TALX Spherion on Controlling Payroll Costs

eSeminar Transcript
TALX Spherion on Controlling
Payroll Costs Using Paperless Pay
June 26, 2008
Speakers:
Roderick Weimer Senior Manager of Payroll Taxes TALX Jeremy Martin ePayroll Product Specialist Gordon Middleton Compliance Specialist Executive Summary:
TALX
11432 Lackland Avenue
St. Louis, MO 63146
(800) 888-8277
www.talx.com
A senior payroll tax executive from Spherion discusses the role of paperless pay in the company’s drive for increasing enrollment in direct deposit and payroll cards as well as reducing costs throughout its payroll operations. Among the topics addressed: using electronic paystubs as an incentive to encourage direct deposit; techniques for promoting the advantages of paperless pay to employees; electronic paystubs as an educational tool for increasing withholding accuracy and reducing W‐2cs. In addition, a TALX paperless pay compliance discusses recent developments in the regulatory environment for paperless pay, with an emphasis on developments at the state level. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of Contents:
page 1. Greetings ......................................................................................................... 3 2. Speaker introductions .................................................................................. 3 3. TALX overview ............................................................................................. 4 4. Spherion paperless pay project: the business case ................................... 5 5. Paperless pay at Spherion: The employee view ....................................... 7 6. Employee motivation to electronic pay ..................................................... 10 7. Paystubs as educational tool ........................................................................ 11 8. Messaging on the paystub ............................................................................ 12 9. Self‐service example: W‐4 forms .................................................................. 13 10. Employee electronic pay support .............................................................. 14 11. Web and IVR paystub usage ....................................................................... 15 12. Accessing and changing direct deposit choices ....................................... 15 13. Accessing and changing federal W‐4 forms ............................................. 16 14. Electronic pay percentage ........................................................................... 17 15. State mandates for direct deposit ‐ existing employees ......................... 19 16. Electronic paycard compliance .................................................................. 20 17. Electronic paystubs: state requirements ................................................... 21 18. Questions and answers ............................................................................... 22 19. Resources ...................................................................................................... 27 Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Jeremy Martin, TALX Welcome, everyone, to the TALX eSeminar with Spherion on Controlling Costs Using Paperless Pay. Before we begin I just want to take care of a little bit of housekeeping. If you aren’t viewing the slides right now, they are available at www.talx.com/slides. We also have a mailbox that’s open for any problems. That mailbox is [email protected]. Feel free to send an e‐mail to that. It’s being monitored during this presentation. Do you want to go ahead and go to the next slide, please? I’m going to go ahead and take care of some introductions quickly. My name is Jeremy Martin. I’m the ePayroll Product Specialist. I work on the ePayroll Product Management Team at TALX. ePayroll is our paperless pay solution at TALX. Joining us from Spherion today is Rod Weimer. He is the Senior Manager of Payroll Taxes at Spherion. He oversees the TALX ePayroll and W‐2 relationship. Additionally, he is the first line of defense when the senior management of payroll is out. He is also in charge of garnishment, unemployment, and employment verification. Thank you for joining us, Rod. Roderick Weimer, Spherion Thank you for having me. Jeremy Martin, TALX We also have with us Gordon Middleton, our Compliance Attorney here at TALX. His role is also part of the ePayroll Product Management Team. He reviews payroll laws and ensures that our service remains compliant in all 50 states. Thank you for coming also, Gordon. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Gordon Middleton, TALX You’re welcome. Jeremy Martin, TALX Do you want to go ahead and go to the next slide, slide three? I want to go ahead and do a quick overview of TALX for those of you who are not familiar with our services. Our services are built around the efficient management of payroll and HR information. Our goal is really to remove paper based and manual steps from the HR and payroll processes. We work in three main areas, and you’ll notice on the wheel we have compliance, hiring, and pay reporting. Just starting with compliance, we have an employment and income verification service many of you may be familiar with. It’s known as the Work Number. Rod, I believe you are a client of the Work Number as well, is that correct? Roderick Weimer, Spherion We are. Jeremy Martin, TALX Additionally, we have an unemployment tax management service. It’s a comprehensive suite of services related to unemployment taxes and unemployment claims management. On the hiring side we have several services, including tax credits and incentives for new hires, the assessment process for new hires, as well as our electronic on‐boarding service, which interfaces with your applicant tracking software and really is the last step in removing that packet of paper that you give employees on the first day that they arrive. Today we’re going to be focused on the pay reporting side, most specifically the paperless pay section. When we talk about paperless pay, we really have developed an employee self‐service module here at TALX and instead of just removing the pay stub we’re also assisting your organization in handling direct deposit changes and handling personal information changes, and also W‐4 changes. W‐4 changes that are federal, state, and local forms as well. If you want to go ahead and move to the next slide, please. Rod, if you want to go ahead and take the floor? Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Roderick Weimer, Spherion Okay. I thank everyone for joining us today. Really, in looking at a paperless pay project it’s to identify the components that any entity should be reviewing when moving to what we refer to as a paperless pay environment. One of the things that comes to mind is the volume. How many employees are you out there actually paying and how many W‐2s are you issuing a year? We look at an environment where we’re writing 70,000 remittances, pays a week, so we have 70,000 people that we’re paying on a weekly basis with 250,000‐plus W‐2s a year. In our environment we found that historically we were running about 25% of those 70,000 checks were paper checks, so we had to look at moving those checks, about 18,000 checks a week, and getting them out to a distribution throughout the U.S., getting them printed, getting them mailed, making sure they get to the employee, and that causes many of us down in payroll a whole slew of problems and costs money for every employer. In looking at that 25,000 it puts it in perspective when you’re looking at almost a million checks, 930,000‐plus checks that are paper checks a year, so it really does start to add up. As I mentioned, cost with those checks, really, we found that that’s almost $1.4 million a year. What’s driving those costs? Printing and distribution and also getting that distribution to get them either mailed out, sent to a branch office using UPS, FedEx, or whatever overnight delivery you might be using to guarantee you’re meeting with state regulatory compliance delivery processes and requirements. Also, in there you’re going to have replacements, because inevitably a check is going to be lost, albeit lost in the mail or an employee will actually lose it. When that happens you also wind up with W‐2c issues. There is the cost associated with W‐2cs. I’ve read anywhere from $200 to $500 per W‐2c to be done. That adds up when you’re talking volume. It also adds up even in a smaller company if you don’t have the volume that we may be looking at, but still, there’s a cost and then bank rep needs to get involved to look at, “Oh, an employee lost a check.” But then there’s a stop payment placed and we find out later from bank rep that the employee did cash the check and we’ve made a reissue, so now we find out maybe in February from a December check that’s been duplicated, Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents that you have a W‐2c out there to deal with. Then, lo and behold, especially when you have that check that may be stopped, the stop payment may be placed on, there’s always the inevitable letter that you can get maybe even one to two years down the road from a check cashing store that says, “We have this check and it was NSF. Now we’re looking to get from you the $75 that we had to pay our bank and our processing center to recoup this money because of these NSF funds.” So there are definite costs out there with the paper environment of paying an employee. Part of those costs are mailing and distribution challenges. Not only does it just take time and effort to make sure that your check printers are running and everything is there so at 7:00 when UPS is out there to pick up, that everything is ready for them so that you don’t have to call them or actually have somebody run to UPS or the airport location to make sure that the drop‐off is made that night when there are system problems. I think any of us who have been in payroll for a number of years know that this can happen. Then there’re also the distribution logistic nightmares that happen. Oh, there’s a snowstorm. There’s a flood. There’s a problem. There’s a hurricane in the southeast U.S. or in the Gulf in the United States. These things all play into factors that making a paper check distribution is very costly and very frustrating and very, very difficult to minimize the possibilities of having a problem with delivery. Lo and behold there’s also, from the employee perspective that an employer faces emergency pay. There are going to be situations where either termination in a certain state you have to have the pay there the next day. So if, in fact, instead of doing a replacement check and having to overnight that one check there are other ways to pay the person, pay the employee. One of those can be a pay card. Funds can be loaded on pay cards once you work through with your vendor 24/7. You can load them at any time, any day, even holidays. You don’t have to have the problem there of getting the paycheck processed and getting it distributed. Even if you do have the availability to run your system however many days a week, you can actually go and use direct deposit as an alternative to a paper pay and you can get that into most banks the next day. As I mentioned earlier with the distribution emergency pays, should you have a flood or should you have an office closed, if that happened you have the ability that you can make sure that your employees are paid on time and they’re not subjected to any other of the factors that can delay the receipt of that paper check. Jeremy Martin, TALX Really, Rod, just to chime in, you’re really making sure that your employees are getting their payment when they need it the most, especially in disaster types of situations that we see, it seems like, occurring with more frequency these days. Roderick Weimer, Spherion Well, our focus here is really putting employees first. In looking at a paperless pay environment you have employees. They are the backbone of the organization and the compensation they receive is critical to them. If you cannot deliver your pay in a timely manner that is where you Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents lose credibility with the employees. It is when you get to those disasters, those catastrophes that you’re able to deliver the funds to the bank and the employees. I’m talking here from south Florida. I’ve been through hurricanes and to know that you can deliver payment to an employee who’s in Wisconsin or Washington state or even south Florida that may have been bit by a hurricane or in Texas or in Louisiana and they have the money in the bank that they can access means everything to those employees, especially those employees who may even have been actually impacted by that catastrophe. Another one of the elements of the business case of this component that you need to look at are regulatory issues. Now, is electronic pay offered everywhere? Not necessarily. There are some constraints and we’ll talk about those a little bit later in the presentation today. Also, as I mentioned, terminations; what can and can’t you do with a termination? What has to be done there in certain states? Then it’s always important when you’re putting together a business case to make sure you talk with your legal department and make sure that any forms you’re going to use actually meet the compliance of every state that you’re going to be payrolling individuals in. If we move on to the next slide, the other component that an employer needs to look at is what is truly the employee view. What options are out there for the employee? You’re offering a paperless pay stub. What does that mean to the employee? First of all, you have to work on educating the employee. The paperless pay solution can be electronic, direct deposit or it can be a pay card. One of the neat things about some of the newer pay cards that are out there, for example, the Visa pay cards, an employee can actually take that pay card, which has funds loaded on it, and they can go to a bank that accepts the Visa card and actually cash that out, so to the employee it’s the same as having a check, except the employee has the pay card. You’ve loaded the funds and you haven’t really gone through the printing and the distribution of the actual pay check. The pay stub can be out there on ePayroll for the employee to look at and have that available for them. That’s a very easy process to use. Also for employees, one of the things that you can do in providing a paperless pay solution is still give the employee the option to receive a paper check. There are going to be a population of employees out there who are still going to want their paper check. They still want that Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents opportunity to go to the bank or the check cashing store, for reasons that may be unique to them. They may not want to have a bank account. They may not be comfortable with the preloaded pay card. For those employees it’s important to look at your regulatory issues to say, “Okay, we will give you a paper check,” but have