How Your Payroll Company is Putting Your Practice at Risk
Do you have complete faith in your payroll company to ensure all HR-related payroll issues are covered? You shouldn’t.
Dental, optometry, and veterinary practice office managers assume the payroll experts will perform all the legal checks and balances needed to ensure accurate compensation and benefits for team members. That’s a mistake, as payroll companies only focus on one thing: payroll. For comprehensive protection, you need help from HR professionals.
Are you making one (or more) of the common payroll mistakes that traditional payroll services won’t fix for you?
5 Common Mistakes That Payroll Companies Won’t Fix for You
There are a few things to think about when you hire and pay hygienists and employees: documentation, exempt/non-exempt classifications, how to correctly classify (and tax) bonuses. These are fundamental employment issues specific to the dental, optometry, or veterinary industries that you may assume your payroll company checks.
The effects of these payroll HR mistakes range from legal and compliance concerns to lowering team member’s morale. If you’re relying on your payroll company to catch these HR mistakes, you should immediately rethink your payroll process. Schedule a call with HR for Health now with questions about your state’s wage laws. Demystifying federal and state-level regulations is the first step towards smoother and more compliant payroll!
Employee Classifications and Minimum Salary Requirements
Your payroll company won't connect the dots between wages you pay and how that affects exempt vs. non-exempt status. Exempt team members must make a legally mandated base salary. Otherwise, they are non-exempt, and you must pay overtime.
Don't assume your payroll company will let you know you're on track for labor laws.
Don't assume your payroll company will let you know you're on track to comply with labor laws. Their job is simply processing payments. For example, you could pay your dental assistant a salary and fail to track hours, never paying overtime. Since dental assistants rarely fall under the classification of an exempt employee, this mistake could interfere with accurate payroll and violate laws in some states. That's an issue your payroll company could identify — but almost certainly won't.
It's not just about exempt vs. non-exempt classifications. Some obligations to team members vary from state to state. Other responsibilities fall under federal law. It might be straightforward for a payroll company to double-check your payroll for compliance with legal regulations. However, if this isn’t on their list of services, they simply won't do it.
If you submit a team member's time card and don't pay overtime, they typically won't override you. The net result is that you have to double- and triple-check everything, which takes precious time away from patients and stakeholders. Non-payment of overtime due to team members can also crush practice morale and lead to legal issues, including fines (and you’ll have to pay the overtime anyway).
Contact HR for Health for more information about which of your employees at your dental practice should get overtime pay.
A diligent payroll HR partner considers all parts of team members' compensation packages, but being a great boss doesn’t mean you’re invulnerable to labor law missteps. Keep in mind that a non-discretionary bonus can affect minimum pay rates and overtime. A payroll company won't make these calculations or flag the bonus when it comes through. That's left for you to monitor, and bonuses are not "extra cash" you can slip to team members for a job well done.
As a dental, optometry, or veterinary practice, you might reward team members with a medical stipend outside of the health insurance plan. Most people appreciate this, but you have to account for it correctly.
If you just give employees a flat amount on their check for medical expenses, the stipend is part of their income and is taxable — unlike health insurance that you pay for, which is not taxable and does not form part of their salary. A misstep here could get your practice on the IRS' radar, resulting in additional fees, higher taxes, or penalties.
You Need Complete Payroll Documentation
Assuming your payroll company maintains a payroll file for each employee, that could expose you to risk. Both the Fair Labor Standards Act (FLSA) and Equal Employment Opportunity Commission (EEOC) instruct all businesses to keep wage records for all employees. These records include more than W-4s, I-9s, and payroll stubs. Every team member should have a payroll file. Here's a partial list of documentation to include:
• General information - name, SSN
• Tax withholding forms
• Time and attendance records
• Payroll records - pay rate, overtime earned, pay stubs, benefit information
• Termination documents (if applicable)
HR for Health can easily and securely integrate this documentation with team members’ files.
Finally, have you been considering big enterprise-level payroll HR services? That's natural, but the level of HR service from a payroll company can be cost-prohibitive for smaller practices.
Likewise, HR for Health's human resources platform also provides payroll services, but backed with our unique combination of HR expertise in the healthcare industry. Our payroll HR services, when combined with our HR software, are also often more cost-effective than payroll-centric providers' solutions.
Let HR For Health show you the cure for your HR headaches today!
About HR for Health
HR for Health is an all-in-one HR software solution dedicated to helping the dental, optometry, and veterinary industries. Our human resources platform features all the tools practice owners need to manage payroll, timekeeping, 401(k), and more with total integration and ease.