Tag: payroll processing

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What to Look for in Payroll Software (Especially for Hourly Teams)

  • Payroll is a process involved in calculating wages, applying deductions, and distributing pay to employees. Payroll for hourly teams can be more complex because of variable schedules and multiple pay rates.  
  • Payroll can be simplified with payroll software. But it can be tricky to find the best one. 
  • Payroll software can streamline the process, provided it has the functionality to ensure the accuracy of wage information and calculations. 

Payroll is one of the most critical and complex parts of running a business. At its core, it’s all about calculating employee wages, applying deductions, and issuing payments. But behind every paycheck is a complex system of moving parts, from tracking hours to ensuring compliance with tax and labor laws. 

For many business owners, especially those with hourly staff, payroll can become a significant pain point. Chasing down timesheets, calculating overtime, applying the correct pay rates, and reconciling records is very time-consuming and can result in significant amount of hours spent on administrative tasks. 

So, what exactly is payroll? And what should organizations look for in software to help them run payroll smoothly, especially if you’re managing hourly teams?

What is payroll?

Payroll is the process a business follows to pay its employees accurately and on time. It involves several key steps: calculating gross wages, withholding the correct amount of taxes, applying deductions such as garnishments or benefits, and issuing the final pay. 

But payroll doesn’t start and end with just cutting checks. Before payday, it requires pulling data from onboarding, time and attendance systems, and any applicable leave balances. After wages are finalized, employers must remit payroll taxes and file the necessary reports.

 In short, payroll is where everything comes together. More than a back-office task, it’s a core business function that directly impacts employee satisfaction and trust.

What does payroll mean for hourly teams?

Payroll is already a complex process, but it’s even more challenging for hourly teams. 

Unlike salaried payroll, which tends to stay consistent from cycle to cycle, hourly payroll is filled with moving parts. Pay can vary based on scheduled hours, roles worked, locations assigned, and local labor laws. These variables can drastically affect how gross pay, taxes, and deductions are calculated.

Take Dave, for example. He works at a restaurant where he’s qualified for multiple roles. Some days, he’s a server; other days, he’s a bartender—each with a different pay rate. Additionally, he may be assigned to various locations, each with its own wage rules and tax rates. These variations make processing payroll more complex. Now multiply that across 100 employees, and it’s easy to see why hourly payroll needs more than just a basic system.

It’s not just calculations, either. Employers must also stay up-to-date with state-specific pay frequency requirements. For instance, in Virginia, salaried employees must be paid at least monthly, while hourly workers must be paid at least twice a month or every other week. These rules vary across jurisdictions and can’t be ignored. 

For teams with shift-based staff, payroll isn’t a “set it and forget it” task. Automation helps, but only if the software is built to handle the unique needs of frontline and hourly operations from end to end. 

TL;DR: Payroll for hourly teams is more complex due to variable hours, multiple pay rates, shifting locations, and evolving labor laws. Getting it right takes the right tools. 

What is payroll software?

Payroll software is a tool that automates the calculation and processing of employee wages and salaries. It utilizes employee data, including hours worked, pay rates, and leave balances, to calculate pay, apply deductions, and issue payments in accordance with company policies and labor laws. It also generates pay stubs that provide employees with a clear breakdown of their earnings, taxes, and other adjustments. 

Payroll software’s primary purpose is to calculate and process employee wages using employee information and in accordance with labor laws and company policies. It also takes into account any adjustments based on leaves, holidays, and bonuses. After calculations, payroll is distributed to employees. Payroll systems often support direct deposits, sending wages straight to an employee’s bank account. Self-service access also lets employees update bank account details securely.

Payroll systems also help genrate pay stubs or payslips, which are documents that provide a breakdown of how pay was calculated.  

Payroll software can be standalone, which means that it’s solely designed to calculate pay. If it’s a standalone product, you must provide the information and data it needs to calculate employee pay.

There are different types of payroll software:

  • Standalone payroll software focuses solely on calculating and distributing pay. Necessary data, such as hours worked and overtime, must be manually input for each pay run. 
  • On-premise payroll software is installed on a company’s local servers. While this offers control over data, it typically requires a significant amount of IT infrastructure and ongoing maintenance. 
  • Cloud-based payroll software is hosted online and accessible from anywhere. It usually offers automatic updates, easier scalability, and less overhead for IT teams. In addition, it is often referred to as online payroll solutions because it allows you to process pay from anywhere with internet access.

Some payroll software is part of a larger human resources platform that includes tools for time and attendance, scheduling, and workforce management. In this setup, payroll pulls real-time data from these modules, which reduces manual entry, improves accuracy, and saves time.

What to look for in payroll software especially for hourly teams

With so many payroll providers on the market, it can be overwhelming to choose the right one. 

While most software promises to simplify payroll, not all of them are built to handle the business needs of hourly or shift-based teams. 

Here are the most essential features to look for in payroll software and questions to ask as you evaluate your options.

Ease of use

Adopting any new software has a learning curve, but it should be user-friendly enough to allow users to get up and running faster. So, what makes payroll software user-friendly? 

A good payroll system should be easy to navigate, even for non-technical users. While some learning curve is expected, it should help your team get up and running quickly without constant IT support. 

Key features to look for:

  • Accessible across devices: The software should function consistently on both desktop and mobile devices.
  • Intuitive design: A clean, user-friendly interface encourages adoption.
  • Minimal training required: Managers and admins should be able to handle payroll tasks without frustration or delay.

Even the most powerful system won’t be effective if your team doesn’t want to use it. 

Accurate wage and tax calculations

Hourly payroll is complex. Your payroll software should have safeguards that ensure every pay run is accurate, no matter how many variables are in play. 

Ask these questions: 

  • Does it support multiple pay rates and roles? 
  • Can it handle overtime, bonuses, and tips accurately? 
  • How are time and attendance data synced, automatically or manually? 
  • Does it manage federal, state, and local tax withholdings? 
  • How does the platform help minimize payroll errors? 

Accuracy is more than automation. It’s about controls and checks that fit your business.

Time tracking integration

Payroll accuracy starts with accurate time tracking. Choose a solution that integrates directly with your time and attendance tools or, even better, one where these tools are built into the same platform. 

Benefits: 

  • No double entry or data transfer errors
  • Real-time syncing of hours worked
  • Easier management of breaks, PTO, and shift differentials

Reporting and audit support

Good payroll software doesn’t stop at just wage calculations. it also helps centralize and organize your payroll data to make reporting, audits, and decision-making much easier.

Look for:

  • Built-in reports for federal and state requirements
  • Custom report builders for internal insights
  • Central access to payroll history and data

Whether you’re preparing internal summaries or government forms, payroll reporting tools should let you filter and export the data you need easily.

Customization and Flexibility

Most payroll systems typically come with default settings, but a good one also adapts to your specific requirements. This is especially important for those with more dynamic needs, such as frontline teams and hourly workers. 

Here are some questions to ask:

  • Can you set rules for multiple roles, rates, and locations? 
  • Can you configure custom pay periods or alerts for overtime and missed breaks?
  • Can the system handle tipped wages and industry-specific rules?
  • Can you automate break compliance and ensure that required penalty pay is issued if rest or meal breaks are missed?

Employee self-service

Empower your staff with access to their payroll information. A self-service portal reduces admin workload and builds transparency. 

Employees should be able to: 

  • View pay stubs, W-4s, and timesheets
  • Update personal and banking information
  • Track PTO balances and request time off
  • View schedules and shift history

Built-in compliance tools

Payroll software should support federal, state, and local tax compliance, while also helping you meet wage laws, recordkeeping requirements, and audit readiness.

The system should: 

  • Alert you to rule violations
  • Maintain digital records for audits
  • Help you stay up to date with changing labor laws

Reliable customer support

Payroll issues can’t wait. Select a provider with a knowledgeable and accessible support team, particularly during implementation and your initial pay runs.

Why Workforce.com’s payroll software is the best choice for hourly and shift-based teams

Workforce.com is a full-service payroll platform built for hourly, shift-based, and frontline workforces. It’s more than just a payroll calculator. It’s a complete workforce management suite designed to automate, simplify, and safeguard every step of the employee lifecycle, from onboarding new hires to payday.

Here’s why it stands out: 

  • Accurate pay for complex teams: Handles multiple rates, roles, and locations with ease
  • Real-time time tracking integration: Built-in time and attendance means no data re-entry
  • Flexible compliance tools: Designed to help you follow federal and state wage laws with configurable pay rules and alerts for your locations
  • Employee self-service: Mobile-friendly tools for staff to manage pay, schedules, and more
  • End-to-end visibility: See everything from scheduling to pay in one system

Workforce.com serves industries such as hospitality, healthcare, and more, helping to reduce payroll errors, save time, and ensure compliance. Book a call today to see how Workforce.com can simplify your payroll process.

