Ensuring Payroll Accuracy and Compliance: Address, Compensation and Tax Verification

Momentum for remote work has been building for years. Then, the pandemic dispersed employees like never before. Able to live anywhere, employees can relocate at the drop of the hat and often without notifying their employers. This can cause serious compliance issues. 

93% of HR professionals were confident they know where the majority of their employees are working (source: SHRM)

While you may think you know, do you really know where your employees are located?

28% of employees have worked outside their home state or country since the start of the pandemic, but only 33% reported all it to HR. (source: Topia)

Many businesses expect to continue working remotely for the foreseeable future. Employers are faced with the complexities of multiple and varying wage-and-hour laws and other location-specific pay, tax, and compliance regulations. 

Employers should check in with employees regularly to ensure all personal information is up to date. It is crucial because most states have thresholds when this information must be updated by employers. HR technology makes this much easier for both employers and workers with alerts and employee self-service.

Learn why it is important for companies to keep updated location information and discover what Netchex has created within our system to facilitate this need. 

74% of professionals expect some form of remote work to become standard after the pandemic (source: Growmotely)

Why is it important to know exactly where your employees are located?

It is important for businesses to maintain updated and accurate employee information for a number of reasons. The most critical reason is to ensure payroll and tax accuracy, including:

• Wage-and-hour laws
• Overtime rules
• Local and state tax withholdings 
• Corporate tax obligations

Additional reasons include:

• Paid and unpaid leave, including sick, disability, and parental
• Temporary COVID-enacted rules
•  Privacy laws

How can Netchex help you remain accurate and in compliance?

What is ACT?

Netchex’s new Address, Compensation, and Tax Verification (ACT) feature ensures employees are being taxed accordingly and paid the accurate minimum wage based on actual location. ACT enables you to manage both wage and tax suggestions for employees based on the updated addresses in their employee profile.

How does it work?

When ACT is enabled, Netchex sends on-screen tax and minimum wage suggestion alerts whenever a change is made to an employee’s home or work address, hourly compensation, or tax information. These real time, compliance-based alerts can be ignored or accepted. 

• If accepted, the Netchex system allows you to accept suggestions for address, compensation and/or taxes, then will scan for additional tax implications after updating.
• If ignored, your company is accepting the liability of collecting the proper taxes on your employee. State tax entities can charge fees and penalties for not withholding taxes.

What are the benefits?

• Verify work location addresses and employee home addresses using the same database the United States Postal Service (USPS) uses for mailings.
• Receive minimum wage suggestions based on employees’ actual work location—whether they are working at a physical office location or if they are working remotely.
• Ensure your employees are taxed accordingly and paid the proper minimum wage for the state they are working in.
• Gain assurance that your company remains in compliance with all updated compensation and tax regulations.