Payroll Plays a Leading Role in Financial Wellness, Speakers Say
Payroll departments can play an important role in informing employees about their pay and ensuring their financial wellbeing, two payroll clerks said on May 19.
Various surveys conducted during the Covid-19 pandemic showed that the pandemic had a negative impact on employees’ financial conditions, said Eric Schuster, vice president and general manager of ADP’s Next Gen Payroll platform.
The majority of employees surveyed had negative effects even if they kept their jobs, otherwise lost income, or viewed building an emergency fund as a primary financial goal, Schuster said during a presentation at the American Payroll Association’s Xstream 2021 convention.
One of Bank of America’s surveys also found that the majority of employers feel “extremely responsible” for the financial well-being of their employees after the pandemic, Schuster said.
Human resources departments can help employees understand their options, answer questions about pay, and encourage participation in programs that offer pre-tax savings, Schuster said.
This can start with teaching employees how to get paid and what to expect from payroll during onboarding, Schuster said.
Employers can then allocate resources to complete Forms W-4 and encourage employees to approve direct deposits or similar actions, Cheryl Lewis, vice president of product management for ADP’s Next Gen Payroll Platform, said during the Lewis Xstream presentation -Congress with shoemaker.
The Treasury Department found in June 2020 that 22% of American employees are still paid by checks, Schuster said.
“When was the last time you ran a direct deposit campaign to get people off checks, or even encouraged them to switch to the 2020 W-4 form?” Asked Lewis.
Have the paycheck
Both speakers emphasized that employees should feel like they own their paychecks at all stages of their careers.
This can be achieved by something as simple as giving employees access to season tickets or other self-service tools, Lewis said.
Teaching employees to monitor and read their payroll can also make the payment process more transparent, Lewis said.
When employees can see how much they’ve earned, “it gives them more confidence in managing their own finances,” said Schuster.
Many payroll clerks’ mobile apps allow employees to compare pay across pay periods, Lewis said.
Employees can also be encouraged to save more, whether through increasing their 401 (k) plan contributions or through payroll and human resources who work with financial experts to organize retirement benefit meetings, for example, Lewis said .
Other resources employers can offer include financial advice for participants in 401 (k) plans and those with student loans, debt advice, and planning for college or retirement, Lewis said.
In particular, a SoFi survey found that only 13% of responding employers offered student loan assistance, but 63% of workers with student loan payments had difficulty making payments, Schuster said.