FAQs about Payroll and Payroll Software

What is payroll in simpler terms? 

Payroll is the process of paying employees their wages and salaries on a regular basis. It involves calculating wages, withholding taxes, and ensuring compliance with legal requirements. 

How does payroll software work? 

Payroll software automates tasks such as wage calculations, tax withholdings, direct deposits, and reporting. It reduces manual work and helps prevent errors. 

Why is payroll more complicated for hourly workers? 

Hourly payroll often involves variable shifts, multiple pay rates, overtime, and tip reporting. These moving parts can make payroll more complex and more challenging to manage manually.

What’s the best payroll solution for hourly teams? 

The best payroll solution for hourly teams or shift-based workers is one that’s in the same ecosystem as time tracking, scheduling, and onboarding. It should support multiple pay rates, variable schedules, overtime, tip management, and compliance. An employee self-service functionality is also a must for hourly workforces. 

Can payroll software help with taxes? 

Yes. Most payroll software automatically calculates and applies federal and state tax rates, helping ensure tax compliance. Many also generate tax forms and reports to support timely and accurate filing.

What are other ways to process payroll aside from payroll software? 

Some companies opt for in-house payroll, where they use manual processes like spreadsheets or accounting tools. Others outsource payroll entirely to accountants or payroll service providers who manage the process and handle tax filings on their behalf.

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7 Practical Tips for Paying Payroll Taxes

Summary

  • Payroll taxes are just one part of running payroll, but it’s a significant part. It’s a year-round responsibility that involves calculating withholdings, filing forms, and meeting deposit deadlines.
  • Even small mistakes can lead to penalties, such as missing a deadline or misclassifying wages.
  • A few smart practices and the right payroll software can go a long way.

Payroll taxes are just one part of running payroll, but they’re a significant part. While payroll processing covers everything from tracking hours to issuing paychecks, the tax side alone spans multiple steps before, during, and after payday. You need to set up the correct withholdings, calculate deductions correctly for each run, file required forms, and meet deposit deadlines. 

Paying payroll taxes is more than just sending contributions to the IRS every now and then. Payroll tax obligations can be extremely complex, but a few practical tips can help business owners stay compliant and avoid any surprises.

Here are some best practices for paying payroll taxes: 

1. Know what taxes you’re actually responsible for

There are different types of payroll taxes that employers must withhold and process from employee paychecks, including: 

  • Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA)
  • Federal Unemployment Tax Act (FUTA) contributions – fund unemployment benefits for eligible workers
  • State and local taxes
  • Employer-side contributions – many of these taxes have an employer’s share, meaning you need to match what the employee pays (as with Social Security and Medicare).

Some of these taxes are withheld as tax deductions from employee wages, while others are paid directly by the employer.

Most of these are based on employee wages, so it’s important to understand which taxes apply, how they’re calculated, and what portion your business is responsible for. Before anything else, you need to know what taxes you need to collect and remit, both on behalf of your employees and from your business directly.

For federal income tax withholding, that process starts with Form W-4, which each employee fills out when they’re hired. It tells you how much tax to withhold based on filing status, dependents, and any additional withholding requests. Keeping this information up to date is key to avoiding under- or over-withholding. 

Also read: What are different payroll deductions? Taxes, benefits, and more

2. Track hours and wages accurately

Accurate time tracking is the foundation of tax compliance, especially when you’re dealing with hourly employees. Every hour worked directly affects how much you withhold for taxes and how much you need to report. These hours contribute to each employee’s taxable wages or the portion of their earnings that payroll taxes are calculated on.

Small errors throw off tax calculations and lead to issues. Ensure you have a system that accurately captures: 

  • Clock-ins and clock-outs
  • Breaks and unpaid meal periods
  • Overtime
  • Shift differentials or special rates

3. Register with federal, state, and local tax agencies

You need to be registered with the right government agencies before you can pay or file for anything. You can start with:

  • Employee Identification Number (EIN) – through the IRS
  • State employer registration: Usually done through the state’s Department of Revenue or Labor
  • Local registration: Required in some cities for payroll taxes or occupational licenses

If you employ workers in multiple states or eventually open up new locations, you would most likely need to register for each one separately. You need to do this first and foremost, as registration can take time to process. 

4. Know your deposit schedule 

Payroll taxes are deposited regularly throughout the year. The scheduled deadline depends on how much payroll tax you reported in the past. 

Under IRS rules, your deposit schedule is based on a lookback period, which is a 12-month window that determines your tax liability. 

For most employers who file Form 941, the lookback period covers the 12 months from July 1 two years ago through June 30 of last year.

Here’s an example: 

For 2025 deposit schedules, the lookback period is July 1, 2023 to June 30, 2024. The deposit will be:

  • Monthly: If you reported $50,000 or less in taxes, you must deposit by the 15th of the following month
  • Semiweekly: If you reported more than $50,000, you must deposit depending on what day you pay your employees. So if your payday falls on:
    • Wednesday, Thursday, or Friday, the deposit is due by the following Wednesday.
    • Saturday, Sunday, Monday, or Tuesday, the deposit is due by the following Friday. 

If you filed Form 944 in either of the previous two years or you’re filing it in the current year, the lookback period is different. It would be the entire calendar year two years before the deposit year. For instance, the lookback period is calendar year 2023 for 2025 deposits. 

It’s also important to take note of the following exceptions:

  • If your total quarterly tax liability is under $2500, you can pay the tax with Form 941 instead of making regular deposits. 
  • If you accumulate $100,000 or more in a single day, you must deposit the next business day and will become a semiweekly depositor moving forward.

5. Adhere to tax filing deadlines

Depositing taxes is only half of the payroll tax equation. The other equally important part is filing forms that officially report what you withheld, what you paid, and when. Filing forms on time is as crucial as paying taxes themselves. It’s important to note that you could be subject to penalties for late filings, even if you already paid what you owe. 

Here are key forms employers must know:

Form 941: Employer Quarterly Federal Tax Return

  • Reports federal income tax withheld from employees, plus Social Security and Medicare taxes
  • Filed four times a year (end of April, July, October, and January)
  • The most common form for employers with hourly teams

Form 940: Federal Unemployment Tax (FUTA) Tax Return

  • Filed annually
  • Reports how much you owe for federal unemployment taxes
  • Required even if you qualify for the 0.6% reduced FUTA rate

Form W-2: Wage and Tax Statement

  • Sent to each employee every January
  • Summarizes their total earnings and withholdings for the year
  • Must also send Form W-3  to the Social Security Administration

Form 944: Annual Federal Tax Return (for smaller employers)

  • Some small businesses file Form 944 instead of 941 if their total annual liability is under $1,000
  • Filed once a year, not quarterly
  • The IRS must notify you in writing if you’re eligible to use this form.

Form 1099-NEC: Nonemployee Compensation

  • If you paid contractors $600 or more during the year
  • Must be filed by January 31 and submitted to the IRS and contractors
  • Not a payroll tax form per se, but still part of year-end wage reporting

Meanwhile, every state with income or unemployment tax has its own set of required forms, which is usually a mix of: 

  • Quarterly state withholding returns
  • Unemployment insurance wage reports
  • Annual reconciliation forms
  • Copies of W-2s or 1099s

Deadlines and formats vary. If you operate in multiple locations, it’s crucial to track and stay on top of these tax due dates aside from federal requirements.

6. Don’t overlook state and local tax rules 

Once you’ve figured out your federal taxes, you’ll also need to calculate and pay state-level obligations, such as state unemployment tax, which varies by location and employer history. State and local rules are equally crucial as federal payroll taxes, especially for hourly or multi-state teams. 

Here are some examples:

  • In Massachusetts, new non-construction employers pay 2.13% in SUI rate, applied to the first $15,000 in wages per employee. If you’re in construction, the default rate is 5.45%, also applied to the first $15,000 in wages per employee. 
  • New York imposes the MCTMT (Metropolitan Commuter Transportation Mobility Tax). Suppose your total quarterly payroll for employees working in the MCTD (Metropolitan Commuter Transportation District,  including NYC, Long Island, and parts of the Hudson Valley) exceeds $312,500. In that case, you’re required to pay an additional payroll tax ranging from 0.11% to 0.60%, depending on your total payroll.
  • Reciprocity agreements can affect income tax withholding. If an employee lives in one state but works in another, a reciprocity agreement may let you withhold income tax only for the employee’s home state.

