Press "Enter" to skip to content

Category: Accounting & Payroll

What is the 7-Minute Rule for Payroll, and is it Legal?

The 7-minute rule is a guideline created by the Fair Labor Standards Act for employers to round employee time correctly for payroll. Time-rounding is actually fairly popular. According to recent studies, about 55% of employers round employee timesheets up and down for payroll purposes. People have reported that it makes their process a little easier because they can see an overview estimation of employee hours. It also prevents early clock-ins and simplifies their invoicing practices. Despite these benefits, there are also some drawbacks. 

Let’s dive into how the 7-minute rule works:

Leave a Comment

Reasons Why You Have to Back Pay Employees

If an employee needs to receive back pay, this means that the employee wasn’t compensated correctly for their work. An employee may be owed back pay for bonuses, promotions, pay increases, or for hours they worked. Whatever the case may be, back pay is something that employers need to take seriously and handle in a timely manner. 

Here’s what you need to know:

2 Comments

Piece-Rate Pay: Should You Do it?

As a business owner, you have the choice to compensate your employees utilizing a number of different methods, as long as you meet federal and state law requirements. One option employers can give their workers is called “piece-rate” pay. Piece-rate compensation allows the employee to earn pay based on the units created rather than the hours they worked.  

If you’re thinking about paying your workers using a piece-rate system, here’s some things you should consider:

Leave a Comment

Which States Raised Minimum Wage in 2021?

Over the years, employees in the United States have fought to increase the federal minimum wage to $15/hr with many political leaders joining in the effort. The federal minimum wage has remained at $7.25/hr since 2009 and studies show that roughly two-thirds of Americans support an increase. With the new makeup of the Senate this year, this long-overdue increase is looking more likely than ever. In the meantime, many individual states have continued to increase their minimum wages in order to keep up with the cost of living in their regions.

Did your state increase its minimum wage? Let’s find out!

Leave a Comment

What to Do When You Overpay Employees

Frustrated business owner looking at his computer

It’s easy to mistype data when you’re manually entering time records into a payroll system by hand. If you’ve made payroll mistakes in the past, you’re not alone. Studies by the American Payroll Association show us that approximately 40% of business owners make payroll mistakes annually. This results in an average of $845 in IRS penalties every year. In order to avoid this, many business owners have invested in online time tracking services that calculate records automatically. This type of software transfers your employees’ time records to payroll and accounting software platforms with ease, avoiding the need to enter time manually. If you’re manually entering data every pay cycle and you’ve made a payroll mistake, you might wonder how to handle it and, more importantly, when you need to handle it. We can help.

1 Comment

Finding the Right Payroll Expert

People lined up in a line with a finger pointed directly at one person

Running a business takes a lot of time and energy. For small businesses, doing your own billing and payroll might be the way to go, but what about a growing business? When business is booming, you don’t want to spend time keeping your books up to date, processing payroll, entering tax write -offs, or searching for missing tax information. You want to focus on the future of your business, rather than dealing with paperwork. This is why business owners are hiring payroll experts to take care of their financial needs. 

1 Comment

7 Reasons Why You Should Hire a Payroll Expert

a woman doing the "thumbs up" symbol towards the camera.

Payroll is one of the most important aspects of business– it builds financial stability among employees and boosts team morale. Many businesses, especially small businesses, tend to take payroll into their own hands and avoid outsourcing payroll. Managers and business owners spend hours calculating everything themselves, often times juggling other roles in the business at the same time. Taking care of your own payroll works when your business is just starting out, but this should be avoided when the business grows.

Once business is booming, it’s wise to bring in a payroll expert to make sure that you save yourself time, headaches, and money. This will allow you to focus on the growth of the business rather than worrying about whether or not your employees are going to get paid on time. Additionally, without a payroll expert, there’s a chance that you can make a mistake. Mistakes can lead your business to legal penalties, so getting some help might not be a bad idea.

8 Comments

Closing Payroll Early to Cover Holidays

early payroll

Employee payroll needs to adhere to a regular payroll schedule. Employers can’t just pay their employees whenever they get paid from their clients and they can’t postpone payroll because they ran into a big expense. However, while you do have to stick to a schedule, you can announce your plans to close payroll early so that employees get a check in time for the holidays.

12 Comments

What Happens When You Make a Payroll Mistake?

types of payroll mistake

Making a payroll mistake could mean getting reported to the Department of Labor. It could mean that you’ll get sued, fined, ordered to pay back wages, and forever fear the DOL. It’ll be an ugly mess over an honest mistake, right?

Well, not necessarily. If employers honestly try to follow the rules and don’t deliberately try to reduce overtime, the DOL may be lenient with a payroll mistake. At least that’s how it has appeared in a recent case.

3 Comments

Comp Time for Private Employers – A Choice for Employees

Offering employees the choice between comp time in place of overtime is a benefit that the public sector has but the private sector does not. The benefit allows employees to choose between getting paid overtime for hours worked over 40 in a week or getting one and a half times the overtime hours added to the employee’s comp time balance.

The benefit is appealing to some employers and employees; some employers don’t want to pay overtime and some employees prefer time off to more money. There are groups that recognize this and are advocating to make this benefit widely available.

Leave a Comment

How Rounding Works in Payroll and Overtime

Round to the nearest 15 minutes

For the longest time, why anyone would use rounding in payroll calculations was beyond me. Since rounding is meant to even out in the end, what is the point? I don’t like unanswered questions hanging around, so I decided to do some digging. I still don’t think rounding is a brilliant idea, but at least I understand why it’s used. Essentially, rounding in the morning benefits the occasional late employee while rounding in the evening benefits the employer. I’ll explain how this works.

Before I start, I wanted to mention that we have a bunch of free business math calculators that could be helpful if you’re calculating by hand.

First of all, it’s important to understand how rounding is supposed to work in order to be compliant with the DOL. Time must be rounded both up and down and never done in the employer’s favor. Specifically, the time must follow the 7/8 rule:

15 Comments