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Don’t Get Tripped Up by These Common Compliance Issues

Ella Baker
Don’t Get Tripped Up by These Common Compliance Issues
Reading time 5 Mins
Published on Sep 9

With the mountain of employment compliance regulations that govern businesses large and small, it’s no wonder that compliance is the biggest headache for many small and medium-sized businesses (SMBs). The time spent making sure that you’re compliant means time you’re not spending on growing your business, but the costs of noncompliance can quickly add up and spell disaster for your company. Here are three common compliance issues that SMBs face and how a trusted PEO partner can help you avoid them.

The bare minimum

When it comes to how much you pay your employees, the law is very clear. However, the nuance of regulations about minimum wage can be tricky for some business owners. The Fair Labor Standards Act (FLSA) sets the federal minimum wage, which is currently $7.25 per hour. However, the FLSA does not supersede state or local regulations when those jurisdictions have a higher minimum wage.

For example, the state of Ohio has set the minimum wage at $8.55 per hour. Therefore, businesses operating in Ohio are required to pay the higher minimum wage of $8.55 to employees. Ohio isn’t alone – 29 states and the District of Columbia currently have minimum wages higher than the federal rate and some cities have begun raising the minimum wage requirements for employers.

A trusted PEO partner, like Sheakley, will evaluate all of your current pay rates to ensure you are compliant with federal, state and local minimum wage regulations. Additionally, your PEO can even act as your payroll administrator, further reducing your team’s workload. Read Evaluating Your Compensation Plan to learn more about how a well-structured compensation plan can help your business grow and succeed.

Taking it into overtime

When it comes to running an SMB with a limited staff, it’s not uncommon for owners and managers to ask employees to put in additional hours. While your employees may appreciate the extra pay on their checks, making sure that you stay compliant with employment laws governing overtime pay can be tricky. While the FLSA requires employers to pay non-salaried employees time and a half for all hours worked over 40 in the standard work week, some states and local municipalities are stricter in their overtime requirements.

In every state, and at the federal level, it is illegal to fail paying overtime at the required rate. While businesses can implement policies that are more stringent than those of their state or the FLSA, they must still be compliant. For example, some employers may elect to pay overtime for any time worked over 8 hours in a given day or beyond the standard shift of the employee. Under the FLSA and Ohio’s state regulations, this is acceptable since it still meets the minimum requirements set by these governing entities.

Tracking the hours that employees work and ensuring that your overtime payroll practices are in compliance doesn’t have to be a pain. Selecting a PEO partner that offers an automated timesheet reporting and processing tool, like Sheakley’s Human Capital Management (HCM) platform, can significantly reduce the likelihood of payroll processing mistakes. Our HCM software can even help you save money by reducing time card fraud and misreporting. Check out Combating Time Card Fraud to learn more.

Timely payments

The frequency and timing of issuing paychecks is as important as ensuring that you’re paying your employees enough and for all the hours they’ve worked. At the bare minimum, your employees should be able to expect their paychecks on a set, predictable schedule.

While the federal government doesn’t set a specific time schedule for the issuance of paychecks, it does require that employers set a consistent pay frequency. Whatever the frequency established, once in place, employers may not change the pay schedule unless all of the following apply:

  • You have a legitimate business reason
  • The change is permanent
  • You are not avoiding overtime or minimum wage regulations
  • You don’t unreasonably delay payment of wages

Ohio’s employment laws have a stricter timetable, requiring payroll to be issued at least twice per month. Employers may pay employees more frequently but must adhere to the state’s minimum requirement of twice per month, unless written pre-authorization for a different pay schedule is issued to the employer by the state.

Payroll processing can be a time-consuming task fraught with compliance issues, but a PEO can help relieve your anxiety by offering payroll services. From ensuring that paychecks are issued on time to keeping you compliant regarding withholding requirements and processing premium payments for benefits, your PEO can help keep your company out of hot water from a compliance standpoint. As your PEO partner in the co-employment relationship, Sheakley can go beyond helping you track the hours of your employees by offering full-service Payroll Services.

Focus on business, not compliance

Accredited by the Employer Services Assurance Corporation (ESAC) and Certification Institute, Sheakley’s 120 years of combined PEO experience and expertise are unrivaled in the industry. As your company continues to grow and becomes subject to more stringent labor laws, Sheakley’s PEO services reduce risks and manage compliance for you – letting you stay focused on the daily demands of your business.

Schedule your free consultation with a Sheakley PEO professional today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.

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