Employers must be proactive to stay up-to-date with these rules. It’s best practice to review SUI notices every year, monitor local tax obligations, and understand residency versus work state rules. 

7. Automate where you can

Running payroll manually is doable, but it’s very risky, especially when your team grows. You can face audits and fines due to mistakes in tax withholdings, errors in tax forms, or late payments. 

If your workforce clocks in and out, works variable shifts, earns multiple pay rates, or moves across locations, automation helps prevent errors that are otherwise easy to miss. 

Use payroll software that syncs directly with your time and attendance tracking and scheduling tools so that:

  • Worked hours, breaks, and overtime flow automatically into payroll
  • Pay rates, roles, and job codes are applied consistently
  • There’s no need for manual re-entry or patching together spreadsheets

Think of automation as both a time-saver and compliance safeguard. The more complex your operations, the more valuable automation becomes. Payroll software helps reduce the risk of costly mistakes, from inaccurate hours to missed employment tax filings.

Stay on top of payroll and tax calculations with Workforce.com

Workforce.com connects scheduling, time tracking, and payroll, so every hour worked, break taken, and pay rate used is accurately calculated. Learn more about payroll with Workforce.com. Book a demo today.

FAQ: Payroll Taxes for Employers

Do I have to pay payroll taxes if I only hire part-time employees?

Yes. Even if your employees work part-time, you’re still responsible for withholding and remitting payroll taxes. This includes Social Security tax, Medicare tax, federal and state income taxes (if applicable), and unemployment taxes.

Do I need to pay payroll taxes for independent contractors?

You don’t withhold income tax or pay Social Security, Medicare, or unemployment taxes for independent contractors or self-employed individuals. Instead, they’re responsible for handling their own taxes and typically receive a Form 1099-NEC, not a W-2.

What happens if I miss a payroll tax deposit deadline?

Missing a deposit or filing deadline can result in late fees, penalties, and interest from the IRS or your state agency. In some cases, repeat violations can trigger audits or legal action. Automating your payroll tax calculations can help avoid these risks.

What is EFTPS and do I need it for payroll taxes?

Yes, the Electronic Federal Tax Payment System (EFTPS) is the IRS’s official platform for submitting federal tax payments, including payroll taxes. Employers are required to use EFTPS to deposit withheld income tax, Social Security, and Medicare taxes.

Do payroll taxes help fund unemployment benefits?

Yes. Payroll taxes like FUTA (federal) and SUI (state) are used to fund unemployment benefits for eligible workers who lose their jobs. These are typically employer-paid and are required in almost every state.

What is the Additional Medicare Tax, and who pays it?

The Additional Medicare Tax is a 0.9% tax on wages over $200,000 per year, paid only by employees. Employers are required to begin withholding it once an individual employee’s wages exceed that threshold — no employer match is required.

Do I need to e-file payroll tax forms?

In most cases, yes. Employers are generally required or encouraged to electronically file payroll tax returns like Forms 941 and 940 directly with the IRS. Wage reporting forms, such as Form W-2, are filed electronically with the Social Security Administration (SSA). E-filing helps ensure timely processing and reduces errors.

How does payroll software help calculate payroll taxes?

Payroll software can handle the most complex parts, such as calculating withholdings and applying the correct tax rates. Workforce.com helps you stay accurate and compliant by syncing hours, pay rates, and locations directly into your payroll calculations, so taxes are easier to manage and less prone to error.

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Biweekly vs. Semi-monthly Pay: What’s the best fit for hourly teams?

Summary

  • Biweekly and semi-monthly pay may sound similar, but they differ in structure, timing, and how they impact payroll processing.
  • Several states have pay frequency laws that specify how often employers must pay their employees.
  • Payroll software makes it easy to manage multiple pay frequencies, assign them by employee type, and automate overtime and pay period calculations.

Biweekly and semi-monthly are standard popular pay frequency options. While they sound similar, they work very differently. Both involve employees receiving payment twice a month, most of the time, but the structure behind them can significantly impact payroll processing. 

So, which one is right for your team? Let’s break it down.

What is semi-monthly payroll?

Semi-monthly payroll means employees are paid twice a month on specific dates, typically the 15th and last day of the month or the 1st and 15th of each month. This results in 24 pay periods in a year. 

Unlike weekly or biweekly pay schedules, semi-monthly pay dates stay fixed by the date, not the day of the week. That means paydays fall on different weekdays each month and, in some cases, on weekends or holidays, potentially delaying direct deposits if not managed carefully. In many states, employers are still required to issue pay on or before the scheduled payday, even if banks are closed, to stay compliant with payday laws. 

What is biweekly payroll? 

Biweekly payroll means employees are paid every other week on the same specific day, such as the second Friday of each month. This leads to 26 pay periods per year, with two months each year containing three paychecks instead of two. 

Unlike semi-monthly payroll, biweekly follows the same weekday, not the same date, which provides more consistency for employees and simplifies time tracking. 

Biweekly pay is paying employees every other week on the same day (e.g., every other Friday), resulting in a total of 26 paychecks per year. Unlike semi-monthly pay, biweekly payroll means employees are paid on the same day every other week, not on a set date. 

Semi-monthly vs biweekly pay: Key differences

Biweekly PaySemi-monthly Pay
Pay periods/year2624
Pay schedule Fixed day, every two weeks (e.g., every Friday)Fixed dates (e.g., every 15th and 30th)
Payroll taxes and withholdingsMore frequent withholdingSlightly higher withholding amounts per paycheck
Direct deposits and bank timingAlways the same weekdayMay fall on weekends/holidays
Payroll and HR Admin workloadMore runs (26/year)Fewer runs (24/year), but may need adjustments
Overtime trackingEvery 2 weeks, aligns with 40-hour weeksMay split workweeks

Which payroll schedule is better for hourly employees?

To know which is the better payroll schedule, you need to understand how each of them affects your payroll management, particularly overtime pay and shift differentials. You need to figure out which pay schedule makes it easy for you to manage. 

If you manage hourly workers, your choice of payroll frequency directly impacts how you track hours, calculate overtime, or account for shift differentials.

How pay frequency schedules affect payroll workflows for hourly teams

A bi-weekly payroll schedule aligns with a standard 40-hour workweek, which makes it easier to calculate overtime. Since each pay period covers exactly 14 days, it’s predictable and easier to reconcile against time and attendance records. 

Meanwhile, a semi-monthly pay schedule may cut across weeks. For example, a pay period might start on a Wednesday and end two Thursdays later, which can result in a single workweek being split between two pay periods. This can result in challenges with overtime calculations and increases the risks of errors, especially when you don’t have an airtight payroll system.

Other pay inputs: Tips, shift differentials, and bonuses

Consider other sources of compensation, too. Businesses relying on hourly teams, such as restaurants, hotels, retail, and healthcare, may have complex pay inputs such as:

  • Shift differentials 
  • Tip pooling 
  • Bonuses and commissions

So, which should you choose?

Suppose you run a shift-based operation or manage hourly employees. In that case, bi-weekly payroll is usually the better choice because it’s easier to calculate overtime under FLSA rules and align with weekly timesheets. That said, syncing hours with pay has fewer risks of errors. 

Meanwhile, semi-monthly payments typically work better for salaried employees or companies with more fixed or consistent payroll patterns than for hourly staff. While it’s still possible to apply a semi-monthly arrangement to hourly teams, it can introduce difficulties with payroll calculations unless you really have a strong payroll system in place.

Do payroll laws affect pay schedules?

Yes. In many states, pay frequency is regulated by law, which means business owners can’t always choose freely between biweekly, semi-monthly, or monthly pay. 

Some states let employers decide how often to pay their staff, while others set a minimum required frequency (like once or twice a month). In some cases, rules vary by industry, employee type, or business size. 

Here are a few examples:

  • Connecticut: Employers must pay employees no later than eight days after the pay period ends. Employers can apply for permission to use a less frequent schedule but must still pay at least monthly. 
  • Hawaii: Employers must pay employees at least semi-monthly, with paydays no more than 15 days apart. Employees can opt for monthly pay via a formal election process. 
  • Louisiana: In industries such as manufacturing, oil drilling, mining, and public service that employ 10 or more staff, employers must pay wages at least twice a month, ideally spaced about two weeks apart. 

Pay frequency rules vary, so it’s best to check with your state or local government to see if any prevailing pay frequency rules apply to you. This is especially crucial if you operate in different states and localities. 

How payroll software makes pay frequencies easier to manage

The right payroll system can make even the most complex pay schedules feel simple, whether you choose biweekly, semi-monthly, or a mix of both. For teams with hourly staff, multi-location operations, or varying employment types, automation is key. 

