Tag: payroll

Posted on

HR and Payroll Trends for Hourly Teams [2026]

Summary:

  • Hourly teams in the U.S. will face both new and familiar challenges in 2026, and the companies that lead will be those that understand their operational needs and invest in solutions that keep them competitive.
  • AI will continue to dominate conversations, but the real advantage will come from using it effectively, not just adopting it.
  • Automation and the push to eliminate manual processes will accelerate, with organizations seeking tools that do the work rather than just support it.
  • A true all-in-one platform can help hourly workforces stay ahead, bridging gaps across compliance, payroll, and workforce operations.

Hourly teams across the United States are heading into 2026 facing long-standing challenges and emerging trends. The labor market remains tight, compliance keeps getting tougher, and the frontline workforce is transforming faster than most organizations can keep up. 

As of late 2025, the U.S. civilian labor force participation rate is hovering around 62-63%, still below pre-pandemic norms. The gap underscores how hard it remains to attract and retain top talent, even as labor costs are rising. More than 20 states raised their minimum wages in 2025 alone, with further increases scheduled for 2026 and beyond.

At the same time, technology continues to reshape how hourly work is managed. In 2026, the competitive edge will go to organizations implementing smarter technology that doesn’t just support work but actually does the work. We’re talking about systems that not only handle administrative tasks but also take action based on different data and insights. 

In 2026, the winners won’t be the ones chasing shiny trends. They will be those who move faster than regulatory changes, adapt quickly to new technologies, embrace challenges, and configure their systems to keep pace with existing trends and stay ahead of new ones. 

Below are five HR and payroll trends hourly teams should expect and prepare for as 2026 unfolds. 

Companies effectively using AI will stay ahead in 2026.

And no, this is not simply adopting AI. It is about using AI in ways that actually move the business forward. 

While AI investment continues to surge, very few companies feel confident about how they use it. In fact, a study found that only 1 percent of organizations believe they are implementing AI sufficiently to deliver substantial business outcomes. The gap between using AI and using it well is becoming one of the most significant competitive divides heading into 2026. 

Over the past year, we have already seen AI take deeper root in HR and workforce management. Adoption has grown steadily throughout 2025, especially in areas like hiring and recruitment. More organizations are recognizing how AI can support critical operational processes, including labor forecasting and demand-based scheduling.

“One of the great value propositions of Workforce.com is to optimize staffing levels, which can have tremendous savings for employers and fewer headaches for employees. AI has been a tremendous tool in that product,” shares Craig Chval, Vice President of Product at Workforce.com. 

Workforce.com adopted AI early and applied it directly to labor forecasting. By analyzing factors such as historical sales, booked appointments, local events, and even weather patterns, the platform can determine how many employees should be on shift on any given day. The result is better staffing accuracy, stronger margins, and more consistent service. 

But forecasting is just one part of it. AI is now helping customers in broader operational areas as well. “AI continues to be the biggest shift in this space. It provides customers clear visibility into how compliance rules are applied, rather than relying on calculations that are hard to interpret. It also helps surface risks early, such as warning when schedules break minor hours or when patterns may trigger a Fair Workweek obligation,” explains Travis Kohlmeyer, General Manager at Workforce.com.

AI is still a buzzword for a reason. But it is no longer a matter of whether organizations should use it. We are well past that point. The businesses pulling ahead today are the ones using AI to streamline their operations and solve real pain points. For hourly teams, the key is applying AI with focus and purpose. That means choosing use cases that matter rather than broad, unfocused applications that do not actually help the business run better.

Compliance becomes central to payroll software buying decisions.

Hourly teams are increasingly recognizing that payroll software needs to do more than generate payslips.

For organizations with shift-based workforces, payroll is inherently complex because no two pay cycles look the same. Hours fluctuate, roles change, and even small scheduling differences can significantly affect what an employee earns.

“Often, organizations don’t realize that some of the really big names in payroll systems actually lack the compliance capability for so many different work rules,” Travis explains. “Break compliance, minor working hour rules, and Fair Workweek are the most we see miscalculated on some platforms.” 

Payroll for hourly teams is not about assigning a pay rate and expecting the platform to handle the rest. Every pay period carries its own variables: different schedules, shift changes, varying roles or departments, premiums, and overlapping rules. This is why businesses must understand how their current payroll system handles these scenarios, or whether it handles them at all.

Workforce.com is built to manage this complexity from the ground up. The platform focuses deeply on how work rules and pay rules operate together. “We treat compliance as a design constraint, and not merely a patch. That means more robust rule engines, better guardrails in scheduling, and clearer auditability,” Travis adds.

Compliance may be complicated, but it is manageable with a payroll platform designed to understand the real-world scenarios that create risk. This includes minor laws, multi-role staff, split shifts, overlapping rules, and complex premium structures. With federal, state, and city-level regulations expected to continue evolving, organizations will increasingly look for payroll systems that anticipate these changes and help keep them ahead of costly mistakes. 

Many will switch to all-in-one platforms to eliminate manual processes.

Many organizations are moving toward all-in-one platforms to eliminate manual processes and reduce complexity. But a genuine all-in-one solution is more than a collection of loosely stitched-together apps. It is a single ecosystem where scheduling, time tracking, HR, payroll, and other workflows all operate in one place. We have seen growing demand for this throughout 2025, and we expect it to become an even stronger priority in 2026 and beyond.

“Oftentimes, potential clients look for help to eliminate manual processes such as spreadsheet scheduling, outdated time tracking, and the disconnect between systems they use,” shares Joseph Cuellar, Enterprise Account Executive at Workforce.com. 

Ray Chan, Head of Customer Support at Workforce.com, adds, “What we have seen as the biggest trend for prospective clients looking into our system is platform consolidation. Many organizations still use separate systems for scheduling, timesheets, payroll, HR, ATS, and more. A solution that spans the entire employee lifecycle is a major attraction.”

The motivation is simple. Organizations want to stop switching between multiple platforms to complete basic tasks. Not only is this tedious, but it introduces errors and forces teams to spend additional time double-checking data that should flow automatically.

Third Space Brewing is one of many organizations that have seen the benefits of consolidating onto Workforce.com. “It is the ability to do everything under one roof and not have to import and export data out from separate pieces of software,” says John Wynne, Taproom GM at Third Space Brewing.

Scott Passolt, Third Space Brewing’s Controller, expands on this, saying, “We definitely saved time from not having to reconcile numbers between two different platforms all the time. Everything flows easily. If we know the timesheets are correct, we know payroll is correct. I have more confidence in the accuracy of the numbers. It has given us peace of mind because we are no longer worried about missing something when moving data between systems.”

Watch: How Third Space Brewing Tapped into Better Payroll and Workforce Management

As organizations look ahead to 2026, especially those operating large hourly workforces, the demand for a unified, all-in-one platform will only continue to grow.

“All-in-one products are the future of the industry, and we are fully committed to that vision,” Craig shares. “Having an integrated, all-in-one solution eliminates so many pain points for our customers, and it is no surprise that the industry is moving in that direction. Our product roadmap is laser-focused on eliminating the need for customers to juggle a host of different services and offerings.

Hourly work is evolving, especially around pay.

Hourly work is changing, and pay is becoming one of the clearest areas of transformation. In 2026, more hourly workers will expect faster, more flexible access to their earnings, rather than waiting for a traditional biweekly cycle.

We are already seeing strong demand for on-demand pay, along with greater clarity and transparency around how compensation is calculated. In response, employers are beginning to look for technology that can keep pace with modern work patterns and move beyond the rigid pay structures built decades ago.

This year, several states and localities introduced or strengthened pay transparency requirements, and similar movements are expected to continue into 2026. These changes reflect a broader shift in expectations: employees want easy, direct insight into how their pay works, and employers are increasingly required to provide it.

Hourly workers should not have to jump through hoops to understand or access their wages. The right technology can make this simple by giving them clear visibility into their pay, the factors that influence their net earnings, and how each calculation is made. As transparency and flexibility become standard expectations, having modern, employee-friendly pay tools will become essential for hourly teams.

Demand grows for automations that do the work, rather than just support it.

More teams will expect automations and built-in intelligence in the software they adopt. Technology has always aimed to reduce administrative workload, but in 2026, we will see organizations push beyond that. They will want automations that fully execute tasks, not just assist with them.

“Customers increasingly want tools that remove work, not just organize it,” Travis says. “They continue to seek hands-off scheduling, such as automatic shift building and demand-based scheduling. We are also seeing customers shift away from platforms that simply give them data. Instead, they want tools that make decisions and explain the reasoning behind them. And as compliance concerns rise, more organizations are adopting automated compliance interpretations as well.”

This shift is becoming more pronounced as many organizations operate with leaner teams. With fewer staff, they cannot afford tools that only support work. They need platforms that actively handle tasks and keep processes moving. In 2026, the demand for true hands-off automation will only grow stronger.