the employee maybe opt into getting that paper check. Have them complete a form that says, “I do want a paper check and I understand that by getting a paper check, should that check be lost or misplaced or whatever, but not made available to me, then it may take the opportune time of up to 14 days.” When the employee starts thinking I may not get this pay for up to two weeks, we’re legally allowed, they may start thinking twice. Also, let the employees know that you’re going to be maybe mailing that check to a home address, it’s not going to be available at the local office or available on premise, if you will, but you’re going to actually mail that check out to them. The employees start to think, really, is this the best way for me to receive my compensation? One of the beauties about using the home address is many payroll systems also opt to use a home address for distributing W‐2s at year‐end. This way if the employee is opting into that check you always capture. It’s another way just for employers to capture the most recent update on what that home address is. Jeremy Martin, TALX So really, we’re changing our way of thinking. Instead of opting into electronic methods we want to reverse that thought and say, “No, you have to opt into a paper method and the preferred method to start with is the electronic payment and the electronic presentation of paid by.” Roderick Weimer, Spherion Exactly. You’re just reversing what most likely were your previous practices of how you would say, “Okay. Our pay‐day is every two weeks. Then you’ll get a paycheck,” or a payday is every Friday and we’ll give you a paycheck. Another way to present this to the employee then is to say, “Our preferred method of payment is electronic. We offer direct deposit, if you have a bank account. If you don’t, we can give you assistance, perhaps, if you’ve coupled in working with a bank, to establish that account or we can offer you a pay card and here are the attributes of the pay card. Please consider these.” If the employee says, “Well, I’d like to really be paid with a check,” say, “Okay. We can do that, however, here’s the form that you would need to complete saying I want to opt in to getting a pay check.” When you look at the reverse of that it really looks to be opportune to take what we’ve experienced as our 25% consistent population of individuals who want to go out and receive the paper check, start dwindling that down and have more interest in the electronic pay. One of the other benefits of educating the employee is to say, well, we’re not only giving you a paperless pay stub, the electronic direct deposit or electronically loading the pay card, but also is to give them some other benefits that are tied to this. That’s where the self‐service comes in, and emphasize that. As mentioned earlier in the presentation, TALX offers a product called ePayroll. We happen to Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents be a client of that, a very, very good product that allows employees to go out and not only view their pay stub, update their personal information, but also go out and modify their federal W‐4. They can actually go out, it’s really interesting and really neat for most employees, you can go out and see what your current W‐4 information is and if you want to change that you have a pre‐
set PIN when you access your account. Your PIN is used for your electronic signature to make that change. That change is registered and then fed back to a file directly into our payroll system from TALX and then it updates with the next payroll processing cycle as the cycles flow in from the file coming from TALX, getting to our system and then the next processing cycle. That really is quite interesting and beneficial to the employees, because now it’s not the employee filling out the form. Did it get in the payroll? Did I do it right? One of the things that’s interesting on the TALX Web site is it almost assists the employee in making sure the right information goes in there, at least the right information into the areas of the form that is necessary to be completed. Also very important, if you’re asking an employee to go to a paperless pay environment your self‐service or ePayroll actually provides the employee to go in and do modifications, establish or modify the direct deposit information. What’s really beneficial, you can see the current direct deposit information and say you currently have an employee has one account and they want to add a second account. They can add that or they can modify a percentage or the remainder of it to go into various bank accounts. That really becomes a very big attribute when actually providing the employee with information and looking at how not only to get this as an employer benefit, but also an employee benefit in a paperless pay environment. In looking at the components that make up the business decision to move to a paperless pay environment, you also look at the anticipated growth and this becomes very important to look at the employee perspective, as well as the employer perspective. We have a little note here, increasing company participation. The goal of participation in a paperless or electronic pay saves some green while going green. It has the potential, as we noted, our costs that we’ve experienced, over $1 million, is to produce checks, paper checks. It’s quite astronomical when you think about it, but we’re actually also helping the environment by reducing the amount of paper, the envelopes and everything else that’s out there. So as you move to the going green, which has become a very popular statement in this and current years to come, the paperless pay environment actually is helping employers get there as well. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents If you’d be kind enough to move on to slide number 6, we looked at the employer, the business case and what the employer’s situation is as far as identifying the components of what makes up the areas that you need to review. We looked at the attributes to the employee, but then you also have to motivate the employee, because remember, our employees, they get paid as long as the money is there and they have it to put in the bank they’re happy. It’s when it’s not there or when it’s different, that’s when we hear from them most likely. But also, there’s an opportunity with moving to a paperless pay environment to motivate the employee and to get them to accept that electronic pay, which is a little bit different than what they may have had in the past. The way to do this is to go out and educate the employee. Identify the options. Here we’ve talked about direct deposit and a pay card. We didn’t only provide to the employee that we need to use direct deposit. It’s either a check or direct deposit. That’s where a lot of employers over the years have actually thought of paperless pay is going direct deposit. We still have the concept of what advice is out there, and that’s where ePayroll comes in and that can be considered a legal advice in many states, as we’re going to look at later in this presentation. But with that, offering a choice of the paperless pay stub, the direct deposit or the pay card, it gives an employee the choice, the opportunity to make a choice. Again, as we mentioned, we can offer a paper check to the employee. It’s going to be mailed to the home address of the employee, which, for us as an organization was a big change, because we used to have many of the checks go right to the branches and distributed thereof, so this is a whole culture change and we’re actually looking to go to reduce that 25% paper generated checks on a weekly basis. With that being said, also remind the employees that it takes longer in a paper environment to get a replacement should something happen. Have the employee look at this and reconfigure, is it advantageous for me to still be a recipient of a paper check. Jeremy Martin, TALX Just to share a story, Rod, we had a client of ours, who looking for other ways to make that paper check a little bit less attractive to the employee actually went to the extent of searching out paper stock that smelled bad. He was looking for ways to look for stinky paper to send to the employee and just finding other ways to really make that paper process not attractive to the employee. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Roderick Weimer, Spherion Well, stinky paper has not been our preferred method of movement. We try to provide a method that may be more attractive to the employee and that’s where we’re looking at the traditional direct deposit into a bank account. We’re offering the pay card as the alternative in the paperless environment. Jeremy Martin, TALX Yes. It’s just a thought. It may not work for everyone. Roderick Weimer, Spherion It may not, but there’s always the creative employer out there. One of the ways we try to educate or motivate the employees was also identify a way to capture the employees at the hire. The inclusion of the opportunity to receive your pay via paperless method is now within all of our new hire packets, our application documents all contain this information to move forward and educate the employee into the culture, changing the culture of the organization. From there, from the employee also, one of the things that we did was educate the whole company on the concept of paperless pay starting with the executives and moving down from the senior executives to senior management to the branch management and getting information out to the employees using the current environment for those who still are receiving a pay check to use a pay check stuffer to educate them, not just having a note inside the check, which we have done as well as use the actual stuffer, and providing that to the employees as well. The electronic pay or paperless environment has other benefits, as we’ve already talked about: direct deposit changes can be made through ePayroll. The employee can go out and do W‐4 changes. We also are tying this to moving to the next phase of our goal; it’s to increase our activity and acceptance of electronic W‐2s and even electronic W‐2cs as they are necessary down the road after year‐end. One of the other things that I actually just alluded to a second ago is how to keep employees updated with important information via pay stub messages. On the very next slide we see a Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents tool here that becomes very useful to the employer. This is one of our affiliated entities here that we have a library of messages that can be stored out in ePayroll that Web managers, who have the ability to go in and create those messages as needed by payroll or the organization to always keep the employee that may be in another state or in another branch office over even in another department that may work a late night shift and may not be there when most employees are, but to always keep your employees updated on what’s going on. On the very next slide, just to give you an example of this, the beauty here is this was a February 23, 2007 example here. We’re right in the middle. We have the direct deposit information and then save $25 on tax preparation. This is not only information to the employee, but a benefit to the employee. This is how you can actually utilize the messages that can be put on the pay stubs to actually keep the employee interested in checking their pay stub. I think many of us in payroll know that not enough of our employees check that pay stub every week and for those that do, we know that we’re okay and we have less questions at year‐end. So it becomes a win/win situation where you’re looking at the business environment. You’re going through and you’re working to keep the employee active in the electronic world and also interested. The more employees get interested and they find out and they go in and say, “Did you see that coupon that’s out there?” Someone else finds out and, “How did you get that?” Then the word actually spreads and you’re not only doing the dissemination of a message of the paperless pay environment through the employer side, but now the employees are working for the employer telling and spreading the message of the benefits of the paperless pay stub. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents We’ve mentioned throughout the talk today on slide 9 the W‐
4s. One of the really neat attributes is, can you imagine if you were an employer and had multiple state activity that you could refer an employee to go and adjust their federal W‐4 and then click on a link that said, “State W‐
4?” This is really interesting. Here we see a bunch of state flags, but what’s really beneficial is when you’re in ePayroll, a really neat feature of this is, say you want to go to the Massachusetts or the Maryland or the California W‐4. You want to be able to pick those up. Some of the states will actually duplicate the federal form and we may not see them here, but there are other states that actually have their own individual form that the employee can use and then interact and feed that back through the payroll environment. Jeremy Martin, TALX Rod, you’ve highlighted one of our W‐4 services and I do want to bring everyone’s attention to the fact we also have a new service called Interactive State W‐4, which not only handles the interactive federal form, as you mentioned, and provides these links to the state forms, but also handles over 150 federal, state, and local tax forms that are all done interactively and then fed back into the payroll system, really eliminating the need for any sort of manual entry of a W‐4 form. Roderick Weimer, Spherion Many of us in payroll know that having that interactive feed right from the employee into the payroll environment is a definite attribute because now, again, we don’t have the possibility of that form being mailed and put into the wrong department or if it is in the wrong department, having it get to payroll in a timely manner so it can get in or is it faxed to the right number. There are just so many attributes of having that form being interactive and having it come right in. I think that’s really beneficial. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents One of the other interesting features is to really look at moving to a paperless pay environment is to have support out there for the employee. On slide ten of the presentation we take a look at what support can be offered if the employee still has a question. Who do they call? Where do they go? With the number of employees that our organization pays on a given week, if they all started calling the payroll department we’d never get a pay check out. One of the attributes of having the ePayroll environment, as well as an organization that may have a help desk, is to offer to the employee through the electronic or the paperless pay environment, help desk support. What is really interesting and beneficial is for an organization like ourselves, who utilizes the ePayroll environment, there is a method that the employee can log on in one of two ways. They can have direct Web access where the employee goes out to a specified Web site and then from there is the TALX Web site, enters the employer code. If they don’t remember the employer code they can actually type in the name of the organization; the employer code can be located and then get the employee in there. With that being said, the employee can use their social security number and a PIN that’s set up to get them into safe, secure access to view their pay data. With that being said, there are going to be some employees, who may not be accessible to a PC at the time or may not have access at all. Also, ePayroll offers an interactive voice response system that can get information to them as well. Another support system for the employee is to have an employer provided help desk to answer initial questions, field those questions, and then direct, as necessary, the employee to the ePayroll site. With the ePayroll Call Center, once the employee gets in there, they can direct the employee to the Web access, work them through, get them support to make sure the employee has the right employer company code if, in fact, there may be multiple employer codes for an organization and also direct them to the interactive voice response, as well as identify what additional provided support is there. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents I want to move to slide 11, which looks at Web and IVR pay stub usage. You see a rollercoaster effect, with peaks in January, as the number of employees tends to change and we have grown over the years. But January coming in, this is when employees want to go in and are checking their W‐4s. They’re going out there and they’re looking, because we are also sending letters out for the W‐4s and W‐5s in December and getting the responses back by December 31st and into January for those that are a little bit slow. Our employees are looking at their pay stubs, going and tracking down what information is in there, also going out and printing that last pay stub so they can go get their taxes done early. We’ve noticed in January 2008, that really spiked as a number of employees called in to say, “I want to use my pay stub to go get my taxes done.” The economy started to turn a little bit in January 2008 and employees were starting to say, “I want my money sooner.” The IVR is a smaller percentage of the Web access. Noticing that we also felt very comfortable that more and more employees would actually go out and utilize the Web to get their actual pay stubs. Moving on to slide 12 is an interesting way to look at the history of those employees that have gone out to the Web and the IVR and actually used this accessible tool to actually go out and make changes to direct deposit. We know that in this day and age of bank competition there is always activity for Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents employees to get lured to another bank. We also know that with identity theft, people are out there, not because of ePayroll environment, but because of the environment that’s outside of the ePayroll environment, looking to make changes to their bank accounts. We also know that employees will just make bank account changes because they need to. What’s interesting though is, there is a higher percentage of employees that are definitely utilizing the Web to go out and access this and then come in here and change it. They’re going out and verifying their direct deposit choices. They’re going out and making sure that things are there. Then we come back and we look at the changes. While changes are a smaller percentage, we still have the activity that’s happening month‐by‐month as employees are utilizing these services. The more the employee has utilized these services the less they’re coming directly to your payroll department. That gives another opportunity for your payroll departments to operate more efficiently and make fewer mistakes. Jeremy Martin, TALX We’ve seen, Rod, that in several organizations that have made a transition to a payroll card as well have seen an increase in the number of direct deposit applications and suddenly they’re handling more direct deposit forms than they had previously. One thing that I want to point out is having this feature in the service means that a lot of those employees that are enrolling for the first time in direct deposit can do that online as opposed to creating a net wash of paper inside of a payroll department. Roderick Weimer, Spherion That’s very true. The opportunity for the employee to go out and as they become more and more familiar with an online environment, they will actually begin to utilize more of the tools that are within that environment. Moving on to slide 13, one of the other really interesting features here is the access and changing of federal W‐4 forms. We mentioned that ePayroll does have the opportunity for employees to go out and look and make a change directly on their W‐4 forms. I personally have done it after tax season myself. It’s very, very easy. I have actually talked to many employees, as I’ve sat in on help calls at year‐
end time just to have our employees feel very comfortable that this is a safe, secure, and efficient way to really control their W‐4s. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents When we look at our access, again, we see the peaks around January of each year just because everybody is thinking of taxes and tax time is right after year‐end. Then you might have a little peak right there in April, but really, our biggest peak we find historically is we have a population of employees who want to get their taxes done early, so they’re out there looking at this very early. As well, the change follows that activity. A very, very parallel graph when you really look at access versus change. It’s interesting to see the access and change here parallelism that in comparing the graph on page 12 of the slide show, is more in correlation with the W‐4s than on the direct deposit. More people are verifying their direct deposits and not necessarily making the changes as compared to those people who are out there verifying their W‐4 forms; a higher percentage seem to be making the changes that are out there. Jeremy Martin, TALX Rod, as we go through a lot of these access slides, it’s my understanding that at some point, you had significant growth in your employee population or at different points you’ve had significant growth in your employee population. You’ve been able to really handle this growth about adding numbers inside of your payroll staff. Is that correct? Roderick Weimer, Spherion That is very correct. What’s interesting is; I’m going to jump here to slide 14, if everyone will ‐ the electronic pay percentage. We’ve tracked that percentage in an organization which historically ran in the 75% range, and in 2007, our organization went on a buying acquisition if you will. We went out and were fortunate enough to go into the market and acquire some other organizations and as those organizations came on, initially we paid those employees via a paper check and then moved from that to getting them into the paperless pay environment, all the way until we look at the week of May 19, 2007 here. We see a spike that’s coming in. We’ve seen a significant spike. We’ve tested the waters internally. We’re doing a larger roll out. We are hoping as an organization to move our 25% paper‐preferred recipients to only 5%. Our goal is now a range from 75% jumping up to 95%. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents In an organization that typically hires 2,000 or 3,000 people a week, that 95% goal almost becomes 100% participation when you really look at it. So, is it aggressive yet? Is it beneficial to the employees? Very much so. With rolling out the initiative to increase our paperless pay environment, we’ve looked at a number of factors. Is it beneficial to the employee? Yes. Do we have other options to offer the employee than just the regular paper check they may not see? Very much so with the introduction of ePayroll. Will we be able to control costs? That is our goal ‐ reduce some costs, reduce some exposure, reduce some headache, reduce some frustrations of employees who may not have received a check because all of a sudden, we find that the FedEx truck is broken down or the UPS truck has not made delivery on that date in a timely manner. Those are when people panic and you wind up doing a pay card and reversing the paper checks anyway. You do a void on those and a stop pay, and you’ve incurred additional time spent, non‐
