Speak the Language of Payroll
Payroll in the security service business is not rocket science, but that does not mean it is easy. Paying people for the hours that they work ties into scheduling, time and attendance, industrial relations, human resource management, and billing.
There are rules to follow, and these rules are not followed just once. Add tens, hundreds, and even thousands of guards to the equation, then mix in tens, hundreds, and even thousands of sites. Each of these sites has rules, realities, regulations, certification requirements, and particularities—as do the respective guards. The potential for errors and pitfalls is huge, and comes with real consequences.
A well-designed back-office system can help you handle all these variables efficiently and prepare your employees' attendance data so that it integrates easily with your payroll system.
Still, those who work in sales, operations, training, and human resources should be aware of certain key payroll terms and realities in order to avoid costly pitfalls and better understand costs--even if there is a payroll specialist on staff. Employee pay rate is just a piece of the puzzle, so let's call it the top line.
Think of the table below as one of those pocket language guides you might carry in a foreign country. My company has clients in both the United States and Canada, so we must be aware of forms and regulations for both countries.
Employers (resident or non-resident) need to complete form T4, Statement of Remuneration Paid, for employees to whom they have paid "employment income, commissions, taxable allowances and benefits, or any other remuneration."
Every employer who pays an employee $600 or more for the year and withholds taxes for services performed must file a Form W-2, Wage and Tax Statement, for each employee.
In a calendar year, you may make payments relating to employment, like fees, allowances, or pensions, that total over $500. Or, you may have deducted taxes from such payment. In either case, you must fill out form T4A, Statement of Pension, Retirement, Annuity, and Other Income. Note that there are exceptions to these rules.
The Affordable Care Act, or healthcare law, details employer benefits and responsibilities, which vary according to the size and structure of your workforce.1099 (U.S.)The Internal Revenue Service's (IRS) Form 1099-MISC, Miscellaneous Income, needs to be filed for each person who is not an employee and to whom you have paid at least $600 for services performed.
Workers' Compensation (Canada)
Employees who suffer an occupational injury or illness are eligible for workers' compensation benefits. Each province and territory has a board that makes decisions on such claims. (In the United States, workers' compensation is generally handled through private insurance.)
Overtime pay (OT) refers to employee wages that need to be paid at higher than the normal rate because the hours worked exceed "the number of hours deemed to constitute a normal workweek or workday."
OT varies based on jurisdiction, but in general OT can be 1.5 or 2 times a regular wage rate.
In the United States, salaried people can be entitled to OT if they earn less than the threshold, which is currently $913 per week; however, there are other conditions.
Federal Holiday (U.S.) Statutory Holiday (Canada)
This is a holiday authorized by the U.S. federal or Canadian federal and provincial governments, respectively. In addition to government organizations, other business entities may also observe the holiday. Employees required to work on such a holiday may receive wages above their normal rate.
Break and meal periods are obligatory pauses from work at defined intervals.
If, due to an emergency, an employee is asked to return to work after leaving work or during a paid leave, they earn callback or report-in pay.
A direct deposit is a free electronic deposit of funds into one's bank account.
When an employee leaves a firm, the final paycheck includes regular wages as well as any unused accumulated annual leave, calculated at the employee's former regular pay rate.
The lowest wage rate an employer can legally pay an employee is called the minimum wage.
Minimum Wage - Exemptions
Certain employees, under certain conditions, may not be covered by certain parts of the minimum wage legislation in your jurisdiction. Or, special rules may apply to these employees. Consult your local authority.
Payout of Vacation/Sick Pay
Vacation pay is a supplemental wage payment based on length of service to the company and a percentage of annual wages.
Sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. These amounts may be paid by a third party.
Both payouts are subject to withholding taxes, as if they were regular wage payments.
Whether mandatory or voluntary, payroll deductions are amounts withheld from an employee's gross wages.
Considering how much the security service sector depends on quality talent, it is important to get the details of payroll right--first time and every time.
Mark Folmer, CPP, is vice president for the security industry at TrackTik. He is a member of the ASIS Security Services Council and ASIS senior regional vice president for Region 6, Canada. He also serves on the PSC.1 Technical Committee and Working Group.