Nearly 80% of Americans feel that they don't make enough money at their jobs. That can mean that they might want access to pay records they're not entitled to. While employees should be allowed access to their pay records, knowing how to manage this minefield is tricky. Here are five things you need to wrap your head around when you're offering your employees access to their pay records.
1. Understanding Confidentiality Issues
Every employee at a company deserves to have their payroll data remain confidential to other employees. Everyone in the payroll department should abide by standards of confidentiality and respect. If two employees work the same job and one gets paid even a dollar more, it could sow discord between people.
Money is a sensitive topic for most Americans and should be treated delicately. If someone feels they're being under-compensated, it will upset them and cause their work to suffer. If a lower paid employee finds out that they're not getting what they think they deserve or are getting less than someone less deserving, there will be headaches.
Save yourself the headache by ensuring that there are no payroll data leaks. The same can be said for the direct deposit information that you store on your company servers. In fact, you should have adequate firewall and cybersecurity preparations to protect against any leaks or breaches. For reasons of security, you might keep a close eye on your payroll information.
However, you need to ensure that employees have access to their own personal data.
2. Employees Sharing Their Own Data
While it's not up to you to be able to disclose someone else's information, employees are allowed to discuss their own information. Make it clear in your employee handbook and hiring data that payment and benefits are dependent on experience and performance. While many states are starting to adopt new laws relating to compensation disclosure, you need to abide by changing standards.
In many cases, it might be required for companies to publish a salary range for all prospective employees. You can't make it your company policy to prohibit discussions about compensation, however. Employees are free to tell whoever they want about what they make, knowing the consequences that could result. You can, however, stress the importance of discretion and confidentiality.
Every employee is entitled to speaking freely about what they make or what benefits they have.
3. You Need Security
Since most companies store their payroll information in their computer systems or servers, you should keep hard copies of information. For small businesses that could be taken down by a simple piece of malicious code, hard copies could be a useful backup. These copies need to be in a secure cabinet, locked away from employees.
The only people who should have access to the physical or digital copies of this data are the staff working in payroll or HR. While paper copies are important to the continued function of your operation, they shouldn't be your only backup plan. Having a strong cybersecurity plan could help you to avoid having to refer back to them.
Payroll confidentiality is dependant on a system that protects data and prohibits access to too many features of a system. If an employee doesn't need to have access to information about wages and deductions data, a system can limit access to that data. Employees should have access to their own data but only in so far as to see what they need to complete their own tasks.
4. In Person Security
For companies with even just a single payroll staff member, they need to be able to work in a secure location. Whether it means that their office remains locked at all times, or that they work from a secure server, they need their work protected. Train your employee in the importance of keeping data private, logging off when they leave for the day or ensuring that all paperwork is locked in a secure office.
Sensitive information needs to be protected from non-payroll staff members. Nothing should be disclosed without the discretion of other employees. A leak of confidential information could result in a lawsuit later on. Termination for payroll staff needs to be made immediate, rather than risking the leaking of confidential information.
Make sure to acquaint yourself with state labor laws to ensure that this is legal before you make it company policy. If you don't have the money to hire security staff, you need to rely on your employees and upper management. Outsourcing payroll duties requires you to hire people who have a commitment to confidentiality and only send communications to designated staff.
5. Disclosure Needs To Be Managed
You should give your employees access to the information they need, even if you offer them printed paystubs on a regular basis. However, the limits you keep need to be firm and written explicitly. In a lot of instances, an employee's spouse won't be entitled to their payroll information unless written consent is given.
However, government agencies may request it in which case it will need to be sent in written form via fax, mail, or email. If an employee requests their information, you are likely required to respond to them directly. There are even state laws that could dictate exactly how long you have to wait to respond. Familiarize yourself with the law so you can meet legal expectations.
Managing Pay Records Is A Tricky Business
If you're managing pay records for a large organization, you could struggle to keep everyone at the level of access they need. While many people will want their own records confidential, they may want to access the records of other people. Since you need to protect everyone, managing access and controlling your records is a full-time job.
Check out our paystub creator and find out how it can help you! In addition, you should also take the necessary tax changes this year to avoid a tax surprise. For freelancers and the likes, you should file for your 1099 misc form. In case you're wondering about retirement contributions, you may want to find out more about the 401K basics.