productive time for the ongoing course of your business. The paperless pay opportunity is really a very, very good way to go, especially as we all talk about a green environment and a green global environment. Jeremy Martin, TALX You mentioned moving forward with paperless pay. It’s really taking a look and saying, “Everybody is going to be on an electronic payment, whether it’s a payroll card or a direct deposit.” A friend of ours at Stein Mart, Greg Loman, has shared with us that they recently went through a similar process where they wanted to move everyone in their retail location from a paper check to either a payroll card ‐ they had what’s called a pre‐check or a check that the employee could write for themselves that gives them the full balance of their payment ‐ or direct deposit. And then, all those employees are also going to retrieve their pay advices online using ePayroll. And so, really, there is a sense that we have to get over the hump here and really get the backbone to make this transition. What was surprising that Greg has shared with us is that they expected some pushback from different employee populations. Instead what they found out is there was very little pushback at all. Employees were ready to make this transition in their population. Roderick Weimer, Spherion We’ve been looking to increase our goal of participation, have made calls all the way down to the branch levels and had regional branches onboard and even talked to some of our client base. Actually, this has been very well received. Jeremy Martin, TALX Great. Okay. Well, Rod, thank you very much. We appreciate you taking the time to talk with us and if you’ll hang on for a little bit, then I’ll circle back, and answer some questions for those who are waiting online. Before we do that though, I want to go ahead and pass the floor over to Gordon Middleton, Compliance Specialist, so that he can go through a compliance update. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Gordon Middleton, TALX All right. Thank you, Jeremy. Thank you, everyone, for being with us today. As Jeremy mentioned, I’m Gordon Middleton, the compliance specialist for the ePayroll suite of products. It’s my responsibility to ensure that we maintain compliance across all jurisdiction in which we do business with the ePayroll suite of products. I’d like to get started today by just giving a quick review and sharing some research that we’ve compiled here at TALX. Please keep in mind that this is us just sharing our research with you and it’s not intended to serve as any sort of legal advice but rather just sort of guidelines to help you as you amass information, hopefully looking to go paperless. The first slide we have here, slide 15 is entitled, “State Mandates for Direct Deposit for Existing Employees.” Note there that there are basically three different areas. We have the white states in which an employer may mandate direct deposit participation of all employees. There are 19 of those states currently. Generally, we don’t see a lot of movement in this area. It’s a pretty well settled area of the law. The most recent thing we’ve seen come down the pipe was actually Kansas passed a law effective July 1st that stated that an employer may mandate either direct deposit or pay card. That’s something of a new wrinkle that they’ve put in it there. You’ll notice the vast majority of states are far more protective of current employees than they are applicants. If we can cut back sort of to what Rod said earlier, this is the perfect opportunity when you get those new people coming on board to set an expectation that your company is direct deposit only. To back up, I do have some communication that I received, I believe it was a little over a year ago, from a state department of labor commissioner. Actually, it was Connecticut as well. This is the way that reads. This is sort of the overall methodology that we use here at TALX. It reads as follows: “Until they are an employee, you can establish conditions of employment and one can be direct deposit. A company should find out from each prospect of employee if they have strong beliefs about getting a paycheck rather than a check stub only through direct deposit. This will alleviate problems in the future.” Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents That’s just a good succinct way of putting it and it’s what we generally try to push people toward as they’re bringing on new people in the new hire process. If we can go on to slide 16, please. We have a similar slide here that deals with electronic pay card. You’ll note that we just have a couple of basic areas here. The white states really haven’t had that much activity with regard to pay cards as of yet. We expect there to be a lot more going on, especially in some of the larger states like California, Florida, and Texas. I know California has had some in the past that have been defeated. But, the more things that we see coming down the pike in the legislative arena regarding pay cards are getting to be more and more positive. The most recent items that we have are, for instance, West Virginia. I believe it was June 1st they had a law go into effect with regard to pay cards that reverse field. They had generally been a state that had ruled out pay cards as a way of paying employees and now, they’ve taken a more positive stance and they have put that in legislation. In addition to that, Vermont was also a state that the Department of Labor had found that an employer previously, with a very strict interpretation of their law, should only pay via paycheck. They too have softened their stance so that those states have come around to the positive side. In general, what we see with pay card legislation is that there are certain conditions that have to be met, and they vary a bit from state to state. But usually, they call for an employee to be able to make at least one withdrawal fee free. A lot of times, they will require that that be for the full amount of the paycheck and a lot of states will require that an employee be able to withdraw their pay to the penny. So a lot of times, you’ll see pay card companies provide checks so that you can write those out and be able to get every penny of the pay that’s due. Let’s move on to the next slide, please. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Here, we have our electronic pay stubs; state requirements for online pay stubs. We’ve got them broken down into three categories here. You’ll see the white states are those states that have no pay stub requirements so that if you wish, you could write your pay stub on a napkin and just slide it across to your employee and they’ll be good to go with that. The access states are those that if you’re going to provide paystubs online that the employee must have access so that they be able to actually get on and see what’s going on with their deductions, pay, etc. The blue states are the access and print so that those states take it up one more notch and say that the employee must be able to print that pay stub kind of in lieu of a written stub so that they could actually have a hard copy. In addition to this, and I don’t have them on this map, but I do have another map available and I’ll give you my information at the end here so that you can write me and get any questions or any materials that I have if you wish. We do have some opt‐out states. I believe there are five or six currently. These are states in which an employee must be allowed to revert to a paper pay stub if they notify an employer in writing that that is their wish to do so. California and Wisconsin are a couple that come to mind off the top of my head. Again, I can send you that map if you so desire and I’ll give you my e‐mail address at the end of the presentation here. Last but not least, I want to discuss the state of California and what it takes to be in compliance with their legislation regarding online or paperless pay. It seems to be the area or the state that causes employers the most headaches. The thinking is if you can comply with California’s regulations, you’re generally good to go with the rest of the states. For the most part, that’s true. We’ll just refer to the latest authority that we have in the state of California, or the best authority regarding Section 226A of the California Labor Code, which is the section that deals specifically with pay stubs. We have a letter from July 6, 2006 that comes straight from the chief counsel and acting labor commissioner of the Department of Labor Standards Enforcement. That letter, more or less, lays out what an employer must do to comply with the requirements in California. Number one, and this is an area where a lot of employers are tripped up right off the bat. It states, “Employee approval is not needed before implementing an electronic pay stub.” Therefore, we can kind of go, again, returning back to what Rod had to say earlier; we can go more with that opt‐out methodology as opposed to an opt‐in methodology. We do have the authority to do so. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Also, “Statements must display all items that are required by the California Labor Code, Section 226A.” Generally, the pay stubs that you’re now distributing, be they paper or whatever, should be in compliance with those. So, you should have a pretty good idea as to what those are. “The online pay stubs must also be available on a secure Web site no later than payday. Employees may elect to receive paper statements at any time.” We’ve covered that. “Access to the Web site must be secure and controlled by confidential PIN and shall be available at all times except for downtime caused by system errors or maintenance. Employees shall be able to access either at home or at work, but the workplace will make terminals available to all employees for accessing these records at work. Employees may print copies of statements at work on printers and in close proximity to the terminals,” and obviously that’s for security reasons. “There will be no charge to employees for accessing and printing records.” Lastly, “Wage statements must be maintained for three years and be available to active employees for that entire period.” Now as far as that three‐year period goes, there has been some concern lately in that certain out of state employers have been targeted by the California Division of Labor Standards Enforcement for record keeping violations regarding the three year time period. The law says, “Employers must keep that statement at the place of employment or at a central location within the State of California.” Basically, if you’re an out‐of‐state employer and you’re paying all these people with paper paychecks and paper pay stubs, the law states that you have to have a repository in the state to keep three years worth of these pay stubs on file so that they can come and demand to see that certain stub and you’d be able to produce it within a reasonable period of time. However, failure to comply with that provision is a $250 violation per employee for the first offense and it’s $1,000 per employee for each subsequent violation. You can see that’s a pretty stern fine for non‐compliance with that particular section. However, again back to this July 6, 2006 letter, electronic statements that are printable are in compliance. Therefore, an employee or an employer should be able to pull that up and print that off right there on the spot and have that readily available. Therefore, it shouldn’t really cause any problems. I just wanted to cover those few items there and should anyone have any questions that we don’t get to, let me give you my e‐mail address and that’s [email protected]. I’ll turn it back over to Jeremy now and we can answer any questions that may have arisen during the course of the presentation. Thanks. Jeremy Martin, TALX Thank you very much, Gordon. Before we head straight over to questions, I do want to remind everyone that these slides will be live until the end of the day. Feel free to come back to this Web site and snag the resources that we have here on this next slide at your leisure, on slide 18. I want to note on the bottom, we have a demo available. We mentioned the interactive state W‐4 service that handles those federal, state and local forms interactively. It removes the need for manual entry of that data. Feel free to sign up for a demonstration of that. First questioner Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents My question is there was a reference in there to the paperlesspay.org Web site. I saw a reference to it somewhere. On that Web site, it says that in California, that only by an employee’s consent can the employer deliver a printable electronic pay stub. That kind of conflicts with what you said in your presentation. I don’t know if they’re not as up to date. Gordon Middleton, TALX There may just be some problem with having‐‐ Are you talking about the map? Questioner continues Yes, the map and it’s showing opt‐out states and then the definition of the opt out states says that you have to provide a written or printed statement. Gordon Middleton, TALX Yes, that’s correct. You do have to provide a written or printed statement, but it is if the employee requests that statement. It may just be a case of some of the materials on that Web site being a bit outdated. Questioner continues Okay, but you said that that letter was from 2006, right? Gordon Middleton, TALX Right. Next questioner On the pay cards, who is actually doing the services, like if the employee loses the card or there’s a dispute as to the dollar amount that’s on the card? Who actually does that service? Roderick Weimer, Spherion If the employee loses the card, they would contact their local branch office. That branch office would then come in and contact the payroll department who would then coordinate with Money Network to go out and have that pay card turned off and the funds that need to be there put back on the pay card. We have authorized individuals throughout our organization who have the ability to load emergency pay and then we work through a system back to payroll to make sure that everything is documented in the employee’s record appropriately. Questioner continues Okay, and what was vendor that you guys use ‐ Money Network? Roderick Weimer, Spherion Money Network. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Questioner continues Okay. Thank you. Roderick Weimer, Spherion You’re welcome. Next questioner Hello. I was wondering about the question regarding the interactive state and federal W‐4s. What is the thinking or the regulation on not having a wet signature, but an electronic signature? Gordon Middleton, TALX We actually provide an electronic signature ability for employees that make an adjustment. We leverage ESIGN, Electronic Signatures in Global and National Commerce and UEDA laws in states, which state that electronic signatures are valid and are considered legal signatures. Questioner continues Is that also true on the federal level? Gordon Middleton, TALX That’s true on the federal level. ESIGN is a federal law that was enacted in 2000. Questioner continues I have a question about direct deposit, electronic sign up of direct deposit and the issue of pre‐