Here’s how Workforce.com’s payroll software helps:

Assign multiple pay frequencies to different employees 

There are cases when not all employees in a company are on the same pay schedule. With Workforce.com, you can assign different pay frequencies per worker or department, which helps streamline and automate the process when you have a team with various classifications and certain types of employee roles.

Automate overtime, pay rates, and shift differentials

Workforce.com automatically calculates overtime based on actual workweeks, no matter what pay frequency you use. It also accounts for multiple pay rates, shift differentials, premiums, and other forms of variable compensation. That way, you avoid manual edits or reworks, and it makes payroll easier to process, especially for hourly employees.  

Integrate time tracking and scheduling directly into payroll

With Workforce.com, you no longer have to worry about manually matching hours to pay periods. Time tracking, scheduling, and payroll all function in a single system, which means that employee work hours are easily calculated into wages and that you can see labor costs while creating shifts.

Give employees visibility and control

Employees must have visibility into how much pay they will receive on payday, as well as what factors contribute to their payroll calculations. With a built-in employee self-service portal and mobile app, your staff can: 

  • See upcoming shifts and schedules
  • View upcoming pay dates
  • Update their bank account details
  • See deductions
  • Access pay stubs

Whether you decide to pay biweekly, semi-monthly, or go for another pay schedule, Workforce.com equips you to run payroll without a hitch with built-in time tracking, overtime automation, and the flexibility to manage multiple pay schedules.

Want to see how Workforce.com works for your business? Book a demo.

Additional FAQs about pay frequencies

Are there other pay frequencies besides biweekly and semi-monthly?

Yes. Other pay frequencies include:

  • Weekly: Employees are paid once a week (typically 52 paychecks/year)
  • Monthly: Employees are paid once a month (12 paychecks/year)

Some states restrict or discourage monthly pay for hourly workers due to long gaps between paydays. 

Can employers change pay frequencies?

Yes, but you must provide notice to employees (often in writing) and ensure the change complies with state labor laws.

What happens in a month with three biweekly paydays?

Because a biweekly pay frequency runs every 14 days, two months each year will include one additional paycheck. These extra paychecks don’t increase annual earnings, but they can affect things like benefits deductions, which are often only taken from the first two paychecks. Employers should plan for the added payroll run when budgeting.

Can hourly employees be paid semi-monthly?

Hourly workers can be on a paid semi-monthly pay period, but it can be more complex. This pay schedule often splits workweeks across pay periods, which makes overtime tracking and hourly calculations more challenging. If you pay hourly employees on a semi-monthly basis, you’ll need to ensure your payroll system properly handles overtime based on weekly thresholds, as required by the Fair Labor Standards Act (FLSA).

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How to Do Payroll Yourself: Steps to Take and Risks to Consider

Summary

  • Small businesses often consider doing their own payroll. This option is feasible, provided you are well-versed in employee wages, tax laws, and payroll regulations.
  • DIY payroll may save you from spending on payroll services or software, but there are other factors you must consider to understand whether it’s cost-effective in the long run.
  • Much of payroll processing starts before timesheets are generated. It begins with onboarding, making sure that employee information is gathered and accurate.
  • Workforce.com’s payroll software takes the stress out of processing pay on your own, handling wage calculations, overtime, deductions, taxes, and more.

If you’re a small business owner or an entrepreneur starting out, you are probably considering doing payroll yourself. And rightfully so – doing this can save you money and give you greater control over your finances.

While this may be true, processing payroll manually presents some considerable challenges, such as keeping track of regulations, taxes, and deadlines. 

So, is doing payroll yourself the best choice for your business? In this post, we’ll explore the process of managing payroll yourself while looking into its complexities and potential pitfalls.

What are the steps for processing payroll?

Processing payroll involves several essential steps, from collecting employee data to calculating wages and managing deductions. Here’s a rundown of what these steps include: 

Apply for tax ID numbers.

You must have an Employer Identification Number (EIN) before you can pay your employees. It’s required to apply for a business bank account, file taxes, and employ people. You might also need to register for different tax IDs if you operate across multiple states. 

Consider setting up an Electronic Federal Tax Payment System (EFTPS), a free tool by the US Department of Treasury to help secure tax payments. The EFTPS allows you to make different types of payments, including estimated taxes, corporate taxes, self-employment taxes, payroll taxes, and excise taxes.  

Gather employee information.

Collect essential employee details, including their name, address, phone number, bank details, date of birth, marital status, social security number, and bank details.

You must also have their W-4 forms or tax withholding documents. W-4 documents show how much taxes you should withhold from your employees’ paychecks. Make sure that a new hire accomplishes this during onboarding. Likewise, any employee whose financial situation changes should update their W-4 as necessary. If you hire freelancers, you must let them complete W-9 forms instead. 

Financial information such as tax IDs, previous payslips, existing insurance coverage, and tax reports is also essential for processing payroll.

Onboarding can be a time-consuming process that’s heavy with paperwork, especially without an organized system in place. Workforce.com’s onboarding system lets new hires log in and input their details, submit forms, and upload necessary documents ahead of their first day. This streamlines the process, ensuring all paperwork is handled upfront and freeing your HR and payroll team from tedious manual data entry.

Set up a payroll schedule or period.

Determine when you will distribute pay to your employees. Typically, you can process payroll weekly, bi-weekly, semi-monthly, or monthly. 

To determine the most suitable pay schedule for your business, factor in the following:

  • Cash flow – The important thing here is to ensure that you have enough cash when payday comes. Determine when you’re most likely to be cash-positive and consider timing your payroll around that time. For instance, timing payroll around the same time you pay for utilities and supplies may not be the best move. 
  • Industry practices – Look at what’s common in your industry. If you employ hourly workers, opting for a biweekly or weekly payment scheme would be best, as they typically prefer more frequent payments than salaried employees. 
  • State laws or payday requirements – Check if there are prevailing state payday requirements about how frequently you need to pay your employees and when to time it.  For instance, Arizona requires that you pay employees two or more days a month as long as they are at most 16 days apart. Meanwhile, in Massachusetts, hourly employees must be paid weekly or biweekly, while salaried employees must be paid at least semi-monthly. The latter can be paid monthly, provided that they agree. These differences and nuances exist around required payday schedules, so factor those in as well.  
  • Payroll processing time – You must also be realistic about how fast you can process payroll. It may not be wise to set up a weekly payment scheme if you’re doing payroll yourself. Factor in the time you need to gather information and calculate wages. 

It’s also important to note that organizations can have multiple pay periods, especially if they employ varied workers. The key to setting the right pay period is to take a look at how your organization operates and what makes the most sense for your employees. 

Workforce.com’s payroll system supports a variety of pay schedules—weekly, fortnightly, semi-monthly, and monthly. You can set up multiple pay periods and assign them to different roles. This ensures that employees get paid on the schedule that works best for them. For you, this means one less payroll task to worry about, because it’s fully automated.

Determine payment method.

Direct deposits are usually the standard form of payment for employers to distribute salaries to their employees. However, even as the standard, some prevailing state laws prohibit employers from making this method mandatory. 

Other ways to pay employees include cash, checks, pay cards, and mobile wallets. Each method has its pros and cons. For instance, checks can be a good option for employees who don’t want to disclose their bank information, but they can be prone to getting lost and are not immediate. While direct deposits may be more commonplace and convenient, employers must factor in how long it takes for funds to reflect in an employee’s account. 

Other considerations include the possible fees that come with each payment method. For instance, pay cards can have setup costs.

As you choose the best payment method for your staff, factor in any prevailing law and what makes the most sense for your employees. Consider providing two options as well. For instance, if an employee can’t be paid through direct deposit because they have no bank account, consider setting up a pay card or issuing paper checks as an alternative.  

It would be best if you also issued pay stubs for your employees. There may be state and local laws that have specific requirements around this. For instance, some states require employers to issue printed pay stubs unless the employees consent to receive electronic ones instead. 

But regardless of whether it’s mandated in your state to issue pay stubs, it’s still best practice to do so. They are essential for transparency. It includes details about what makes up their pay, such as wages, deductions, and taxes. 

Track employee work hours.

Tracking time and attendance is at the core of processing payroll. Record the hours worked by employees, including regular and overtime hours. It also involves monitoring PTO, leave, and holidays.

There are different ways to track employee time, but the goal is to do so accurately. Time and attendance data is vital to calculating wages, and you must get it right from the start. Ensure you have an accurate record of this information to calculate salaries accurately. It’s best practice to have an automated system to capture and export employee time into timesheets. Doing so will help ensure accuracy and avoid time theft. 

