Expert: Shirley McAllister, CPP, PHR - 6/14/2011

Question
QUESTION: Hello -

I am having to write guidelines for volunteer employee payroll deductions. The payroll deductions are a benefit that includes, Tires Plus, Auto Repair, Car purchases, etc. Everything outside the realm of the normal payroll deductions such as helath, dental etc.

Do you have any ideas on where to start? Some employees even use the payroll deduction to purchase concert tickets. It's a real mess. Any help?

ANSWER: The real mess is that your company has allowed this to happen. You have become a bill paying payroll department.

It needs to stop immediately. YOur policy  needs to state which voluntary deductions are allowed and it should be very few any thing else is not allowed. No exceptions if you do for one you will have to do for all.

Voluntary payroll deductions which are generally allowed are:

one established rec center which is endorsed by the company
One established charity which is endorsed by the company
Voluntary Life insurance above any paid by the company with one establish company endorsed by the company.


This is what is standard at most companies:

We have one rec center "Idaho Athletic Club" (no others can be voluntarily deducted)
We have one Charity "United Way" (no others can be voluntarily deducted)
We have one Life Ins company "Guardian" (no others can be voluntarily deducted)

Whatever your company agrees on should be it and no others.

It should say something like:

As of July 1, 2011 our company has endorsed the following Voluntary payroll deductions only. These are the only deductions allowed, there will be no exceptions:

List the voluntary deductions.

Have the CEO sign it and distribute a copy to all the employees.

---------- FOLLOW-UP ----------

QUESTION: Would this function belong in the HR Department or Payroll Department? Right now the payroll deductions are in the HR dept being it is an "employee benefit." I personally think this is strictly a payroll function. What are your thoughts and why? Thanks

ANSWER: The HR department is in charge of writing company policy. The PR department is in charge of adding the deductions to the system and deducting the funds. Accounts Payable usually is than sent a payment request and pays the amounts to the pertinent parties.

Although HR writes and distributes the policies Payroll and HR need to work together on preparing the policy because it needs to be legal for HR and it needs to actually work for Payroll. It can be nice for the employees and legal but if it is a nightmare to implement than it does not work for Payroll. The HR and Payroll departments need to find a common ground that makes the policy work for everyone.

Shirley

---------- FOLLOW-UP ----------

QUESTION: Which department would actually input the pay roll deductions and reconcile payments/payment history?

Right now HR has this procedure assigned to us and I beleive it is a payroll function.

Answer
Usually payroll imputs the pay roll deductions and reconciles the history reports. This is a payroll function.  HR only writes and enforces the policies and procedures they do not imput them into the computer.

I have actually seen this done both ways but when we had HR entering and Payroll entering into the system things got all mixed up because there were too many fingers in the pot. It is better if it is all entered by payroll so they know exactly what is being imput in and out of the payroll system and on the payroll checks.

It has worked much better for our company to have payroll do all the imput. Accounting reviews the payroll reports as a security measure for fraud prevention as per our accounting firm.

We have HR doing policy, paperwork with the employee, setting up benefit tables, explaining benefits to employees , negotiating with the insurance companies, answering all benefit questions and solving benefit challenges.

We have Payroll entering all the amounts into the payroll system for the employees. HR sends a memo to payroll that employee XYZ has enrolled in this benefit program and needs to have X amount of dollars deducted from each check. Payroll imputs it into the payroll system.

When payroll is run the reports for the voluntary deductions are printed and reviewed by the Payroll Manager, than they are sent to Accounting where they are reviewed and a check is cut and mailed to the voluntary deduction company.

This is our checks and balances as suggested by our Accounting firm during our annual audit.

Shirley

Shirley