noting. How is that handled? Roderick Weimer, Spherion We do the pre‐note through the normal course. We notify employees that it may take one pay cycle to do the pre‐note and then on the second pay cycle, whether that employee is paid weekly, biweekly or on whatever cycle they may be on, until the actual direct deposit will take place. But, it is always advantageous in any payroll environment to do the pre‐note. Questioner continues Okay. Thank you. Roderick Weimer, Spherion You’re quite welcome. Next questioner Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Yes. Is your access to your ePayroll system in Intranet or an Internet? Roderick Weimer, Spherion It’s an Internet because you’re going outside of your organization into the site of TALX. What I personally like about it is that way, if I am here using the services at work at my desk through my laptop, I can use it. I can use my laptop, or I can actually log into ePayroll from my home personal computer. I can go right in, right through the Internet into ePayroll and it gives total flexibility. I think that’s one of the attributes here; that if an employee does not have their own personal computer, they can go out even to a public library and utilize the services of ePayroll. Jeremy Martin, TALX Additionally, we talk about the IVR aspect of ePayroll just a little bit. I do want to mention that in order to be compliant; we talked about states that have requirements or access requirements where the employee must be provided access to a pay stub. The way we meet that requirement is to provide Internet access not just at a workstation, especially for an hourly employee that maybe isn’t sitting at a desk near a computer, but they can access that from home or they can access their information over the telephone using the IVR system. So really, you’re knocking down the obstacle of access in terms of providing paperless pay. Just so you’re aware, we have a portal feature that’s available as well where we can have a link basically that authenticates your employee from an Intranet site. Basically, we could prevent the employee from accessing the site from a different location. They would access ePayroll through that portal link. Questioner continues Okay. Thank you. I have one additional question. You didn’t mention what payroll system you’re on, but the interaction between your W‐4s or your pay ‐ I mean that’s all a pretty smooth process then? Roderick Weimer, Spherion Oh, it’s an exceptionally smooth process. We’re using PeopleSoft. It interacts right with the file that comes directly from TALX. It’s a back‐end feed file from employees going out to the ePayroll site and self‐service activities. We receive that file. It feeds right in on a scheduled time frame. It’s batched in. It’s scheduled. It processes through for the next payroll cycle and we have the information to support it and everything flows very seamlessly. Questioner continues What PeopleSoft version? Roderick Weimer, Spherion We are actually on 8 right now moving to 9 next year. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Next questioner You talk about states mandating this, that or the other. Is that particular point of law or point of issue based on the state I work in or the state that my company is incorporated from? Roderick Weimer, Spherion Those laws are based on basically where the employee is working, so where the employee’s work location is the law that would apply to that particular location. Gordon Middleton, TALX That is correct. Next questioner Yes, hello. I have a question about the pay cards. When you’re cutting checks or whatever or cutting your file to do the pay cards, how much lead‐time does your bank need? Is it like the ACH where they need like two days? Roderick Weimer, Spherion We can actually work with the pay card under one day. You can have your on‐cycle processes and your off‐cycle still deliver for that on Friday pay. Jeremy Martin, TALX I just want to chime in real quick. We’re about five minutes after the hour and to respect everybody’s time that joined us today, I want to go ahead and make this our final question. Next questioner On the pay cards, the question I have is if the employee loses the card, you explained the logistics about how the card is replaced. My question really is, does the employer bear any responsibility on the cost of that replacement card, or does it all belong to the employee? Roderick Weimer, Spherion That’s kind of a situation by situation. In general, it’s going to come back down to‐‐ you really have to work with your pay card provider. The same liability is going to come out with the check because what you’re going to do is as soon as you find this data has been identified as lost, you contact Money Network or your provider and you literally stop any future activity from happening on that pay card. One of the beauties of the pay card is when an employee is presented with it, there is a whole instruction packet, which can be presented in one of six different languages. We’ve worked to identify various ethnic backgrounds which require languages other than English that we can supply this information to our employees and from there, we have the employees educated as to what to do in the event the pay card is lost or misplaced. Once that happens, if the funds are still there, they get transferred back from the provider so that we can then have them to reload. Spherion on Controlling Payroll Costs Using Paperless Pay
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Table of contents Again, there is a provision for the emergency pay within that. It actually works out to be easier to use than either a direct deposit change or a stop payment. Jeremy Martin, TALX Okay. I want to respect everyone’s time. We’re going to go ahead and wrap things up. Before we finish, Rod, I just want to say thank you, again, for joining us. We really appreciate it. Roderick Weimer, Spherion I thank everyone for the opportunity to share this information. Jeremy Martin, TALX Thanks also to all of our participants. If you have anything else that you would like to ask, feel free to use the e‐mail link and we’ll get you an answer as soon as we can. If you have a question that you asked while you were registering for this eSeminar, we will answer that question via e‐
mail. We want to thank everyone, again, for their time and we appreciate it. Spherion on Controlling Payroll Costs Using Paperless Pay
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