Workforce.com’s time and attendance system captures employee clock-ins and clock-outs in real time, automatically generating timesheets. It also sends alerts to both managers and employees if a punch is missed, reducing the need for manual cross-checking during payroll and maintaining the integrity of time records. Plus, employees can clock in directly from their devices with GPS tracking, which is ideal for workers in the field or businesses with multiple locations. 

Calculate gross pay.

Determine the gross pay for each employee by multiplying their hours worked by their hourly rates or by dividing their salary by the pay periods if they’re salaried. 

In order to do any of this, you first need to gather employee timesheets to determine how many hours each employee has worked. This is especially crucial for hourly employees, but you must also look at non-exempt salaried workers’ timesheet records in case they’re entitled to overtime pay.

Aside from their base pay, you must also factor in overtime, PTO, bonuses, and other incentives. Do you offer premium pay rates or shift differentials? Make sure that those are accounted for as well.

Furthermore, if you have employees who receive a significant amount of tips, you’ll need to track that as well and account for all applicable state laws.

Also read: Your guide to tipping laws by state

Note that there are state-based rules for computing overtime. Typically, overtime rates come into play when employees work more than 40 hours a week. However, some states have unique stipulations, like California. Employees who reach the 8-hour threshold in a day are paid 1.5x more per hour of overtime. And if they work over 12 hours, they are paid 2x their regular rate. 

Yes, a lot goes into computing an employee’s gross wages, and clearly, it’s not just about adding up their work hours and corresponding base pay. Here are other relevant and useful guides to help you get started: 

Compute and apply deductions.

After calculating gross wages, you need to factor in applicable deductions. Some of these are involuntary, while others are voluntary. 

Involuntary deductions are mandatory under the law. Employers should subtract these amounts in compliance with applicable laws and remit them to tax agencies and other authorities. Common involuntary deductions include employee withholdings like FICA tax, Medicare tax, social security tax, federal income tax, state and local taxes, and wage garnishments. 

Voluntary payroll deductions are amounts subtracted from an employee’s paycheck by their explicit choice or agreement. These deductions include retirement plans, health insurance, union dues, and other job-related expenses such as parking and travel. Some of these deductions are taken before or after taxes. It pays to double-check whether they are post-tax or pre-tax deductions.

Also read: What are different payroll deductions? Taxes, benefits, and more

Also, consider the necessary paperwork for deductions. There’s the W-4 for taxes and insurance forms for benefits, to name a few. Authorization to deduct is required for voluntary payroll deductions, so ensure your employees accomplish that and update when necessary. In addition, some employees may be exempt from FICA, so you need to consider that, too. 

Free template: Payroll Deduction Authorization Form

Calculate net pay.

The net pay is the amount employees take home after all deductions. Subtract the total deductions from the gross income to find the net pay.

Pay your employees.

Pay your employees according to the set payment method and on the scheduled pay date. Make the necessary transactions and arrangements to ensure your staff receive their pay on time. 

If you’re paying employees through direct deposit, account for how long it will take for the money to reflect in their bank account. Typically, it takes 1 to 3 days, but double-checking is still best.

File and remit taxes accordingly.

After determining federal, state, and local tax withholdings, you must remit these payments to the correct agencies. Depending on the tax type, you may either need to direct the funds immediately or reserve them and make the remittance closer to the payment deadline. 

It’s also important to note that while employer contributions are not part of employee payroll, they are a core part of this process. Some contributions are paid by both employers and employees, such as Social Security and Medicare. Other obligations are solely on the side of employers, such as the Federal Unemployment Tax (FUTA).  

Check with the appropriate agency for more information on handling tax rates and payments. For a complete list of employment taxes and their due dates, visit this full list from the IRS.

Keep payroll records and generate reports.

Create and review payroll reports to ensure accuracy and prepare for external audits. This includes reports for tax filings, financial statements, and employee records.

You must also create reports required by government agencies such as the IRS. Typically, such reports inform the agencies about wages paid to employees, withheld taxes, and employer contributions. Note that these reports may have different deadlines and require specific forms. For instance, Form 941 is used to report an employer’s quarterly federal tax return, while Form 940 is in relation to FUTA.

Furthermore, the FLSA mandates employers to keep payroll-related for three years.

Also read: A guide to accurate and comprehensive payroll reports

You can easily generate payroll reports to get a better understanding of your business and payroll expenses. Workforce.com helps you stay on top of government requirements and also lets you create reports that show how your payroll connects to frontline work and employee performance.

Things to Consider Before Doing Payroll Yourself

If you’re leaning toward doing payroll manually, here are factors you need to carefully weigh before doing so: 

Cost

Doing payroll yourself can save you costs in terms of not having to pay for software or outsourcing payroll. That’s where the appeal comes from, especially if you have a small workforce of 5 to 10 employees. 

However, it’s not just about whether or not to pay for a service, which brings us to the next point. 

Time

Doing payroll yourself requires time – and a lot of it. If you have a growing business, the hours spent processing payroll yourself can sometimes end up costing you more than outsourcing the work.

Consider the opportunity cost of spending a day gathering data, making calculations, cross referencing computations with the latest federal, state, and local laws, staying on top of taxes, and submitting reports. What else could you be doing instead?

All of this work can be incredibly challenging when you have a scaling business. Processing payroll may be manageable for staff with 5 team members, but it can quickly become much more complex when you’re doing it for 50 employees. Not being able to manage your time well can also result in a delayed payroll, which is the last thing you want to happen.

Legal risks

If you or someone on your team is well-versed in tax laws and payroll regulations, doing it in-house might be feasible. However, manually processing pay is risky – errors are inevitable. If you’re doing payroll in a spreadsheet, one wrong entry or a single typo could cause a chain reaction of errors, making you legally liable for inaccurate pay. You can opt to double-check or even triple-check your calculations, but routinely doing so will make payroll take even longer, which, as discussed earlier, can also cost you.

Another risk of manually processing payroll is the potential for employee misclassification. Ensure you understand which staff to classify as independent contractors vs. full-time employees.

Support

When you do payroll yourself and encounter issues, it’s up to you to figure out answers or solutions. This situation can be daunting and complicated. Of course, resources are available, but combing through data sheets and government guidelines can be time-consuming, overwhelming, and prone to misinterpretation.

Operations

If your business is seasonal or operates temporarily, manual payroll might make the most sense since it’s not something you will be doing year-round. But then again, consider the number of employees you have. Choosing a payroll tool might be worth considering if you have a big workforce, even if you won’t be running payroll year-round.

Why Using Payroll Software Makes Sense

Quick answer: automation and accuracy. 

Payroll software helps simplify calculating wages, accounting for labor laws, withholding taxes, bookkeeping, and generating reports. It handles all the vital administrative areas of payroll faster than you would manually do. 

If you run a small business, payroll software helps you stay hands-on with your pay runs, but this time, you can make computations quickly and error-free. Furthermore, if you’re a growing business, payroll software can scale with you and handle the process even as you hire more team members.  

Also read: 14 Best Payroll Software Services in 2025

Features of payroll software to look for

If you’re planning to look at payroll solutions, go for software that has the following functionality: 

Synced with your time tracking system

Much of the payroll process happens even before the part where you calculate wages. This means that the success of your payroll depends on how accurately you record work hours.  

Ideally, your payroll should sync directly with whatever you use to track time and attendance. This way, you can easily process employee time automatically without re-entering or exporting it into payroll.

Automated calculations

Payroll software should be able to automatically compute wages, deductions, and taxes. At the same time, it should account for applicable taxes and labor rules. 

The thing with payroll processing is that every paycheck is different. Your payroll system should account for all these nuances and differences, especially if you employ hourly employees in various locations. 

Go for a payroll system that can handle computations for different employee classifications, pay rates, overtime, tips, deductions, and withholdings.  

Employee self-service

Make payroll information accessible to everyone at your business. Staff should be able to update their personal details and direct deposit information via an online portal or app. This eliminates the need for a middleman; employees handle their own profile changes instead of wasting time asking management.

User-friendliness

While any new software has a learning curve, it is important that you choose one that is intuitive and well-designed. Small businesses don’t have the large departments or specialized expertise required to handle complex legacy systems. Go for an easy-to-use payroll platform that offers quality support—from importing your current data to ensuring that your first pay runs are accurate and smooth. 

Do payroll in minutes with Workforce.com

Workforce.com helps reduce payroll processing time from hours to as little as 20 minutes. It automates adjustments, keeps staff details up to date with self-service features, and sends out incomplete timesheet reminders, taking care of the things that typically slow down and complicate payroll processing.