Industry Focus: Family Entertainment Centers (FEC)

Family entertainment centers (FECs) offer a clear snapshot of the challenges that hourly work businesses face today. FECs sit at the intersection of hospitality, retail, and events, all sectors with highly variable hourly staffing and tight compliance requirements. This makes them a strong indicator of the trends shaping HR and payroll across many other industries.

FECs deal with unpredictable demand swings driven by weather, school calendars, weekends, and special events. Their staff often work across multiple roles in a single week, sometimes in a single day. And because many employees are minors, managers must navigate some of the strictest labor rules in the country, with specific limits on scheduling, breaks, and total hours worked.

Navigating all of that makes technology essential. Bria Stuckey, the General Manager of Altitude Trampoline Park, explains how technology can help FECs overcome operational challenges. 

For Bria, compliance with minor labor laws is one of the most significant pressure points. She notes that the right system helps her avoid mistakes before they happen. “Most of my team is between 15 and 17, so we have to follow strict hour limits. Workforce.com helps me stay compliant with those labor laws. If a minor cannot be scheduled, it tells me and will not let me schedule them. I do not have to go back and fix mistakes. It keeps us compliant from the start.”

Beyond compliance, FEC operators also need tools that let them focus on their guests rather than administrative issues. Bria explains that when something goes wrong, like a missed break clock-in, she doesn’t need to stop what she’s doing or manually track down errors. The system gives her visibility into who is approaching or exceeding their allowed hours, so she can stay present on the floor rather than buried in corrections.

Just as importantly, many FECs rely on multiple disconnected systems—POS, scheduling, time tracking, HR, payroll—and the friction between those tools can cause errors and long administrative delays. Bria experienced this firsthand before consolidating. “With the other apps, we had to schedule in one system and fix timesheets in another. It was a whole thing,” she says. “With Workforce.com, I can do everything in one place. It saves time and lets me focus on people having fun.”

Watch: The Software Behind the Fun: How Workforce.com Powers Altitude Richardson


Bria’s story reflects a broader trend across the industry: FECs succeed when they streamline processes, improve compliance, and consolidate disconnected systems into a single operational hub. As organizations head into 2026, businesses with large hourly workforces will need technology that understands the realities of shift-based work and helps them manage complexity without adding more of it. 

2026 will widen the gap between businesses that adapt and those that do not. Businesses that will win are those bold enough to evolve and recognize that old systems cannot support new labor realities.

Success will not come from working harder. It will come from building workflows that anticipate issues, respond quickly, and keep hourly teams moving in the right direction. The organizations that choose to modernize now will be the ones setting the pace next year.

Ready to transform your business in 2026? Book a demo today. 

Posted on

Wage Transparency is Coming to Massachusetts: Is Your Business Ready?

Summary:

  • Starting October 29, 2025, Massachusetts employers with 25 or more employees must include salary ranges in job postings. 
  • Pay transparency laws ensure pay equity and fairness, but compliance can be a challenge without the right system. 
  • Workforce.com helps businesses stay compliant by centralizing pay data, standardizing job postings, and providing tools that simplify workforce reporting across locations.

Massachusetts has officially joined the growing list of states mandating pay transparency. Beginning October 29, 2025, employers with 25 or more employees must include salary ranges in job postings, provide them to applicants, and share them with current employees upon request.

Earlier in the year, beginning February 1, 2025, businesses with 100 or more employees that already file federal EEO-1 reports must also submit those reports to the Commonwealth.

Both measures fall under An Act Relative to Salary Range Transparency signed by Governor Healey on July 31, 2024. 

Also read: A Guide to State and Local Pay Transparency Laws [2025]

What the Wage Transparency Covers

The Wage Transparency Act in Massachusetts focuses on two key areas: pay range disclosure and EEO workforce reporting.  

Pay Range Disclosure Requirements

Starting October 29, 2025, employers with at least 25 employees must disclose pay ranges in job postings and must provide pay information upon request of current employees. The pay range refers to the annual or hourly wage range that an employer reasonably and in good faith expects to pay for such a position at that time. 

Employees and applicants have the right to receive the pay range when applying for a role, being promoted or transferred, or upon request for their current position. Employers are prohibited from retaliating against employees who exercise these rights.

Although the law’s disclosure requirement takes effect in 2025, employers can voluntarily begin complying earlier.

EEO Reporting Requirements

Beginning February 1, 2025, private employers with 100 or more employees that already submit an EEO-1 report to the federal government must also send their most recent report to the Massachusetts Secretary of the Commonwealth each year.

This requirement aims to improve statewide visibility into workforce diversity and pay equity, helping the state identify and address wage disparities across industries.

Practical Ways to Ensure Compliance

Pay transparency laws like Massachusetts’ Wage Transparency Act are changing how businesses handle compensation. While adapting to new regulations can feel complex, the right systems can turn compliance into an advantage. Workforce.com can help you do exactly that. Here are some of the ways: 

Standardize pay ranges in job postings

Every job posting should include a pay range, one that’s consistent with internal pay bands and defensible under the law. 

Workforce.com’s Applicant Tracking System (ATS) allows HR teams to add and display pay ranges directly in job postings, helping organizations comply with wage transparency requirements not only in Massachusetts but also in other states. 

Centralizing pay and job information

Workforce.com is an all-in-one system that houses scheduling, timekeeping, and payroll data in a single platform. With all pay and job information in one platform, HR and hiring teams have a single source of truth for wages across locations and roles. This makes it easier to verify pay range accuracy before posting job vacancies, respond to pay range request inquiries from current employees, and submit consistent payroll reports. 

Conduct regular pay audits

Pay transparency often goes hand in hand with pay equity. Regularly reviewing your compensation data helps ensure fairness and compliance.

Workforce.com provides reporting tools that let you analyze pay distribution across roles and locations, making it simple to track pay rates, identify discrepancies, and stay aligned with both state and federal reporting requirements.

Pay transparency laws are changing the way businesses talk about compensation. For employers, it’s an opportunity to build trust and demonstrate fairness, not just another compliance box to tick. 

With Workforce.com, businesses can manage pay ranges, job data, and workforce reports in one place, making it easier to stay consistent and confident as new laws take effect.

Discover how Workforce.com can help your business comply with labor laws, such as pay transparency rules, with an all-in-one platform. Book a call today.

Posted on

Tax Resolution Excellence: Workforce.com vs. Industry Standard

Case Study 1: Mid-Quarter Provider Transition

Challenge: Customer switched to Workforce.com mid-quarter with incomplete returns from previous provider.

Industry Standard: Most providers would require the client to resolve issues with their previous provider or charge significant fees for manual corrections.

Workforce.com Approach: Submitted manual corrections free of charge, saving the client time, stress, and potential penalties.

Implications of Workforce.com Approach: Without Workforce.com’s intervention, the employer would face potential IRS penalties for incomplete filings, interest on unpaid taxes, and compliance violations that could trigger audits. The employer would also need to divert staff time to resolve the issue or pay their previous provider additional fees. Workforce.com eliminated these financial risks and administrative burdens completely.

Case Study 2: IRS EIN Merger Complication

Challenge: IRS automatically merged a customer’s two EINs, creating filing discrepancies.

Industry Standard: Typical providers might identify the issue but expect the client to resolve it directly with the IRS.

Workforce.com Approach: Invested hours on calls with the IRS to investigate the root cause, then manually reconciled transcripts with submissions to ensure compliance.

Implications of Workforce.com Approach: The standard approach would leave the employer facing potential IRS notices, penalties for apparent underpayment of taxes, and the need to hire specialized tax consultants to resolve the issue. These discrepancies could lead to incorrect tax assessments costing thousands of dollars and jeopardizing the company’s tax compliance record. By taking ownership of this complex problem, Workforce.com saved the client approximately 15-20 hours of specialized accounting work (valued at $3,000-5,000) and prevented potential penalties that could have exceeded $10,000.

Case Study 3: Late Discovery of Missing Payroll Data

Challenge: Client forgot to share January payruns during February implementation, only revealing this two weeks before federal filing deadlines the following January.

Industry Standard: Most providers would either charge rush fees, delay corrections until after deadlines, or require the client to file amendments themselves.

Workforce.com Approach: Rapidly produced corrected W-2s and completed all federal and state filings within just three business days.

Implications of Workforce.com Approach: The standard industry response would likely result in missed filing deadlines, triggering automatic IRS penalties (starting at $50 per W-2 and increasing to $260 for extended delays), plus separate state penalties. Employees would receive incorrect W-2s, potentially delaying their personal tax filings or requiring them to file amendments. The employer would face not only financial penalties but also diminished employee trust. Workforce.com’s rapid response prevented additional penalties and preserved the employer’s reputation with employees. Additionally, this quick resolution allowed employees to file their personal taxes on time without complications.

