It is often expressed that “employees are the lifeblood of every organization.” Ann M. Mulcahy, former CEO and chairwoman of Xerox Corporation, said, “Employees are a company’s greatest asset—they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, and stimulus, and make them feel that they are an integral part of the company’s mission.” Given this truth, it makes sense to pay attention to and comply with all labor laws and regulations related to payroll.
Why Are Labor Laws Important
Labor laws specify the obligations that a business enterprise has to its employees. They exist to protect a worker’s rights. They also offer protection for businesses and contribute to their smooth operation. Labor laws exist to provide:
Equal employees and applicants with equal access to employment along with fair treatment in the workplace. They prohibit discrimination and provide mandates for employers to provide equal opportunities to employees regardless of their age, sex (including pregnancy, sexual orientation, and gender identity), race, national origin, color, and disability.
Pay equity for equal work.
Family-friendly workplace conditions include the requirement that companies do not penalize employees when they need time off to deal with a serious medical condition of a family member or that of their own.
The right to concerted activity means that employees can engage together to seek better work conditions.
Workplace safety. Employers are required to provide a safe workplace including the conditions when employees may be exposed to hazardous substances, dangerous conditions, and complex machinery.
Child protection. Labor laws prohibit the employment of children under the age of 14 and specify the hours during which children 14-16 can work.
Wage protection. A national minimum wage is specified, along with the requirement for businesses to provide reasonable hours and compensation.
Compliance with labor laws and regulations related to payroll helps protect an organization from legal liabilities including severe financial penalties.
Regulations Related to Payroll
Complying with regulations related to payroll ensures that employees are compensated fairly and correctly for their work, thus reducing the risk of expensive penalties and lawsuits. Compliance through good payroll management also facilitates employee engagement, job satisfaction, and retention.
Here are 9 key things to know about compliance with regulations related to payroll:
- Payroll taxes are required to be calculated correctly and paid on time. Federal taxes to be withheld from employee’s paychecks include income tax, Social Security, and Medicare. State tax withholding requirements vary by state.
- In most states, workers’ compensation insurance is required to cover potential expenses incurred by employees’ on-the-job injuries.
- Employers are required to manage any court-ordered garnishments.
- All tax forms must be filed by specified deadlines. That includes year-end W-2 forms and any 1099 forms.
- Payroll records are required by law to be kept for three to four years. Those records include paycheck stubs, year-end tax forms, new hire tax forms, time sheets, and payroll registers.
- Some employees must be paid overtime, and employees are protected by minimum wage rules.
- All employees must be paid on time, although employers can set their own pay periods, including weekly, every other week, and twice monthly.
- Multiple payroll options are sometimes required including paper checks, direct deposit, cash, and pay cards.
- Rules on paying tipped employees must be followed.
Some common payroll mistakes include misclassifying workers, applying incorrect tax withholdings, late payment of payroll taxes, and inaccurate payroll records. It is important to avoid these mistakes to not have to pay expensive legal fees, settlement charges, and a damaged business reputation. Getting expert payroll management assistance can be a big relief for small business owners as they deal with the complexities of payroll processes and regulations related to payroll.
Choose an Expert Payroll Service
Choose an expert payroll service to assist you with your payroll system and stay compliant. Palmetto Payroll has offices in Columbia and Charleston, serving over 300 business owners statewide. We offer tailored solutions to save you time and money so you can thrive and grow including payroll, tax depositing and filing, management reporting, Human Resource Services, and timekeeping services.