It can handle tax forms such as W-2s and 1099s, direct deposits, tax filing, wage garnishments, deductions, multiple pay runs, benefits, and payroll reporting. Workforce.com’s payroll software even syncs with other important functions like time tracking, scheduling, hiring, and more.

Discover how Workforce.com can simplify payroll for your small business by booking a demo today. 

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Payroll Challenges by Industry: What California Employers Need to Know

Summary

  • Different sectors in California face unique challenges, from varying pay rates to complex, location-specific labor laws.
  • Industries like hospitality, healthcare, retail, construction, entertainment, and agriculture often struggle to stay compliant while accurately paying staff.
  • A powerful payroll system can help simplify payroll no matter how complex the rules.

California isn’t just known for its beaches and movie sets; it’s also home to some of the most complex labor laws in the country. And those rules can get tricky fast when it comes to payroll. 

But here’s the catch: not every industry is dealing with the same challenges. In California, payroll compliance isn’t one-size-fits-all. Payroll challenges can look different for a restaurant in LA, a construction site in Fresno or a vineyard in Napa. 

So, let’s break it down. Here’s what California businesses in six major industries—hospitality, healthcare, retail, construction, entertainment, and agriculture—need to watch out for when it comes to paying their teams.

Hospitality: Tips, Schedules, and Challenging Payroll Scenarios

Complying with California Tip Laws

California law is clear: all gratuities belong to the employees. That sounds simple, but confusion often arises around who gets the tips, how they should be pooled, and whether tips count toward the regular rate of pay for things like overtime. 

Unlike in other states, California doesn’t allow a tip credit, meaning employers can’t count tips towards meeting the state’s minimum wage. Every nonexempt employee must earn the full minimum wage before tips are factored in.

Workforce.com Solution: Proper tip handling requires a clear, written policy. Setting expectations upfront is vital, whether you allow tip pooling among front-of-house staff or distribution to everyone working a shift. Once your policy is in place, Workforce.com can help manage the rest. The platform integrates directly with your POS system, enabling you to automate tip distribution based on hours worked, roles, or even custom percentages. Tips can be routed through a virtual “tip jar”, ensuring every employee gets their fair share alongside their regular wages.

Also read: Should you Implement Tip Pooling? Pros, Cons, and Best Practices for Restaurants

Managing Predictability Pay

In California, last-minute schedule changes can come at a cost. Cities like Los Angeles enforce Fair Workweek rules that require employers to post schedules at least 14 days in advance. If you cancel a shift, add work hours, change start and end times within that window, you may owe employees additional “predictability pay”. 

Predictability pay counts as regular wages, which means that they are taxed and must be clearly listed on employee pay stubs.

Workforce.com Solution: Demand-based employee scheduling can help you plan ahead and reduce last-minute changes that trigger predictability pay. Workforce.com analyzes key data points like bookings, events, weather, historical sales, and foot traffic to help forecast demand and optimize staffing. 

What if schedule changes happen within the 14-day window? You can set conditions in Workforce.com to automatically calculate predictability pay when certain conditions are triggered. This ensures that premiums are correctly calculated and won’t be overlooked when it’s time to process payroll. 

Healthcare: Minimum Wage Rules and Off-the-Clock Work Risks

Minimum Wage Compliance

Healthcare workers in California are entitled to higher minimum wages, ranging from $18 to $23 per hour, depending on the type of facility. These rates are set to rise in the coming years.

The first challenge with healthcare minimum wages is figuring out which rate applies. Employers need to know whether their organization falls under the covered categories. The Department of Industrial Relations provides a complete list of who qualifies and what rates apply.

However, knowing the applicable rate is just the first step. You also need a system that keeps up with rate increases and ensures that every employee gets paid correctly based on their job and worksite.

Workforce.com Solution: Workforce.com automatically applies the correct minimum wage rate based on each employee’s location and role. You know that your staff is getting paid what the law requires, whether they’re rotating across departments, facilities, or cities.

Preventing Off-the-Clock Work

It’s common in healthcare facilities for employees to start early or stay late to finish tasks. However, when those tasks happen outside of scheduled hours and without proper time logs, employees can be held liable for unpaid wages and penalties.  

What counts as off-the-clock work? Think nurses reviewing charts before clocking in, staff prepping meds after hours, or handoff meetings that happen outside scheduled shifts. These are all job-related tasks for which employees should be compensated.

Workforce.com Solution: It’s all about having an efficient time tracking system. Workforce.com helps by automating clock-ins, generating real-time timesheets, and sending alerts when employees try to clock in or out outside of their scheduled shifts. 

If an employee tries to log in before or after their shift, the system can prompt them to provide a reason, giving managers visibility into potential issues. Aside from preventing unpaid work, it also helps identify whether extra hours qualify as overtime. 

Employee time and attendance information can be turned into reports that help spot recurring patterns and address off-the-clock trends to avoid non-compliance.

Retail: Local Wage Rates, Predictive Scheduling, and Seasonal Staff Challenges

Managing Varying Minimum Wage Rates

Retail business owners in California can face challenges with varying minimum wage rates across cities and counties. If you’re operating stores in both Los Angeles and San Francisco, for example, you’re looking at two different minimum wage rates: $17.28 in LA and $18.67 in San Francisco. Keeping up with local wage ordinances and applying them correctly can make payroll complicated. 

Workforce.com Solution: Workforce.com’s payroll solution automatically calculates pay based on the location listed in each shift and clock-in record. Because payroll, scheduling, and timekeeping are all connected in one ecosystem, there’s no cross-checking required between spreadsheets or separate platforms.

Dealing with Predictive Scheduling Laws

Retailers in California may be under specific predictive scheduling laws, such as the Formula Retail Employee Rights Ordinance in San Francisco. These laws generally require you to post work schedules at least 14 days in advance, and any last-minute changes can mean extra pay for affected employees. That’s great for workers and improving retention, but tough on payroll if you’re constantly shuffling schedules to keep up with fluctuating demand. 

Workforce.com Solution: While last-minute changes are sometimes unavoidable, demand-based scheduling can help minimize them. Workforce.com uses labor forecasting to build more efficient schedules ahead of time. It factors in data like historical sales trends, local events, weather, and customer traffic patterns, helping managers align staffing with actual demand. This means fewer last-minute changes, fewer penalties, and better compliance. And honestly, even if you’re not legally required to, giving employees their schedules early is just good business practice.

Hiring and Paying Part-Time and Seasonal Staff

Retail relies heavily on seasonal and part-time employees, especially during holidays or promotional events. But quick hiring can often lead to messy paperwork, incorrect classifications, and payroll errors. In the rush to fill part-time and seasonal roles, it’s all too easy for key details to fall through the cracks when you’re onboarding at scale. 

Workforce.com Solution: Workforce.com streamlines onboarding with a paperless process that feeds directly into scheduling, time tracking, and payroll. New hires enter their information directly into the system, eliminating manual data entry errors and ensuring every employee is classified correctly from day one. It allows you to hire faster and focus more on training new hires so they can get up and running instead of being buried in onboarding paperwork.

Construction: Job Sites, Overtime Pay, and Workers’ Comp Risk

Multiple job sites

Construction projects rarely happen in just one place. Tracking hours can become complex when you have crews moving between job sites and working varying schedules. It becomes even more problematic when you rely on manual methods or outdated systems. Without accurate time data, you’re more at risk for wage disputes, payroll errors, and staffing gaps. 

Workforce.com Solution: Workforce.com’s mobile time clock uses geofencing to ensure employees clock in at their assigned job site. It’s a simple way to guarantee that time logs are accurate and tied to the right location. This also allows you to monitor which sites are properly staffed and which ones need more support. 

Workers’ Comp and Classification

In California, construction businesses are legally mandated to provide workers’ compensation insurance. While workers’ comp premiums aren’t technically a payroll deduction, complying with this legal requirement depends heavily on accurate employee classification and payroll records.

Getting the classification right is crucial because different tasks come with varying levels of risk. Premiums are calculated based on the work being done. If you misclassify a worker or fail to track task-specific job codes, you could end up paying too much or facing a compliance issue.

Workforce.com Solution: Workforce.com allows you to assign employee classifications, which can include job codes tied to specific tasks or roles. These classifications are then connected to time tracking and scheduling, so when employees clock in or are scheduled for a shift, their job code and classification are automatically reflected in your records. That way, your payroll data stays accurate, and your workers’ comp reporting aligns with the actual work being done.

