Reasons Why Paying Payroll on Time Is Crucial to the Success of Your Business

As someone running a business, you’ve got to pay your people what they’ve earned, and you’ve got to do it on time.

That’s just the way it is. I know most bosses get that paying on schedule is the law. But even so, sometimes staff don’t get all the money coming to them.

Maybe in some cases that’s on purpose (not cool, by the way). But a lot of the time, it happens because things slipped through the cracks. Keeping track of hours and what folks are owed takes work. If you’re not on top of it in your human resources (HR) department, problems can creep up on you.

And here’s the crazy part – even huge companies with bazillions for HR budgets mess this up all the time.

Big Brands Drop the Ball Too

Seriously, over the last few years, the U.S. Department of Labor has caught several ginormous corporations shorting their employees on rightful pay.

The DOL investigations found these mega-companies “failed big-time in recording hours accurately and paying up for many, many hours employees put in.”

So when even the biggest brands with the most resources routinely underpay, you can bet smaller operations are vulnerable to payroll slip-ups too.

Whether it’s on purpose or an accident, not paying your people fully and on time just isn’t okay.

Payroll Issues Burn Trust and Kill Morale

Your staff works for their paychecks. They expect – and deserve – all of their hard-earned money on schedule.

When pay comes late or light, people obviously feel frustrated and ticked. It throws their finances out of whack and causes stress. They might have to get payday loans or whip out the credit cards to make ends meet.

These money worries spill over into their home and work worlds. And seeing their coworkers shorted? That torches team morale. It makes everyone feel like you don’t value them.

Over time, ongoing payroll junk creates real distrust. Motivation tanks. Folks disengage. Not exactly what you want, right?

You’ve Got to Follow the Payroll Rules

I wish I could say paying properly is just about being a stand-up boss. But nope, state and federal laws are also super strict about all things payroll.

On the federal side, the Fair Labor Standards Act (FLSA) says hourly non-exempt workers must get overtime pay – 1.5 times their regular rate – when they pass 40 hours in a week.

Salaried exempt folks like executives don’t get overtime. But they still have to receive their full salaries whenever they put in any work that week.

Meanwhile, states often go above the federal laws. Many require daily overtime pay and meal/rest breaks beyond what FLSA mandates. Some triple damages for “willful” (knowing) violations.

It’s a tangled web, for real. Accidental missteps happen. Working with seasoned advisors is key to avoid stepping wrong.

Payroll Screw-ups Can Cost You Big Time

Lawsuits over pay are popping up like mushrooms lately, usually grabbed up by shady plaintiffs’ lawyers.

Check it – FLSA lawsuits jumped a whopping 438% between 2000 and 2015. And over 8,000 were filed in 2016 alone.

Lately, huge companies like Walmart, JP Morgan, and Bank of America have shelled out massive settlements for systematically underpaying people.

For a small fish, just one or two suits can mean game over. Beyond the legal bill, you’ll hemorrhage cash for fines, lawyers, and lost productivity when morale crashes.

And forget finding or keeping standout talent if people don’t trust you to pay correctly. Your rep as an employer takes a major hit.

I don’t need to tell you that getting payroll right matters to your success. Like, a lot.

Technology Can Seriously Help With Payroll

Tracking hours, calculating steadily changing tax withholdings, staying on top of constantly shifting laws? Not fun manual labor, am I right?

Luckily, today’s payroll services and HR tech does the heavy lifting for you. These genius systems automatically verify hours, compute overtime, calculate gross and net pay, and handle direct deposits.

Sophisticated software also makes it simple to set up complaint overtime, meal break, and other policies. Some even monitor laws and give you heads up about relevant changes.