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| What Should Employers Know About Their Payroll Records? Posted: 18 Feb 2020 07:52 AM PST 
Whether you work in construction or software development, managing your employee payroll records is a task no company is exempt from. Keeping payroll records is a legal obligation and how long you must keep these documents is determined by the law. Storing these sensitive documents can be unwieldy, which is why business owners need to know when it's OK to dispose of old records. Also, storing all of your old records isn't recommended either, as it can lead to security issues.
Editor's note: Looking for the right online payroll service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs. What are the payroll record policies?The Fair Labor Standards Act, or FLSA, establishes employment provisions like the minimum wage and overtime pay. The FLSA has also established requirements about how long employers must store certain payroll records. Payroll records typically contain the following information:
Why should I keep payroll records?Keeping payroll records for the appropriate amount of time is in your best interest, because failure to do so can lead to expensive fines and penalties if the IRS ever audits your company. But the IRS isn't the only agency that monitors payroll documents. The Wage and Hour Division of the U.S. Department of Labor and the Equal Employment Opportunity Commission (EEOC) mandates that you save certain employee payroll information to comply with the FLSA, the Family Medical Leave Act (FMLA) and the Employee Retirement Income Security Act (ERISA). Following payroll document retention protocol is important because it protects you and your business from legal and monetary penalties. "After a few years, someone can go to the labor department and say they didn't get paid," said Charles Read, CPA, USTCP, and president and CEO of GetPayroll.com. "If you can't prove those hours [were paid], and they have a little hand notebook as evidence, then (the judge) may take their word and make you pay it." Without the right documents on file, a disgruntled employee who sues your company can cost you a ton of money and, depending on the outcome, possibly your company. Preserving financial statements also ensures you have internal control of your company. Keeping tabs on your payroll documents prevents you from being ignorant of your company's financial state. When you aren't tracking your financial affairs, especially payroll, you leave the proverbial door wide open for dishonest employees, bookkeepers or payroll processors to steal from you. There's another important reason why your payroll and personal records should always be up to date. Companies change all the time, said Jason Averbook, co-founder and CEO of Leapgen. Employees join and leave businesses, and having an accurate record is helpful for those in charge of managing staff. [Check out these payroll service options to help your payroll processing run smoother] How long should you keep pay stubs?The IRS and FMLA mandate that pay stubs be kept three years. The FMLA protects employees who take unpaid leave for family or medical reasons. While your employee handbook should detail the FMLA policy and guidelines, pay stubs reflect whether an employee used paid time off or if they took unpaid leave. The FLSA requires businesses to keep specific documents that list information like employee name, address, Social Security number and pay rate – all of which can be found on hiring documents, paychecks and pay stubs. Other information, such as pay type, hours worked, earnings by type, total net earnings, date of payment and work period, can be pulled from those documents. How long should you store I-9 forms?An I-9 form, which verifies the identity of an employee and that they are legally allowed to work in the U.S., contains sensitive information, such as a person's Social Security number; as such, you shouldn't keep these documents longer than three years. You run a security risk if you keep I-9s longer than three years. By disposing of these forms, as well as personal payroll-related data – bank account information, credit reports or copies of Social Security cards – it lowers the risk of identity theft and your employee's information being misused. How long should you keep 401(k) records?You need to keep retirement plan records, including plan operating documents, agreements, compliance documents and participating notices for at least six years, according to the Employee Retirement Income Security Act. How long should you store all other payroll records?Each payroll record is different and has a different life span in your filing cabinet. Here are the retention requirements for payroll documents. Seven years
Six years
Four years
Three years
Two years
The EEOC enforces civil rights laws to combat workplace discrimination and requires job evaluations to be kept for two years. "This is so you have a company basis to defend yourself if a disgruntled employee comes back with a lawsuit of discriminatory practice," Wagner said. As an employer, you want a paper trail of the terminated employee's behavior and how they were assessed over time so you can defend why they were let go. Are the rules the same in every state?Except for California, New York, Illinois and Washington, all states follow the same guidelines as the Department of Labor. New York's Wage Theft and Prevention Act requires that employers keep payroll records for six years, not three years. This law also requires New York employers to provide a written notice of wage rate to their new hires that includes pay rate information, the official name of the employer, address and phone number of the employer's office and allowances taken. California requires businesses to keep payroll records for six years, and Illinois requires you to keep them for five years. Although Washington follows the Department of Labor's guidelines, it's more specific as to the information it wants employers to keep. For example, Washington's legislation on payroll and personnel records states that they require, "the number of units earned or produced for each worker paid on a piecework basis" and "the risk classification applicable to each worker whenever the worker hours of any one employee are being divided between two or more classifications." Make sure you understand the requirements for your state so you don't inadvertently dispose of records that you may, in fact, still need to hold onto. How do you store payroll records?Although many business operations, including payroll, are done electronically, paper, in some respects, is still king. If you store paper payroll records, keep that information in a locked filing cabinet. If you're looking for a greener method, you can scan a copy of your paper records, said Wagner. However, keep both paper and digital copies of important documents, because paper files could get damaged by a flood or fire, and digital copies could be permanently lost if your network has a meltdown. You can store personnel documents in an online system using payroll software or a document management solution. Whatever system you use, use a system of organization that is clear to you. Organizing records by year and file type is a good way to start, and each year when payroll records reach their throw-out date, shred them. |
| What Is Document Control Software, and Do You Need It? Posted: 18 Feb 2020 05:20 AM PST 
It is important for every business to have a proper management system in place for document creation as well as document workflow. Properly managing current and archived electronic documents is essential for quality control management, increased efficiency in business processes, and regulatory compliance. Some industries, though, require a software solution that is more advanced in its tracking abilities. Document control software can be essential in ensuring regulatory compliance for your business, and for some industries, it is legally required. There are several document control software options that are available, but how do you choose the right software for your business? We spoke with industry experts to explore the types of businesses that need this software, and we've listed several viable software providers at the end of this article.