Keeping Up with Overtime Rules

Overtime is a given in the construction sector. However, overtime rules in California can add another layer of complexity. Beyond the standard 40-hour workweek, employees are also eligible for overtime after 8 hours a day and double time after 12 hours. 

Workforce.com Solution: Workforce.com payroll software handles California’s overtime rules automatically. Whether it’s time-and-a-half after a full 8-hour shift or double time after working 12 hours, the system applies the correct rates once the appropriate conditions are met. 

Agriculture: Break Tracking, Worker Classification, and Piece-Rate Pay

Tracking meal and break times

California state law entitles workers to a paid 10-minute rest break for every 4 hours of work and an unpaid meal break of at least 30 minutes if they work more than 5 hours. It sounds easy on paper, but enforcing these rules on the field can be more challenging with fast-paced work spread across large areas. 

Workforce.com Solution: Workforce.com’s time tracking system helps ensure that your team doesn’t miss legally mandated breaks. It sends break reminders to employees, flags missed or late breaks, and alerts managers when someone’s about to skip one. Every break taken or missed is automatically logged in the system, so you’ve got a clear paper trail come payday or audit time.

Avoiding Employee Misclassification

Misclassifying workers as independent contractors, whether by mistake or misunderstanding, can lead to legal risks. When that happens, workers miss out on wages and protections they’re entitled to, and employers can face penalties. 

To guide employers, California has provided the ABC test to help determine whether a worker should be classified as an independent contractor or not. Unless a worker operates independently, outside the core of your business, and without your control, odds are they need to be classified as an employee.

Workforce.com Solution: Classification starts during onboarding with Workforce.com. Employers can set each new hire’s status right from the beginning, helping avoid errors and payroll discrepancies later.

Managing Piece-Rate Pay

In agriculture, paying by the piece, say, per basket of fruit picked, is common. However, California has strict rules to protect piece-rate workers. You can’t just pay per unit harvested and call it a day. Workers still need to be paid for rest breaks, and their total earnings must meet or exceed the minimum wage. They’re also entitled to overtime and detailed, itemized pay stubs.

Workforce.com Solution: Workforce.com’s time and attendance tools help track every hour worked and every break taken, even for piece-rate workers. If someone’s earnings fall below the hourly minimum wage, the system automatically flags and adjusts it. It also generates detailed pay stubs showing piece rates, break compensation, overtime, and other key wage information. 

Entertainment: High Turnover, Multiple Roles and Rates, Local Labor Laws

Quick Onboarding for Seasonal Work and Rotating Crews

The entertainment industry, whether it’s theme parks, theaters, concert venues, or live events, relies heavily on seasonal staff and rotating crews. That means onboarding needs to be fast and accurate. But rushing this process often leads to errors in tax forms, missing I-9s, or incorrect employee data, all of which can cause payroll issues later.

Workforce.com Solution: Workforce.com makes onboarding fast and paperless. New hires input their own information, upload documents, and complete required forms like the I-9 and W-4 in one secure system. Everything flows automatically into payroll and scheduling.

Managing Multiple Job Roles and Pay Rates

It’s common for entertainment workers to wear multiple hats. One can be an usher one day and a merchandising attendant the next. Often, these roles come with different pay rates. Manually tracking these role changes across shifts is prone to error and slows down payroll processing.

Workforce.com Solution: With Workforce.com, you can assign pay rates by role and location. When managers build schedules, they select the job the employee is working on. Workforce.com then carries that rate through time tracking and straight into payroll. This ensures every shift is accurately paid based on the actual job performed.

Location-specific labor laws

Location-specific labor laws affect entertainment businesses operating in particular localities in California. One such law is the San Francisco Health Care Security Ordinance (HCSO). 

This law requires certain employers to make health care expenditures for employees who:

  • Work at least 8 hours in San Francisco per week
  • Have been employed for more than 90 calendar days
  • Work for a business with 20 or more employees (50 or more for non-profits)

This can cover entertainment employees who meet the criteria, such as ballpark concession workers, ushers, security, janitors, and ticket agents at locations like Oracle Park or Chase Center.

Workforce.com Solution: Much of the eligibility for the San Francisco HCSO is based on hours worked and employment duration, which are all key information that Workforce.com stores and tracks. With everything centralized, employers know exactly who qualifies, how much to remit, and when. Plus, by tracking benefits obligations in real time, you can manage labor costs more effectively while staying compliant.

Much of payroll happens even before you export that timesheet. From onboarding and scheduling to clock-ins and break tracking, every step affects how accurate and compliant your payroll will be.

Workforce.com ties all those steps together in one system. Because time tracking, scheduling, and employee data flow seamlessly into payroll, you get built-in wage and hour automation that reduces errors and keeps you compliant, whether you’re navigating complex labor laws in California or operating in a more relaxed regulatory environment.

Discover how Workforce.com simplifies payroll. Get a demo today.

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Why Payroll Deductions are Harder Than They Look (Especially for Hourly Teams)

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.

Payroll deduction may seem like a basic, straightforward task: calculate gross wages, withhold required amounts, and issue the paycheck. But for hourly workers, this can get complicated fast.

Hourly teams often have variable schedules, which means inconsistent hours and irregular pay. Plus, turnover tends to be higher for this type of worker, so business owners often onboard and offboard staff, which can also be an area of risk. When you add that to wage garnishment orders and state-based rules, it can quickly result in compliance issues, frustrated employees, and fines. 

Let’s take a look at why deductions are trickier for hourly workforces—and what employers can do to avoid common pitfalls.

Why payroll deductions are more complicated for hourly employees

If your business relies on hourly workers, here are several factors that make payroll deductions more challenging:

Variable schedules 

Hourly workers don’t have fixed salaries and hours, and therefore, their gross pay can swing dramatically from week to week. This creates challenges for applying deductions, especially when they’re fixed amounts like insurance premiums or wage garnishments. 

Here’s an example: In a biweekly pay period, an employee works 25 hours total at $15 hourly wage, earning just $375 gross. While FICA taxes are percentage-based (7.65% of gross pay), if this employee also has a court-ordered garnishment of $75 or voluntary deductions like health insurance premiums at $100, their remaining net pay might fall below minimum wage thresholds after all deductions are applied. In this case, employers would need to reduce, prorate, or defer some deductions. 

Note that aside from pay deductions, you also need to watch out for any predictive scheduling laws that may apply to you. Under Fair Workweek laws, you are mandated to create more predictable schedules for employees.

Also read: Predictive Scheduling Laws Explained: A Guide for Employers

Multi-location operations

Each state, city, or county, may have its own rules for income tax withholding, minimum wage, and even pay frequency. And if you’re operating in multiple cities and states, it can lead to challenges with compliance and applying correct deductions. 

For instance, a worker in California is subject to state income tax and State Disability Insurance (SDI) deductions, while an employee in Texas isn’t. If your system doesn’t account for location specific rules, you can easily over- or under-withheld taxes from employees, leading to compliance issues. 

And it becomes even more trickier especially when you have employees working in multiple jurisdictions at a time. So for instance, you have neighboring stores in Emeryville and Oakland in California, and you have a worker who worked in both locations in one pay cycle. You need to properly calculate their wages not just on the number of hours, but also on where those hours are worked. Make sure your system supports different hourly rates, especially when employees work across roles or locations.

High turnover rates

Turnover rates are typically higher for industries that employ hourly teams, which can introduce several challenges for payroll and deductions. Because onboarding and offboarding are more frequent, employers may forget to prorate certain deductions, miscalculate withholdings for departing employees, misclassify employee status, and increase the administrative burden on payroll teams when processing these deductions.

Best practices for payroll processing and deductions

Automate payroll, but…

Not all payroll systems are built for hourly teams. You need one that accounts for the nuances of hourly operations. 

Like many things in HR, payroll deductions are not a set-it-and-forget-it kind of thing. They can change depending on several factors, and you need a system that can automate even the way you deal with different nuances that affect payroll computations and deductions.Here’s what to look for in a payroll service provider or software:

  • Centralized system – Keep everything connected, from onboarding, to scheduling, to payroll. Much of payroll happens way before you process time and attendance. It begins as early as employee onboarding. For instance, collecting a new hire’s Form W-4 is essential, as it determines how much federal income tax to withhold from their pay. If this form is missing or outdated, it can throw off your deductions and lead to compliance issues.

