In some states even longer, so if you didn’t already, be sure check with your state labor office.
However, legal requirements are not the only reason to keep your companies payroll. The financial data gathered in payroll is very important for creating budget estimates for the next years to come.
One of the most efficient ways to keep your payroll records is to use timekeeping software or payroll software.
Inaccurate time entries
Inaccurate time entries result in miscalculated work hours. This may cause numerous payroll issues. The best way to prevent this type of mistakes is to put your trust in a software product that can track time automatically.
You can do it using TimeCamp. Time tracking software that allows you to automatically track time spent on work. Moreover, to help you ensure every employee tracks time correctly, TimeCamp offers the approval feature.
Can we do everything in our power to avoid and fix them? Did any of these mistakes happen to you? Or maybe you’ve encountered another payroll issue? Let us know in the comments section!