Posted on

What New Jersey’s Pay Transparency Law Means for Payroll

Summary

  • New Jersey’s Pay Transparency Act will be in effect by June 1, 2025.
  • Employees will be required to disclose pay ranges and benefits new hires can expect to receive within 12 months of employment..
  • Payroll software is crucial to ensuring that publicized salary ranges match what employees are being paid.

New Jersey joins a growing list of states that have implemented pay transparency laws, including New York, California, and Colorado. Starting June 1, 2025, the Pay Transparency Act will require covered employees to include pay information and benefits data in job postings, both for new roles and internal opportunities.

The act is designed to improve pay equity by making compensation more transparent to job seekers and employees alike. 

Who’s covered?

The law applies to employers who meet the following criteria: 

  • Have 10 or more employees over 20 calendar weeks 
  • Conduct business in New Jersey
  • Employ workers in New Jersey
  • Accepts applications for employment in New Jersey

What must be disclosed? 

Employers must disclose:

  • The hourly wage, salary, or pay range
  • A description of the benefits an employee can expect to receive in the first 12 months

These conditions apply to external job postings, internal promotions, and transfer opportunities. Employers must disclose any opportunities for promotion to all current staff in the affected department. However, promotions resulting from “unforeseen events” or based on years of service or performance are exempt from the notice requirement.

What happens if you don’t comply?

Employers who fail to comply can be subject to a penalty of $300 for first-time violations and up to $600 for subsequent violations.

What the new law means for payroll teams and how New Jersey businesses can adapt

Compliance with this new regulation has a lot to do with policy changes, and it’s easy to think that this is more of HR’s domain. However, once salary bands are made public, payroll teams must ensure that those numbers align with actual compensation data. 

Here are some practical tips to help payroll teams prepare:

Standardize pay rates across locations

If you’re hiring across state lines, you must ensure that each job post meets corresponding pay disclosure requirements in every state. 

Businesses operating in multiple locations often face challenges with standardizing job titles and pay rates. With Workforce.com, you can set pay rates for different roles or locations, which helps avoid any inconsistency between what’s posted on job listings and what’s paid.

Align job postings with actual pay data

To comply with laws like this, job postings must be audited against internal pay data. But this is easier said than done when compensation information is scattered across different spreadsheets or platforms. 

With Workforce.com, all your pay and role information lives in one system, making it easy to review, audit, and generate realistic pay ranges. 

For instance, instead of posting a vague range of $15-$25/hour, Workforce.com can help you determine the median pay rate for the role across locations, which will help you set a more realistic pay band.

In states that already have pay transparency laws, some businesses have received criticism for posting an overly broad range (e.g. $40,000-$120,000), which feels less like transparency and more like an attempt to skirt the law. If you’re serious about compliance and attracting the right people, realistic ranges matter. 

Audit job titles across roles

Payroll teams should look for pay disparities between employees with similar roles. If two people are doing the same work but receiving different pay, it’s important to understand why. 

Again, addressing these gaps is a matter of having the right data. Workforce.com houses employee records and pay rate history, which enables you to quickly identify inconsistencies among job titles and their pay. Managers can filter reports by job title and location to check whether employees with similar roles are paid within the same pay range.

Maintain clean payroll records

Keeping payroll records organized is a huge part of complying with different labor laws, including pay transparency requirements. Workforce.com keeps this information organized because it unifies time tracking, scheduling, and payroll. Ultimately, it creates a clean audit trail that connects job titles, hours worked, and pay rates. Having that information organized can help with compliance, especially if state regulators and employees ask for proof.

Invest in a good payroll system

Payroll is too complex to manage manually or with outdated tools. More than processing paychecks, a good payroll system centralizes your data such as pay rates, job roles, and other relevant information that can be crucial to compliance. 

Workforce.com was built to simplify this. It brings payroll and HR together, giving you a clearer view of your team and helping you stay compliant with new regulations.

Simplify compliance with Workforce.com

Pay transparency is both an HR and payroll challenge. With New Jersey’s law taking effect, it’s high time to ensure job postings align with what employees are actually paid. Workforce.com has the tools to help audit pay data, standardize pay rates across locations, and make payroll reports—all to help you stay compliant. 

See how Workforce.com makes payroll transparency easy for hourly teams. Book a demo today.

Posted on

Paycheck Pain: What Employers Need to Know About Student Loan Garnishment

The Trump administration is resuming wage garnishment for defaulted student loans starting May 5, 2025, with employers required to withhold up to 15% of employees’ disposable income. Small and mid-market businesses face significant administrative responsibilities including calculating garnishment amounts, processing deductions, and maintaining documentation, with estimated costs of 1-2 hours of staff time for initial setup and 15-30 minutes per affected employee each pay period.

Unlike most debt collection, federal student loan garnishment requires no court order, making implementation immediate once employers receive notice. Businesses that fail to comply face substantial liability risks, potentially becoming responsible for the employee’s entire debt plus penalties.

The policy affects roughly 5.3 million defaulted borrowers now, with nearly 4 million more at risk of default in coming months.

The Policy Evolution and Current Implementation

The concept of garnishing student loan payments directly from paychecks first emerged in February 2019, when then-Senator Lamar Alexander proposed it as part of reauthorizing the Higher Education Act. That original proposal called for a universal withholding system for all federal student loan borrowers, offering two options: an income-driven plan capping payments at 10% of discretionary income or a standard 10-year repayment plan.

While that proposal never became law, the current Trump administration announced in April 2025 that collection efforts on defaulted federal student loans would resume after a five-year pause that began during the COVID-19 pandemic. This implementation differs significantly from the 2019 proposal:

  • The current policy applies only to defaulted loans (typically 270+ days delinquent)
  • It follows administrative wage garnishment procedures established in the Debt Collection Improvement Act of 1996
  • Collections through the Treasury Offset Program began May 5, 2025
  • Wage garnishment notices will be sent to employers “later this summer”

The Department of Education maintains that resuming collections is not discretionary but required by the Higher Education Act. Education Secretary Linda McMahon stated that “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.”

Employer Responsibilities and Implementation Mechanics

When an employer receives a student loan wage garnishment order, they face several mandated responsibilities:

Immediate Responsibilities

  • Process garnishment orders as soon as received (no court order required)
  • Calculate the employee’s “disposable earnings” (gross pay minus legally required deductions like taxes)
  • Withhold up to 15% of disposable income
  • Notify affected employees about the garnishment
  • Begin withholding from the next available pay period
  • Send garnished funds to the agency specified in the order

Ongoing Requirements

  • Continue garnishment until receiving an official release or the debt is paid
  • Recalculate withholding if employee income changes
  • Maintain proper documentation of all garnishment activities
  • Ensure total garnishments don’t exceed legal limits (25% across all garnishments in most cases)
  • Manage priority order if multiple garnishments exist

The process differs from typical debt collection garnishments in critical ways. Most significantly, federal student loan garnishment is an administrative wage garnishment that doesn’t require judicial process. This means employers must implement these orders immediately upon receipt, with no court validation required.

Administrative Burden and Costs for Small/Mid-Market Businesses

Small and mid-market businesses bear disproportionate burdens from wage garnishment requirements due to limited administrative resources and less sophisticated payroll systems.

Time Requirements

The administrative work includes:

  • 1-2 hours of staff time for initial processing of each garnishment order
  • 15-30 minutes per affected employee each pay period for ongoing maintenance
  • Additional time for addressing employee questions and concerns

Small businesses face higher garnishment rates (13%) than large firms (8.7%), according to ADP Research Institute data, meaning they often handle more garnishments with fewer resources.

Financial Costs

While exact costs vary by business size and number of affected employees, expenses typically include:

  • Staff time costs (payroll/HR personnel diverting from core functions)
  • Potential investment in payroll system upgrades
  • Legal consultation expenses
  • Administrative fees (some states allow employers to charge employees $1-10 per payment)
  • Potential liability costs if garnishment orders aren’t processed correctly

For a small business with 25 employees and 3 garnishment orders, this could translate to approximately 6-8 hours of initial setup time plus 1-2 hours per pay period for ongoing maintenance—significant for operations with limited administrative staff.

Compliance Risks

The most severe cost comes from non-compliance. Employers who fail to properly implement garnishment orders can be held liable for the entire amount that should have been withheld, plus potential penalties and interest. For businesses processing multiple student loan garnishments, this represents substantial financial risk.