    A system that keeps information in sync across time and attendance, payroll, and employee scheduling ensures accurate pay calculations and correct employee classifications without switching between modules and multiple data entries.
  • Labor compliance engine – Your system should automatically apply federal, state, and local labor rules to stay compliant every pay run.
  • Time and attendance integration. Manual timesheets slow down payroll processing and increase the risk of inaccurate computations, including deductions. Avoid manual errors. Use digital time tracking to feed clean data directly into payroll. A system that simplifies tracking employee time, supports varying hourly rates, and generates timesheets is the way to go.
  • Secure recordkeeping. Documentation is vital for payroll. The Department of Labor and IRS have retention requirements that organizations must adhere to. Payroll records must be stored and accessible for audits or employee requests without digging through spreadsheets.

Payroll calculations and deductions would be significantly more straightforward when you have the right system. Workforce.com handles all of this automatically. From employee classifications, pay rate calculations, and deduction rules to recordkeeping requirements, it ensures everything’s accounted for and compliant.

Know the deductions you’re working with

Even with a solid payroll system, your managers still need a working knowledge of wage rules and deduction types. This helps ensure everything runs as it should and gives your team the confidence to spot errors or answer employee questions on the fly. 

Payroll deductions fall into two main categories—mandatory and voluntary. Here’s a quick overview of what your team should be familiar with. 

Mandatory deductions

As the name suggests, these are amounts that employees must pay, and employers must deduct from their staff’s wages. Statutory deductions take up a considerable portion of mandatory deductions, and these are amounts to meet tax obligations and fund essential public services like Social Security, Medicare and state programs. Here’s a list of statutory deductions that are mandated by law: 

  • FICA (Federal Insurance Contributions Act) – for Social Security and Medicare tax
  • Federal income tax
  • State and local taxes

Wage garnishment is another form of mandatory deductions. It is based on a court order mandating employers to withhold a portion of an employee’s pay for financial obligations or debts, such as child support, student loan payments, tax debts, and personal debts. 

Voluntary deductions

Voluntary deductions are optional and can enhance employee benefits. Retirement plan contributions, health insurance benefits, union dues, and charitable donations are examples of voluntary deductions. Before employers can withhold amounts under this category from an employee’s paycheck, they must secure written authorization. 

It’s also important to distinguish between pre-tax and post-tax deductions. Common examples of pre-tax deductions include HSA contributions, health insurance premiums, and 401(k) contributions. Pre-tax deductions can also lower an employer’s liability for the Federal Unemployment Tax Act (FUTA), which funds unemployment benefits for workers who have lost their jobs.

Meanwhile, Roth IRA contributions or union dues, are taken out after taxes have been applied. Understanding the order and type of deduction is key to accurate payroll and compliance.

For a more in-depth look at the different types of payroll deductions and how they are calculated, read this guide.

Having a good grasp of how payroll deductions work will also help you manage unusual and tricky scenarios better, such as:

  • What happens when an employee works a shift in a different city? How does that affect taxes or local withholding? 
  • What if a new garnishment order comes halfway through a pay cycle? 
  • What if a deduction pushes net pay below the minimum wage threshold? 

An automated system can handle these situations, but it’s just as important for managers to understand the “why” behind the numbers. That way, they can explain deductions to staff clearly, catch potential system errors, and ensure nothing slips through the cracks.

Download: Free Payroll Deduction Authorization Form

Watch for changes that affect deductions

Did an employee receive a raise? Change their benefits? Update their tax withholding? Went from part-time to full-time?

Any change to salary, benefits, or classification should prompt a quick audit to ensure payroll deductions stay accurate. But don’t forget about tax forms, either. If an employee submits a new W-4 form to update their filing status or withholding preferences, it should be reflected in your payroll system immediately.

Failing to update these changes can lead to incorrect deductions, under- or over-withholding, or even compliance issues. A centralized system that syncs employee data across payroll, time tracking, and HR makes it easier to catch and act on these updates before they cause problems.

Keep pay stubs clear and accessibleEmployees should always be able to see how their pay is calculated, from gross income to deductions to final take-home pay. Clear, transparent pay stubs build trust and cut down on confusion. Your payroll system should generate and distribute them automatically, without extra admin work. It would be even better if employees could access their pay stubs anytime, from any device, without needing to chase down HR for answers.

The smarter way to manage payroll deductions

Payroll deductions are never as simple as they look, especially for hourly teams. But with the right system and tools, they can be one less thing to worry about every pay run. 

The key here is to automate and use tools that will allow you to calculate gross wages, factor in deductions, account for unique situations and nuances, and stay compliant at every step. That’s where Workforce.com can help you. 

Workforce.com is built for hourly operations. It calculates gross wages, applies accurate deductions, handles different pay rates, accounts for federal and state rules, and keeps records audit-ready. From onboarding, tracking work hours, assigning shifts, managing PTOs, and running payroll, the system keeps everything connected and compliant. 

From onboarding, employee classifications, assigning shifts, tracking work hours, managing PTOs, handling different pay rates, and complying with state and federal rules to calculating payroll, the system can automate it, save you time, and significantly reduce the risk of errors.  

Ready to simplify your payroll? Book a demo to see how Workforce.com helps hourly teams stay on top of payroll, HR, and workforce management.

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Passion for getting it right: Spyder Surf’s secret to workforce success

Spyder Surf, scheduling,

“I fell into the role. I had no idea that I was going to end up in retail for the last 20, almost 30 years now,” said competitive surfer and Spyder Surf managing partner Dickie O’Reilly.

Founded by Dennis Jarvis in 1983, Spyder Surf has been a Los Angeles area mainstay ever since. And it has had no problem keeping up with the trends either, releasing new board models to fit all kinds of needs. O’Reilly has been with the brand from the start, seeing it grow from one small retail space to two Los Angeles locations.

Spyder Surf’s flagship store on Pacific Coast Highway used to be an 850-square-foot space. Today it boasts 7,000-square-feet of signature surfboards, wetsuits and other surfing gear. Likewise, Spyder II in Hermosa Beach has been showcasing their products to millions of surfers since 1997. Maintaining a strong presence in this competitive industry can be quite a challenge. Spyder Surf’s secret? O’Reilly and his team know exactly what they’re doing.

Creating a brand, shaping a culture

Spyder Surf’s story began where all good stories do: the passion for getting it right. Jarvis began competitively surfing in the mid-1970s. As a professional surfer, he quickly learned that his equipment could be better.

Also read: Building a safety policy was vital to Shawmut Design and Construction’s health

He grew up practicing art, so he decided to make the equipment himself. Soon after, he began shaping boards for some of his best contemporaries. “I was shaping boards for competing surfers, and I was surfing against them. We were all friends,” Jarvis said in a 2015 interview.

Jarvis was more than a pioneer though; he was also O’Reilly’s mentor.

“Competing as a surfer myself and dabbling in a little bit of the Pro Junior contests, he was my sponsor and he was making me surfboards. And then you have me working at the store. I worked there through high school,” O’Reilly said. After he graduated from college, an opportunity opened up for him to manage the store. He has been growing the business ever since. “He’s a creative genius and [an] amazing craftsman. A bit of a mentor for me for sure.”

Innovating for Spyder Surf’s workforce

When O’Reilly is not out on the beach, he’s thinking of ways to operate more efficiently. As managing partner, among his duties are monitoring attendance and processing payroll.

But when the administrative work cost too much time and energy, Spyder Surf turned to Workforce.com.

“You know, the fact that you uploaded all of our employee data saved me a ton of time there,” O’Reilly said when asked about his experience. “What was a half a day for me starting out payroll is now an hour at most, and the Workforce.com side of it is about 15 minutes. So that alone frees up my time to do the other stuff that’s more important,” he added.

Workforce.com’s Employee Time Clock App is installed on Spyder Surf’s tablets, which allows them to monitor their stores.

“Love being able to log in from anywhere and see who’s there — exactly when they got there, when they came, when they left, when they took their break or didn’t take their break at the right time. I’ve never seen it before,” he said.

And because it also generates timesheets that can be exported to an existing payroll partner, they are able to pay employees accurately and on time, at a fraction of the effort.

Also read: Payroll challenges eased by software solutions

Riding the waves into bigger things

Spyder Surf is showing no signs of slowing down. The brand continues to evolve, from their product lines to the way they run their stores. O’Reilly looks forward to using more of Workforce.com’s features. “I’m excited about seeing the lifetime salaries and comparing it with our sales,” he said.

Moving forward, O’Reilly’s team is balancing growth with keeping their tight-knit work culture alive.

“We would love to keep growing, but we’ve got a small core group of really good people that have been with us for a long time too. It’s a family,” he said. If their progress so far is anything to go by, Spyder Surf is riding the waves into bigger things.

O’Reilly is keeping a level head, though. “We do it slow and we’re going to continue to do it slow and make sure we do it right.”