Payroll departments can play an important role in informing employees about their pay and ensuring their financial wellness, two payroll professionals said May 19.
Various surveys conducted during the Covid-19 pandemic showed that the pandemic negatively affected employees’ financial conditions, said Eric Schuster, vice president and general manager of ADP’s Next Gen Payroll platform.
Majorities of surveyed employees experienced negative impacts even if they kept their jobs, otherwise lost income, or considered building an emergency fund to be a primary financial goal, Schuster said during a presentation of the American Payroll Association’s 2021 Congress Xstream.
One of the surveys, by Bank of America, also showed that a majority of employers feel “extremely responsible” for their employees’ financial well-being after the pandemic, Schuster said.
Payroll departments can help employees understand their options and answer questions about pay as well as encourage enrollment in programs that offer pre-tax savings, Schuster said.
This can start with teaching employees during onboarding how they are paid and what to expect from payroll, Schuster said.
Employers can then provide resources for filling out Forms W-4 and encourage employees to authorize direct deposits or similar measures, Cheryl Lewis, vice president for product management of ADP’s Next Gen Payroll platform, said during Lewis’s Congress Xstream presentation with Schuster.
The Treasury Department found in June 2020 that 22% of American employees are still paid through paper checks, Schuster said.
“When’s the last time you might have run a direct deposit campaign to get people off of paper checks, or even encouraged them to switch over to the 2020 W-4 form?” Lewis asked.
Both presenters emphasized that employees should feel as if they own their paycheck in all stages of their career.
That can be achieved through something as simple as allowing employees to access timecards or other self-service tools, Lewis said.
Teaching employees to monitor and read their pay statements can also make the payment process more transparent, Lewis said.
When employees can see how much they’ve earned, “it gives them some more confidence in managing their own finances,” Schuster said.
Many payroll providers’ mobile apps allow employees to compare pay across pay periods, Lewis said.
Employees can also be encouraged to save more, whether by increasing their 401(k) plan contributions, or by payroll and human resources working to organize, for example, retirement planning sessions with financial experts, Lewis said.
Other resources that employers can offer include financial advice for participants in 401(k) plans and those with student loans, debt counseling, and planning for college or retirement, Lewis said.
In particular, a survey by SoFi showed that only 13% of responding employers offered student loan assistance, but 63% of employees with student loan payments struggled to make payments, Schuster said.