Timeline and Implementation Challenges

The current timeline creates several challenges for employers:

  • The Treasury Offset Program (seizing tax refunds, certain federal benefits) resumed May 5, 2025
  • Wage garnishment notices will be sent to employers “later this summer”
  • Approximately 5.3 million borrowers are currently in default, with nearly 4 million more at risk
  • Employers may face a sudden influx of garnishment orders with minimal preparation time

This compressed timeline coincides with other significant challenges:

  • The Department of Education is reducing staff by approximately 50%
  • Student loan management is transitioning from the Department of Education to the Small Business Administration
  • Many businesses face other economic pressures from inflation and tariffs

The administration has not announced any implementation assistance programs for affected employers despite the sudden resumption of collections.

Reasoning and Context for the Policy Shift

The Trump administration presents several justifications for resuming wage garnishment:

  • Fiscal responsibility: Officials argue taxpayers should not continue bearing costs of nonrepayment
  • Legal requirement: The administration maintains the Higher Education Act requires them to pursue collections
  • Normalizing operations: Officials frame this as returning to standard practice after an extended pandemic pause
  • Deterrent effect: Research suggests potential garnishment can motivate some borrowers to seek repayment options

Critics counter that the timing is problematic amid economic pressures, and that more effective alternatives exist, such as expanded income-driven repayment options.

Federal vs. Private Student Loan Treatment

The enforcement mechanisms differ significantly between federal and private student loans:

AspectFederal Student LoansPrivate Student Loans
Legal processAdministrative wage garnishment without court orderRequires lawsuit, judgment, and court order
Garnishment limitUp to 15% of disposable incomeUp to 25% of disposable income (varies by state)
Default timeline270 days of missed paymentsOften 90 days of missed payments
Notice requirement30-day notice before garnishmentVaries by state law
Additional collectionTax refund offsets, Social Security reductionLimited to wage garnishment and asset seizure
Protected incomeSome federal benefits partially protectedSocial Security and disability typically fully protected

For employers, the key difference is that federal loan garnishments arrive directly from the Department of Education with no court validation required, while private loan garnishments must first go through judicial process, potentially giving employers more time to prepare.

Precedents for Similar Wage Garnishment Systems

The current policy builds on established legal frameworks:

  • Higher Education Act of 1965 (Section 488A): Authorized garnishment up to 10% of disposable pay for defaulted student loans
  • Debt Collection Improvement Act of 1996: Expanded authority to 15% and standardized administrative wage garnishment procedures
  • Consumer Credit Protection Act: Provides general protections for all wage garnishment (maximum 25% total garnishment, employment protection)

The Department of Education has successfully implemented wage garnishment for student loans for over 20 years. Many of the debt collection mechanisms in current use were modeled after the Department’s existing practices.

Other similar systems include:

  • IRS wage levies for tax debts
  • Child support wage withholding
  • Bankruptcy-related wage earner plans

Expert Opinions on Feasibility and Impact

Experts offer varied perspectives on the policy’s implementation and effects:

On Feasibility

  • Mark Kantrowitz, higher education expert, questions the accelerated timeline: “It sounds like they are not pursuing the normal due diligence schedule for collecting defaulted federal student loans.” (CNBC)

On Economic Impact

  • Pew Research found 79% of borrowers who experienced wage garnishment reported it had a “major” financial impact, more severe than other consequences of default. (Pew Trust)
  • Federal Reserve projections suggest borrowers with delinquencies could see credit scores fall by up to 171 points, affecting their ability to secure housing and transportation. (CNBC)
  • Mike Pierce, executive director of the Student Borrower Protection Center, warns: “This will further fan the flames of economic chaos for working families across this country.” (Student Borrower Protection Center)

On Business Impact

  • Small business advocates note the disproportionate burden on smaller operations without dedicated compliance resources.
  • Scott Buchanan, executive director of the Student Loan Servicing Alliance, emphasizes proactive approaches: “Most borrowers…they’re not in danger of default today, but in five months, they could be. Taking action today is pretty important.” (NEPM)

Conclusion

The resumption of student loan wage garnishment represents a significant administrative challenge for employers, particularly small and mid-market businesses. While the legal framework for these garnishments is well-established, the sudden implementation after a five-year pause creates operational burdens with minimal preparation time. Small businesses face disproportionate impacts due to limited administrative resources, higher garnishment rates, and potential liability risks. For affected employers, developing clear internal processes, ensuring payroll systems can handle garnishment calculations, and documenting all actions will be crucial to navigating this policy shift without incurring significant costs or liability exposure.

Posted on

California Minimum Wage by City and County: What Employers Need to Know

Summary

  • Payroll deductions can be more challenging to manage for hourly teams due to different factors such as variable schedules, different pay rates, higher turnover, and location-based compliance rules.
  • Handling payroll deductions for hourly teams goes beyond automation. It requires a system that can adapt to the complexities of hourly work. 
  • Workforce.com’s payroll software simplifies deduction tracking, ensuring accurate wage calculations and compliance on every pay run.

Effective January 1, 2025, the minimum wage in California is at $16.50 per hour. But that’s not the only thing you should know, especially if you have multiple business locations in the state. Many cities and counties in California have their own minimum wage laws, many with rates higher than the state’s. 

Whether you’re operating in one city or twenty, staying compliant means more than being adept at the law; it’s about having the systems in place to implement it.

The minimum wage landscape in California

California’s state minimum wage is currently $16.50, which is well above the federal minimum, with enforcement being overseen by the Department of Industrial Relations. The 2025 increase was deemed necessary because the consumer price index (CPI) grew by 3% over the previous year, as required by state law. 

California also enforces prevailing minimum wage laws specific to certain industries, such as fast food and healthcare.

  • Fast food employees – $20 per hour, effective April 1, 2024 for covered workers
  • Healthcare workers – $18-23 per hour effective October 16. 2024 for covered workers depending on the type of facility

Beyond statewide and industry-specific labor laws, business owners must also monitor local minimum wage rates. Some localities follow the state minimum wage, but other cities and counties impose their own, which is often higher than the state’s. Cost of living, economic conditions, and local policy goals are typically the factors that drive local regulations for setting unique minimum wage rates.

California minimum wage by city or county

Below is a breakdown of cities and counties in California that have their own, many of which have higher minimum wage rates than the state’s.

City/County2025 Minimum Wage
Alameda$17
Belmont$18.30
Berkeley$18.67
Burlingame$17.43
Cupertino$18.20
Daly City$17.07
East Palo Alto$17.45
El Cerrito$18.34
Emeryville$19.36
Foster City$17.39
Fremont$17.30
Half Moon Bay$17.30
Hayward$17.36

*$16.50 or state minimum wage for businesses with 25 or fewer employers
Los Altos$18.20
Los Angeles City$17.28
Los Angeles County (unincorporated)$17.27
Malibu$17.27
Menlo Park$17.27
Milpitas$17.70
Mountain View$19.20
Novato$17
Oakland$16.89
Palo Alto$18.20
Pasadena$17.50
Petaluma$17.97
Redwood City$18.20
Richmond$17.77
San Carlos$17.32
San Diego$17.25
San Francisco$18.67
San Jose$17.95
San Mateo$17.95
San Mateo County (unincorporated)$17.46
Santa Clara$17.27
Santa Rosa$17.87
Sonoma$18.02

$16.96 for employers with 25 or fewer employees
South San Francisco$17.70
Sunnyvale$19.00
West Hollywood

Local minimum wage variations by size

In some cities, local minimum wages include different rates based on employer size. For example, Hayward and Sonoma set lower minimum wage thresholds for small businesses with 25 or fewer employees. 

This adds yet another layer of complexity for business owners, especially when it comes to calculating pay accurately and staying compliant across multiple jurisdictions. 

Understanding unincorporated localities 

Another detail to watch out for is unincorporated areas. These regions are not part of an incorporated city but fall under the direct jurisdiction of the county government. 

Take Los Angeles County, for example. Cities like Los Angeles or Pasadena have their own local governments and wage laws. But places like Hacienda Heights and Walnut Park are unincorporated and are not part of the City of Los Angeles but within Los Angeles County. This means that the county’s minimum wage applies to them, not the city’s.

Challenges for California employers

Handling minimum wage in California presents unique challenges, especially for businesses operating in multiple areas. Here are some challenges business owners typically face and tips on what to watch out for:

Payroll complexities

Managing payroll is never simple, but it becomes more complex when you’re dealing with multiple locations, varying pay rates, and hourly employees working in various roles. Add to that the different local minimum wages across cities and counties. It could be easy to overlook details, such as mistakenly paying an employee in an unincorporated area the city minimum wage rather than the county wage.

Inconsistent labor costs

Multiple minimum wages in California, along with industry-specific wage laws, overtime and meal/rest break laws, and other labor ordinances, can lead to inconsistent labor costs for businesses in the state. This presents a significant challenge to organizations wanting to keep their labor costs leveled and consistent as much as possible. 

Wage compression issues 

Wage compression occurs when the pay gap between entry-level employees and more experienced workers narrows. This often happens when minimum wage increases outpace raises for more seasoned staff, making the difference between the two smaller. 