Editor's note: Looking for document management software for your business? Fill out the questionnaire below to have our vendor partners contact you about your needs. What is document control software?Document control software, not to be confused with document management software, stores and manages business documents in adherence to regulations mandated by federal (and/or state) agencies and/or standards issued by organizations such as the International Organization for Standardization that are required in certain industries. Companies in heavily regulated industries benefit from the advanced features that a document control solution offers. Nikhil Koranne, assistant vice president of operations at Chetu, listed three benefits that a good document control solution offers:
Document control software vs. document management softwareChoosing a solution for your business documents can seem inconsequential, but the right system can greatly impact your business workflow. In some cases, the right system can be the difference between maintaining industry standards or falling victim to a damaging audit. Because of the high stakes involved, business owners need to know the difference between document management software and document control software, and there are a few key differences. Jared Weitz, CEO and founder of United Capital Source, said that document control systems are essentially more mature than document management systems and have a higher level of oversight. Koranne added that although the two systems have similar features (e.g., file sharing, storage, indexing, etc.), document control software integrates compliance protocols that many businesses need to ensure their documents are secure and transparent. Some document management systems have compliance features, but they are often restricted and not comprehensive enough for businesses that need to maintain a record of every version of an electronic document. "The main difference lies in the capabilities a document control software carries around lifecycle models and supporting actions such as revision and approval processes," Weitz told business.com. "In the event of an audit, there must be a clear audit trail and a full history of the documentation process." Knowing whether you need a document management solution or document control software lies largely in which industry you operating in. Who needs document control software?If you work in any of the following industries, you may be legally required to have document control software to manage and maintain your business documents:
"Nearly every major company will have departments within their own organization that face compliance and regulation restrictions, and can, therefore, benefit from document control software," said Koranne. If you undergo any type of auditing, your business will benefit from document control software. How much does document control software cost?Software costs vary, depending on your business and factors like the industry you operate in, the size of your business, the number of users and which features you need. Another element to consider that will affect your total costs is whether the software is compatible with other business applications you use; you may need to estimate the potential cost of integrating all of your business platforms together. Businesses can expect to pay an average of roughly $1,000 per user for an on-premises solution, according to the experts we spoke with. So, for example, a company with 50 employees should budget at least $50,000 for their document control software. Employers can choose a hosted solution as well. According to Koranne, hosted software runs anywhere from $400 to $3,000 per year for smaller companies and up to $24,000 for larger organizations. Are there free solutions?In short, kind of, but not really. Users can find free document management systems that have some document control features; however, experts warn against using any free application, since security can be lacking, and the support is not always reliable. This type of software is not something you want to skimp on. A data breach or an audit that uncovers major deficiencies can be catastrophic for your business; a good document control solution can help you avoid that. "You are better off going with more premium software due to the nature of sensitivity the documents hold," said Weitz. "When it comes to regulations, you want everything to be solid and secure." Document control software for engineering and construction industriesThere are several software options that are available; the best one for your business depends on the industry you're in and which features you need. If you are in the engineering or construction industry, for example, the best application is one that is custom made for engineering and construction firms. To find the best industry-specific software for your business, ask other companies in your industry which programs they use. Two document control software options designed for the engineering and construction industries are ASSAI and PULZ Project Document Control System by AGTIV. "With engineering documentation, revision control is critical, and ensuring [that] all documentation that stems from drawings matches is mandatory," said Weitz. "Without this, a PDF drawing could be sent to manufacturing, and millions of parts end up being produced from an old design ... Autodesk Vault Collaboration tracks revisions, manages documentation and ensures that 2D documentation is published alongside the release of engineering files." Outside of engineering-specific document control software, Koranne said Synergis Adept information management platform is a top-performing tool. It helps engineers expertly manage and control CAD, compliance and engineering business information. For construction projects, the ability to track documentation and manage project milestones in one place is essential. "RedTeam has managed to support managing and controlling versions of all drawings while also enabling Gantt schedules," said Weitz. "Timing is key in construction, and being able to ensure everything is updated when it needs to be is a big perk." Parting advice on choosing a document control solutionDepending on the industry you operate in, find document control software that secures your documents according to your industry's regulations. As a final piece of advice for choosing document control software, Koranne said the software your company uses is only as good as the software it integrates with. "If programs cannot interact with each other, then data silos form, which creates problems in industries that rely on security, compliance and frequent audits," said Koranne. "To best optimize any document control software, companies should turn to custom software developers that specialize in their specific industry. These developers can certify that a company's latest solution works in lockstep with the current software suite to ensure that there are no bugs, hiccups or data silos within an organization." |
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