To further illustrate, here’s an example. Let’s say your business in Los Angeles used to pay entry-level workers $16 and shift supervisors $18. And now, the minimum wage is at $17.28 per hour. Naturally, entry-level pay should follow this new rate to comply with the law. However, your shift supervisors will end up just earning $0.72 more, which may not be reflective of their responsibilities and roles. 

This can result in a drop in morale, and experienced employees may feel undervalued. Raises may also become reactive rather than strategic, creating a ripple effect in your payroll structure.

Best practices for complying with California’s minimum wage laws

California has one of the most complex labor landscapes in the country, including local minimum wage rates and rules. So, how do employers stay on top of compliance?

Automate HR and payroll

Even the most experienced payroll and HR professionals can make mistakes, especially when handling multiple wage rates across cities, industries, and employee roles. That’s why using software to automate processes is vital.

However, not all payroll systems are built the same. If you’re managing something as nuanced as California minimum wage laws, you need a robust and centralized system. This is where Workforce.com comes in, and these are the ways it helps California businesses stay compliant and efficient:

  • Wage and hour automation: Multiple pay rates and minimum wages are the least of your concerns with Workforce.com. The platform automatically applies the minimum wage according to role and location, including cases where employees work multiple roles across different cities. It also accurately calculates overtime.
  • Employee classifications: Another cause of payroll mistakes is misclassifying employees, and that’s one thing that Workforce.com eliminates for employers because all data and information live in one place. This includes employee details, such as their employment status, corresponding pay rates, and bank information. If any employee information gets changed down the line, it’s reflected instantly across schedules and payroll. No need for manual re-entry.
  • Accurate time and attendance tracking: Inaccurate employee time logs can lead to payroll mistakes.. Workforce.com turns employee clock-in and clock-out into timesheets, which managers can easily verify and check.
  • Labor forecasting: California’s ever-changing labor rules can cause inconsistent labor costs. Workforce.com helps stabilize costs by forecasting demand based on relevant factors such as historical sales, upcoming events, booked appointments, foot traffic, and even weather.

    When creating schedules, managers can easily see how much each shift would cost and receive alerts if they schedule someone for overtime or forget to schedule break times. This will help avoid unnecessary labor costs or potential fines for non-compliance. 
  • Real-time alerts: Managers get live updates when employees fail to clock in or out for a shift or break time. They will also get alerts when employees are about to breach overtime, especially if they’re not scheduled for it. This allows teams to fix small issues before they turn into bigger problems.

Conduct regular wage audits

Conducting wage audits in the state of California is essential because it helps employers stay on top of local rate changes. While most cities raise their minimum wages annually, note that they can do so on different schedules. 

Regular wage audits ensure your pay structure reflects the latest local rates. They also help you catch wage compression issues early, keeping your compensation strategy fair and employee morale intact. In case you face a labor board inquiry or employee complaint, having audit records on hand gives you the evidence you need to respond quickly.

Train your managers

Automation is powerful, but it also pays to equip your managers with the right information and training on handling complicated labor rules. 

Regularly train your management team on California’s local wage laws. These rules can change frequently, so ongoing refreshers are vital. Managers should also have tools and resources to help them explain wage-related issues and faqs to employees and recognize compliance gaps in workflows or systems.

California’s minimum wage rules can change quickly. Stay ahead by automating wage rates and catching compliance issues before payroll with Workforce.com. See the platform in action and book a demo today. 

Posted on

Overtime Pay Laws | States + Federal (2025 Update)

Summary 

  • Federal overtime laws require that employers provide overtime pay to those who work over 40 hours per workweek.

  • Many states have their own overtime laws. States that do not have their own overtime rules default to the federal law. 

  • Many employers opt to use specialized payroll platforms that can automate overtime calculations and payments. 

If you are in charge of hourly employees, it’s likely that there will be days, weeks, or even months when your staff needs to work extra hours. Whether that’s over a typical eight-hour workday or a 40-hour workweek, the federal government has made it mandatory to compensate all non-exempt employees. This is important as it protects workers and rewards them for the additional time they spend supporting your business. 

Some states have their own overtime laws, while others do not. It’s crucial to stay informed on the current overtime regulations in your state. In fact, if an employer willfully or repeatedly violates overtime requirements, they will be subject to a civil money penalty of up to $1,000 for each violation. 

Luckily, the laws themselves are relatively straightforward. Below we’ve compiled the federal laws along with a table outlining the overtime laws by state. 

Jump to overtime law table

Federal overtime laws 

According to the US Department of Labor, federal laws on overtime pay are determined by the Fair Labor Standards Act (FLSA). The FLSA states that all non-exempt employees are entitled to overtime pay for working over 40 hours in a workweek. If an employee has exempt status, such as a salaried employee, you are not required to provide overtime. 

The rate of overtime pay must be no less than time and a half their usual hourly rate of pay (or 1.5 times the regular rate of pay). Additionally, there is no limit to the number of hours an employee can work in any workweek. 

A “workweek” is seven consecutive days or a fixed set of 168 hours. These seven days do not need to align with a typical calendar week or job starting time. As long as a fixed and regularly recurring schedule is established, employees should receive the overtime rate owed to them. Typically, overtime pay is included with the wages earned in a regular payday or pay period. 

Forced overtime work

In most states, workers can be “forced” to work overtime by their company. Employers can schedule workers for any shift length or consecutive work days. Additionally, federal law does not require breaks to be provided to the employee. However, many states have mandatory breaks and paid rest periods. If a worker refuses to work overtime, the employer has a legal right to terminate the employee. 

Salaried employees and other overtime exemptions 

Various occupations and job duties are exempt from overtime pay. The standard salary level that currently exempts executive, administrative, and professional (EAP) employees is at $684 per week ($35,568 annually). 

On April 2024, the U.S. Department of Labor announced a rule that aims to increase the salary thresholds for EAP employees to $844 per week ($43,888 annually) effective July 1, 2024, and further to $1,128 per week ($58,656 annually) starting January 1, 2025. However, the U.S. District Court for Eastern District of Texas vacated the 2024 final rule. Currently, the 2019 thresholds are being enforced.

Examples of some exempt roles include: 

A state-by-state breakdown of overtime laws

If a state does not have its own overtime laws, it must default to the federal law. However, if a state has its own overtime laws, the state law is added on top of the federal law. In other words, employers need to abide by whichever law is more generous and provides their staff with the highest earnings. 

When it comes to remote workers who work in different states, the labor laws of the state in which they are physically located and perform work apply. This is true regardless of where the company is located. So if your company is based in New York, but your employee is working from California, you would follow California’s overtime laws for that employee. 

A look at overtime laws by state

Column two denotes whether or not a state has a law establishing a daily overtime threshold and the rate at which these hours are paid. The dashes indicate that the state does not have any laws pertaining to daily overtime. 

Column three lists each state’s weekly overtime threshold as well as the rate at which overtime is paid. States with notable exceptions or unique labor laws have links to their respective Department of Labor pages. 

StateDaily OT thresholdWeekly OT threshold 
Alabama–40 hours (1.5x)
Alaska8 hours (1.5x)40 hours (1.5x)
Arizona–40 hours (1.5x)
Arkansas–40 hours (1.5x)
California8 hours (1.5x) / 12 hours (2x)40 hours (1.5x)
Colorado12 hours (1.5x)40 hours (1.5x)
Connecticut–40 hours (1.5x)
Delaware–40 hours (1.5x)
D.C. –40 hours (1.5x)
Florida–40 hours (1.5x)
Georgia–40 hours (1.5x)
Hawaii–40 hours (1.5x)
Idaho–40 hours (1.5x)
Illinois–40 hours (1.5x)
Indiana–40 hours (1.5x)
Iowa–40 hours (1.5x)
Kansas–46 hours (1.5x)
Kentucky–40 hours (1.5x)
Louisiana–40 hours (1.5x)
Maine–40 hours (1.5x)
Maryland–40 hours (1.5x)
Massachusetts –40 hours (1.5x)
Michigan –40 hours (1.5x)
Minnesota–48 hours (1.5x)
Mississippi–40 hours (1.5x)
Missouri–40 hours (1.5x)
Montana–40 hours (1.5x)
Nebraska–40 hours (1.5x)
Nevada8 hours (1.5x)40 hours (1.5x)
New Hampshire–40 hours (1.5x)
New Jersey –40 hours (1.5x)
New Mexico–40 hours (1.5x)
New York–40 hours (1.5x)
North Carolina–40 hours (1.5x)
North Dakota–40 hours (1.5x)
Ohio–40 hours (1.5x)
Oklahoma–40 hours (1.5x)
Oregon–40 hours (1.5x)
Pennsylvania–40 hours (1.5x)
Rhode Island–40 hours (1.5x)
South Carolina–40 hours (1.5x)
South Dakota–40 hours (1.5x)
Tennessee–40 hours (1.5x)
Texas–40 hours (1.5x)
Utah–40 hours (1.5x)
Vermont–40 hours (1.5x)
Virginia–40 hours (1.5x)
Washington–40 hours (1.5x)
West Virginia–40 hours (1.5x)
Wisconsin–40 hours (1.5x)
Wyoming–40 hours (1.5x)

As you can see from the table above, the majority of states base overtime pay on a 40-hour workweek, defaulting to the federal law. However, some states require overtime pay based on the hours worked in a single workday or other unique exceptions. Below we’ve delved into a few examples of state-by-state exceptions. For other exceptions, click through the links in the table above. 

California 

In California, employers are required by law to provide 1.5x pay for every hour an employee works beyond: 

  • 40 hours in a workweek
  • 8 hours in a workday 
  • 6 days in a workweek  

Moreover, California also has a law in which an employer must pay 2x an employee’s regular hourly rate, also known as double time pay, if they work over:  

  • 12 hours in a workday 
  • 8 hours on the seventh consecutive day of work in a workweek

Alaska

Like California, Alaska’s state overtime law requires that employers pay overtime when a non-exempt employee logs more than 40 hours of work and eight hours in a workday. However, the overtime rules have a number of exemptions related to occupations in agriculture and aquatic work. ‌

Colorado

Colorado’s state overtime law requires overtime pay for hours worked beyond: 

  • 40 hours in a workweek 
  • 12 hours in a workday 
  • 12 consecutive hours, regardless of the start and end time of the workday  

Kansas 

Unlike the conventional 40 hours of most states, Kansas overtime law requires employers to pay overtime when an employee has worked over 46 hours in a workweek. However, because the FLSA requires that overtime is awarded at 40 plus hours, Kansas businesses that are covered by the FLSA must follow the federal law. If not, they must follow Kansas’s overtime rules for non-exempt employees.  

Minnesota 

Minnesota’s state overtime law requires companies to pay overtime for those working over 48 hours in a workweek. Like Kansas, Minnesota businesses covered by FLSA must follow the federal law. 

Stay on Top of Overtime

Overtime is expensive. While necessary at times, ideally, it should never be the norm. If you find yourself consistently paying out overtime hours even in the face of manageable workloads, something is probably wrong. Check out the free webinar below to figure out how to keep your labor costs low by drilling down on where you are overspending on overtime. 

Webinar: How to Lower Your Overtime Hours

For the few times you do need to pay overtime, make sure you are doing it correctly. There are many ways to do this; however, manually tracking and calculating overtime hours is a dangerous game.

Workforce.com’s Payroll platform makes the hassle of recording, calculating, and paying overtime much easier. Through an extensive time clock system, employee overtime hours and pay are automatically compiled on electronic timesheets, helping you improve visibility, reduce errors, and avoid compliance risks. With special tags, you can customize multiple earnings rates to match your state’s specific overtime rules. These rates automatically trigger whenever an employee crosses into overtime. 

To learn more about how Workforce.com can help you manage overtime, book a call today. 

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, labor laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to comply with the most current standards.

Posted on

Practical Ways to Simplify Payroll and HR with Employee Self-Service

Summary

  • Employee Self-Service (ESS) systems can relieve some of management’s administrative burden and give employees access and control over their HR and payroll details.
  • Not all ESS systems are created equal. Businesses need an intuitive and fully integrated system to get the most value.
  • An all-in-one platform with built-in ESS can transform HR, payroll, and workforce management for hourly workforces.

Running a business is a constant balance between strategic planning and day-to-day admin tasks. Big-picture planning fuels growth, while essential administrative duties keep operations running smoothly. However, maintaining this balance is easier said than done. 

Admin work can take up a lot of time, and managers and business owners can quickly find themselves buried in paperwork instead of being on the ground, supporting their teams, and creating employee engagement initiatives. To ease this burden, many turn to employee self-service systems. But how do these systems actually function?

Workforce.com has employee self-service (ESS) features, from onboarding to payroll. Let’s break down how they work and how they can save business owners a ton of time.

Getting it right from onboarding

HR tasks involve a lot of paperwork, but managers don’t have to handle it all. Employees can take charge of some of this administrative work and have more autonomy over their personal details. 

Workforce.com’s onboarding system makes it easy for new hires to get set up. Within minutes, new hires can submit their personal and contact information, bank details, I-9s, and W-4s without physical paper forms. This not only speeds up the process but also eliminates double data entry, reduces mistakes, and ensures accurate pay. 

Managers can also streamline processes by uploading key documents, such as company handbooks, role-specific materials, or a list of faqs, to ensure that every employee has exactly what they need from day one.

“One of the exciting features that I’ve really enjoyed with the Workforce.com platform is the HR onboarding portion because they have a feature that allows me to upload documents. So, for instance, I can upload a document that says ‘front of the house server benefits’ for our bakers. I can have a different set of benefits and upload that document in a PDF form where they can open up their cell phones and see it right there. And that’s been a really good thing, as well as the policy manual. It makes it available to everybody,” shares Shelly Archer, Human Resources Manager at Shipley Do-nuts.

Faster updating of employee information

Workforce.com’s HR software, employees can quickly update their details whenever a life event requires it, such as a move, a name change, or a new bank account. Instead of going through HR or filling out paperwork, they can simply update their information directly through their profile in the company’s HRIS.

Easier management of timesheets and PTO 

Accurate employee clock-ins and outs are the backbone of accurate payroll processing, but things can get tricky when employees forget to log their hours or when clunky systems fail to track time properly.

Workforce.com’s time and attendance system tracks employee time accurately. Employees can clock in and out through a shared tablet at work or on their mobile device. No matter where they are, whether on-site or remote, their hours and breaks are recorded correctly.

Employees can also review and correct their time logs should there be any mistakes or discrepancies. Instead of constantly chasing down timesheet corrections, managers can focus on more important things.

“One of the features I was most excited about with Workforce.com is the employee’s ability to edit their own time punches. If they did forget to clock in, they can submit it. Of course, it still gets reviewed. At the end of the day, it’s just one less step,” says Bobby Archer, General Manager at Shipley Do-nuts. 

Beyond tracking hours, employees also get complete visibility over their leave balances. They can plan ahead, submit time off requests, and ensure that nothing falls through the cracks, like a PTO request form that gets buried in email or miscommunication due to having multiple channels.  

“We wanted our employees to be able to see how many PTO days they have. We also want them to be able to see their clock-in and clock-out times. So that way they can know and plan personally on their end how to pay their bills and what to expect,” Shelley shared when she talked about their goal of giving their employees the ability to view their information and how Workforce.com helped them provide a way to do that. 

See Workforce.com in Action: Shipley Do-Nuts’ Success Story

Visibility into all things payroll

Employees shouldn’t jump through hoops to access their payroll information. With Workforce.com’s payroll software, they can easily access their pay stubs, tax documents, direct deposit information, benefits details, and complete payroll history. 

There’s no need to wait for HR or finance to pull reports. Employees can generate and view their own payroll info anytime, all in one place. This means fewer email requests, less back-and-forth, and a faster, more seamless way for staff to get the details they need whenever they need them. 

An all-in-one solution makes things easier

Employee self-service is a feature that’s great to have, but what makes a huge difference is having a single solution where all things that can make or break payroll are in a single, integrated platform. 

Juggling separate systems for time tracking, scheduling, HR and payroll is time consuming, puts you at risk of potential errors, and can disrupt workflows. When data is scattered across multiple platforms, every step takes longer and the risk of mistakes only increases. A single, connected solution simplifies the process. 

“Prior to Workforce.com, we were using four different platforms. We had an online service that would send out the new hire paperwork and I would have to process it manually. We had a clock-in and clock-out system that was web-based. We had another scheduling system that was also web-based. As far as the payroll processing, we had an actual person with whom I would send our payroll through another system. Integrating all of those together has saved so much time. It takes me 95% less time doing what I’m doing now with Workforce.com.” Shelley further explained.

Tips for Implementing an Efficient Employee Self-Service Software

Implementing an ESS portal or system is beneficial both for employees and employers. Aside from taking some of the admin load away from managers and HR teams, it also enhances the employee experience.

To make ESS systems truly effective, here are a few tips:

Keep it all in one place

Employee self-service is meant to streamline processes, but using multiple platforms defeats the purpose. Choose an integrated system so employees don’t need to juggle different apps or logins. 

Prioritize ease of use

The best ESS system is not the one with the most bells and whistles. It’s one that’s easy for staff to use. Make sure that your ESS is intuitive and minimize the learning curve as much as possible.

Employees should be able to view and update their personal data, emergency contacts, tax withholdings, and other HR information without hitches.

Keep it mobile

These days, mobile access is no longer optional. A mobile-friendly ESS or dedicated mobile app allows staff to handle work info on the go, whether checking pay stubs, submitting time-off requests, or updating personal details. It’s all about making things as convenient as possible and allowing them to do these tasks without waiting until they’re at a computer.

Gather feedbackRegularly check in with staff and get feedback about what they think of the platform. Identify areas that work well for them and determine which parts need improvement. Their input helps refine the system and ensure it stays as efficient and user-friendly as possible. Be ready to adjust to make the most out of the system.

Make the switch to Workforce.com

Switching to a new system can feel like a big leap, especially when you’re used to current platforms. However, making the move could be one of the best decisions for your business, especially if you want to lessen the administrative burden for your team.

“It would be in a company’s best interest to switch over sooner rather than later because you would be wasting a tremendous amount of time. Workforce.com helped us improve our efficiency,” Shelley said. 

Discover how Workforce.com helped Shipley Do-nuts and numerous other businesses across the globe. Book a call today.

Posted on

What are different payroll deductions? Taxes, benefits, and more

Summary

  • Employers are legally required to withhold portions of employee paychecks for federal income taxes and FICA contributions. Employers may also withhold amounts for voluntary deductions such as retirement plans and health insurance premiums when authorized by employees.
  • Managing payroll deductions can be complex, involving intricate calculation rules, varying employee statuses and preferences, and ever-changing labor regulations.
  • Workforce.com simplifies payroll by automating accurate calculations and ensuring the correct deductions are applied every time.

Payroll deductions are withheld from an employee’s paycheck to cover taxes, garnishments, or benefits like health insurance. While federal and state taxes are statutory and legally mandated, options like retirement savings or supplemental insurance fall under voluntary deductions. Deductions are further classified as pre-tax or post-tax, depending on when they’re applied in the payroll process.In this guide, we’ll break down the types of payroll deductions, explain how they work, and share tips to ensure accuracy every pay period.

Mandatory vs. Voluntary Payroll Deductions

Payroll deductions are primarily mandatory or voluntary. As the name implies, mandatory deductions are amounts employees must pay and employers must withhold or deduct. This includes statutory deductions mandated by law, such as federal income taxes and Social Security. 

On the other hand, voluntary deductions are amounts taken out of an employee’s paycheck with their consent. These are typically for retirement accounts, health insurance, and charitable donations. 

Mandatory deductions

Statutory deductions

Statutory deductions are amounts that employers withhold from staff paychecks to meet tax obligations and fund essential public services like Social Security, Medicare, and state programs. 

Here are the statutory deductions that employers must withhold to comply with the law:

FICA taxes

FICA (Federal Insurance Contributions Act) taxes are a type of statutory deduction used to pay for Social Security and Medicare. 

Employees pay 6.2% of their salary toward Social Security tax. The contribution limit or cap on this amount is based on the wage an employee earns. For 2025, the wage base limit is $176,100.

Medicare tax is 1.45% of an employee’s pay and includes no cap. Employees who earn more than $200,000 could be subject to (based on their filing status) paying additional Medicare tax. More information can be found here on the Internal Revenue Service (IRS) website.

Federal income tax

Federal income tax is an amount deducted from every employee’s salary. The federal government sets different percentages to be paid as taxes on gross salaries based on a person’s income. The taxable brackets start at 10% and go up to 37% of someone’s gross pay.

Federal income tax is calculated progressively. That said, taxes on wages are not computed in its entirety by a certain percentage alone. It means that different portions of an individual’s income are taxed at increasing rates. For instance, a single individual has a taxable income of $65,000. That employee’s federal tax liability will be charged as follows according to 2025 rates:

  • 10% on the first $11,925 = $1,192.50
  • 12% on the next $36,550 ($48,475 – $11,925) = $4,386
  • 22% on the remaining $16,625 ($65,000 – $48,475) = $3,635.50

Total Tax Liability: $9,214

State and local income taxes

Employers must also withhold state and local income taxes, depending on where their employees work or live. How these taxes are calculated varies. Some states follow a similar progressive model as the federal government, others impose a flat rate, and some states don’t impose income taxes at all. 

In addition to how state income taxes are calculated, you need to be aware of reciprocity agreements if an employee works in one state and lives in another. 

It’s important to note that while mandated by law, not all workers are subject to statutory deductions. For instance, independent contractors are not subject to Social Security or Medicare tax withholdings. If you need clarification on a worker’s classification, the IRS offers support through Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. This form helps clarify whether a worker should be treated as an employee or an independent contractor.

Wage garnishments

Wage garnishments are payroll deductions based on a court order mandating an employer withhold a portion of an employee’s paycheck to pay for financial obligations or debt. Child support is a typical garnishment, but it can also be for other purposes, such as payments for student loans, tax debts, and court judgments for personal debts. The employer must calculate wage garnishments based on federal and state limits. As soon as the court order for garnishment is received, employers are obliged to apply the deduction and notify the employee.

Voluntary deductions

Unlike mandatory deductions, which fund government programs or fulfill obligations like child support payments, voluntary deductions are optional and enhance employee benefits. Common examples include: 

Retirement contributions

Employees can voluntarily set aside funds for their retirement. Popular options include 401(k) plans and Individual Retirement Accounts (IRAs), which employees can opt into if offered by the employer.

Health and welfare benefits

Employees can also opt to have health insurance premiums deducted from their paychecks for themselves and their dependents. Contributions to a health savings account (HSA) can also be taken with the worker’s consent.

Supplemental insurance coverage

Premiums for additional coverage, such as extended group life insurance, are voluntary. While employers may provide a base plan, employees can pay extra for added protection directly from their paycheck. 

Union dues

Union members can authorize their employers to deduct their union fees and dues from their paychecks. 

Savings and investment programs

Payments for employee stock purchase plans or amounts allocated for direct deposit to savings plans are a couple of examples of voluntary deductions geared toward employee savings and investment.  

Charitable donations

Employees can elect to have their donations to charity be deducted from their pay.

Voluntary deductions provide convenience to employees in managing their benefits and savings plans. However, employers must secure written authorization before processing these deductions to ensure compliance and transparency.

Download: Free Payroll Deduction Authorization Form

Pre-tax vs. Post-tax deductions

Payroll deductions are categorized as pre-tax or post-tax, depending on when they are taken from an employee’s earnings. 

Pre-tax deductions are withheld from an employee’s gross wages and can reduce the employee’s taxable income. However, they may still be subject to FICA taxes. Common examples of pre-tax deductions include HSA contributions, health insurance premiums, and 401(k) contributions.

Pre-tax deductions also reduce the amount a business owner has to pay toward federal unemployment tax (FUTA). FUTA is the system that provides compensation to people who have lost their jobs.

On the other hand, post-tax deductions are withheld from an employee’s net pay, meaning taxes have already been calculated and applied. While they don’t reduce taxable income, benefits or contributions made in this category often provide tax-free withdrawals or benefits in the future. Examples include Roth IRA contributions, charitable donations, and wage garnishments.

Stay on top of payroll deductions with Workforce.com

Managing payroll deductions is rife with complexities and challenges, from navigating regulations and unique state rules to managing employee updates, multiple voluntary benefits, and garnishments. Without the right tools, these tasks can quickly become time-consuming and prone to errors. That’s where Workforce.com steps in. 

Here are some of the ways Workforce.com can simplify payroll deductions. 

Onboarding

Accurate payroll starts with proper employee classification. Workforce.com has a strong onboarding system that ensures you have all the necessary information to classify employees correctly. It also handles necessary paperwork such as employee contracts and tax forms such as W-4. 

Centralized employee records

Workforce.com centralizes employee data within its payroll system, ensuring a single source of truth. Any updates to employee information, like changes to voluntary deductions, are instantly reflected across the platform, ensuring consistency. 

Time and attendance tracking

Accurate payroll depends on precise time tracking, especially for hourly employees.

Workforce.com’s time-tracking system ensures employees clock in and out correctly using mobile devices or kiosks. Missed punches trigger alerts, so issues are addressed immediately. The data flows directly into payroll processing, ensuring accurate timesheets and gross wage calculations.

Payroll

Workforce.com has a payroll system to calculate employee wages based on classifications, pay rates, timesheets, and corresponding deductions according to what’s mandated and what employees authorize you to withhold. All of these are automated and can be done in minutes.  

Recordkeeping

Workforce.com ensures that payroll records are kept safe and can be easily accessed in case of audits or employee inquiries. 

Managing payroll deductions is crucial not only for complying with tax laws but also for maintaining employee trust. Understanding the nuances of these deductions is vital to ensuring regulatory compliance, optimizing payroll processes, and supporting employee financial well-being.See Workforce.com in action and learn how it can improve your payroll processing and more. Book a demo today.

Posted on

What is FUTA and how to calculate it

Summary:

  • FUTA is a payroll tax used for unemployment benefits. Unlike FICA taxes, it’s solely covered by the employer.

  • FUTA can be as low as $42 per employee annually, but it can quickly become significant for bigger workforces spanning different states.

  • Payroll software simplifies and automates FUTA calculations, ensuring timely payments and accurate filing.

The Federal Unemployment Tax Act (FUTA) is a key component of payroll taxes and a critical responsibility of employers. It funds unemployment benefits and provides a safety net for unemployed workers. 

A clear understanding of FUTA and other payroll taxes is vital for business owners. This guide will explain what employers need to know about FUTA, how to calculate it, and practical tips to simplify the process.

What is FUTA?

Administered by the Department of Labor, FUTA is a payroll tax intended to fund unemployment insurance and job programs across the United States. Unlike the Federal Insurance Contributions Act taxes (Social Security and Medicare), FUTA is solely the employer’s responsibility. There is no employee contribution or employer match. However, the FUTA amount an employer owes is directly tied to employee wages. 

Generally, employers are obligated to pay FUTA if they:

  • Paid wages of $1,500 or more to employees in any calendar quarter during the last two years. 
  • Had at least one employee for part of a day in 20 or more different weeks during the previous two years.

The Internal Revenue Service (IRS) uses a rolling assessment model for the above criteria, which looks at current operations and recent employment patterns. As we transition to 2025, the reference years for calculation are 2023 and 2024.

FUTA rules for agriculture and household employers
Because of their work patterns and employment relationships, there are specific rules for household and agricultural employers. For instance, agricultural work is seasonal, while household employees are often hired in small-scale settings. 

Household: 

Employers must pay FUTA taxes for household employees who perform work in a private home, local college club, fraternity or sorority chapter if they pay a total of $1,000 or more in cash wages during any calendar quarter in the current or preceding two calendar years.

Agriculture:

Employers who have farmworkers must pay FUTA taxes if they:

  • Paid cash wages of $20,000 or more to farmworkers during any calendar quarter in the current or preceding two calendar years
  • Employed 10 or more farmworkers working at any time during 20 or more different weeks in the current or previous two years.

Are there FUTA exemptions for small businesses and self-employed individuals?

If you’re running a small business and don’t meet the IRS criteria, you are exempt from FUTA tax. The same goes if you hire independent contractors instead of full-time employees.

Self-employed individuals are generally exempt from FUTA tax liabilities. 

Also read: How to Manage Compliance for Contractors

FUTA credit reduction

The FUTA tax rate is 6% and applies to the first $7,000 of an employee’s annual wages. This is known as the federal wage base. Most employers can qualify for a 5.4% tax credit, bringing the FUTA tax rate down to just 0.6% per employee. That’s only $42 per employee per year if all conditions are met. 

Employers can qualify for the tax credit under the following conditions: 

  • The State Unemployment Tax Act (SUTA) tax must be fully paid by the Form 940 deadline, before January 31.
  • The FUTA applies to the same $7,000 wage base. You automatically meet this condition if your state’s wage base is higher. If it’s lower, you may not qualify for the full tax credit. 
  • The state is not a credit reduction state. A state is considered a credit reduction state if it received a loan from the federal government to fund its unemployment benefits and failed to pay it back within two years. If the state has an outstanding loan balance from the federal government on January 1 for two consecutive years and fails to repay it in full by November 10 of the second year, the FUTA tax credit for employers in that state is reduced by 0.3% each year, and the loan remains unpaid.

How to calculate FUTA tax liability

FUTA tax is calculated quarterly for deposit purposes. The tax report, on the other hand, is filed annually through the Form 940. 

Here are two example methods of FUTA calculations, assuming that the employer is eligible for the maximum credit (5.4%): 

Example 1: 

  1. Subtract the maximum allowable state credit (5.4%) from the FUTA rate (6.0% in 2024).
  2. Multiply each employee’s wages, up to the $7,000 wage base, by 0.6%.
  3. Total these amounts for your net quarterly FUTA tax liability.

Example 2:

  1. Calculate the gross FUTA tax liability by multiplying each employee’s taxable wages (up to $7,000) by the full FUTA rate of 6.0%.
  2. Determine the maximum allowable credit by multiplying the same taxable wages by 5.4%.
  3. Subtract the credit amount from the gross liability to get the net liability.

FUTA calculations can be straightforward if operating in a non-credit reduction state that matches the federal wage base. However, it can become more complicated when you operate in states considered credit reduction states or states where the wage base is different from the federal one. 

When are FUTA liabilities paid?

FUTA tax payments are typically due quarterly, but whether you need to pay each quarter depends on how much FUTA tax you owe. 

Quarterly payment due dates

If you owe FUTA taxes for the quarter, payments are due by:

  • April 30 for the first quarter
  • July 31 for the  second quarter
  • October 31 for the  third quarter
  • January 31 for the fourth quarter of the previous calendar year

Do you need to pay this quarter? 

Here are general guidelines in terms of timing your FUTA deposits:

  • If you have $500 or more in FUTA liability in a calendar year, you should pay by the next quarterly deadline. 
  • If it’s less than $500 in a quarter, you can roll it over to the next quarter and continue doing so until your cumulative amount due is more than $500. 
  • If your liability for the entire year is less than $500, you can wait and pay it when filing Form 940, due by January 31.

What if the deadline falls on a non-business day (weekend or legal holiday)? You can make your payments on the next business day, which will still be considered on time.

How to pay FUTA tax liabilities

FUTA taxes are primarily paid to the U.S. government via the Electronic Federal Tax Payment System (EFTPS). This 24/7 free service offered by the U.S. Department of Treasury, allows employers to make payments, track payment history, schedule a payment in advance, and get support when making tax payments. 

An alternative method is same-day wire transfers, where the employer makes direct payments via bank, but this can incur transaction fees. Another option is to delegate tax payments through a payroll service provider or tax professional.

Reporting FUTA Tax Payments

FUTA taxes are reported annually using Form 940, the Employer’s Annual Federal Unemployment Tax Return. In this IRS form, employers document all FUTA tax payments made during the year and disclose any remaining amounts due.

The filing deadline is January 31, but if all FUTA tax deposits are paid on time, employers get a grace period until February 10 to submit the form. While Form 940 focuses exclusively on federal unemployment taxes, it’s often compared to Form 941, which covers payroll taxes like Social Security and federal income tax withheld from employees’ wages.

FUTA and SUTA: What sets them apart?

FUTA and SUTA are similar because they have the same overarching purpose: to fund unemployment programs. However, there are some operational differences. The most obvious difference is that FUTA is imposed on a federal level, while SUTA is a state-specific tax that goes to unemployment insurance programs for eligible workers in the state. 

Another key difference is the FUTA tax credit. Employers who make timely SUTA payments can qualify for up to a 5.4% credit, which can reduce their FUTA liability. On the other hand, SUTA is strictly a state-imposed tax and doesn’t have a tax credit system. 

Like FUTA, SUTA tax is also imposed on a wage base. However, FUTA uses a uniform base of $7,000, while SUTA wage bases vary. Some states like Arkansas and California follow the same $7,000 base as the federal government. While states like Washington and New York impose higher bases. Specific industries have additional assessments or alternate rates, so it’s always good pratice to review your state’s latest guidelines. 

Another key difference between FUTA and SUTA is who foots the bill. FUTA is entirely paid by the employer. In the case of SUTA, some states like Pennsylvania and New Jersey, require both employers and employees to contribute.

Simplify FUTA calculations with Workforce.com

FUTA tax liabilities may seem small at just $42 per employee annually, but, it can quickly increase as your workforce grows and spans multiple states. As a result, managing FUTA and other payroll taxes can become more complex. 

Workforce.com can help you stay on top of FUTA tax liabilities and other employment taxes. Here are some of the ways the platform can help streamline your process.

Automated payroll calculations and reporting

Workforce.com’s payroll system automatically calculates wages when you reach the FUTA wage base. It helps ensure timely tax payments and handles overtime, payroll taxes , and deductions. 

Accurate time and attendance tracking

Since FUTA calculations are tied to wages, accurate time and attendance tracking is essential. Wokforce.com ensures that employee hours are recorded in real-time so that hourly wages are always precise and tax calculation errors are avoided. 

Unified employee data

Employee information, such as pay rates and employment status, is centralized in a single profile, eliminating redundant data entry. This single source of information powers payroll computations and includes FUTA tax liabilities. 

If you run an hourly workforce, discover how Workforce.com can help you comply with FUTA obligations and other payroll or labor regulations. Want to see it in action? Get a demo and learn how it can simplify HR, scheduling, and payroll for your hourly team.