So you’ve been studying the payroll service provider space and are leaning toward an online payroll service.  Well, congratulations! As I blogged about recently, I truly believe that for most SMB companies, Internet payroll solutions prove a better choice than either in-house application software or a traditional payroll processing service.

But now comes the hard part, because the criteria becomes finer-grained from here on.  In the remainder of this posting, I've assembled a checklist of items you can use to compare the offerings of the various providers you’re considering.  Not that there are “right or wrong” answers;  the point is to use the following criteria to pick the solution that represents the best fit to your situation:

• Design center.  Some services are tailored for companies under five employees, so they may be too slow or cumbersome to handle companies of your size and complexity. 
• History/legacy.  Some providers are traditional payroll processing service companies in disguise, having grafted a Web-ish front end onto a legacy batch application.  Their software isn't truly Web-based:  you have to install something on your desktop, you have to synchronize with a central server, payroll isn't calculated immediately for you to review.
• Flexibility.  How much can you control on your own?  Can you easily add new pay codes, departments, deduction codes, etc.?  Is the report writer real-time and easy to use?  Do you have the option of printing your checks locally?
• Full cost.  How will you be charged? ...per payroll run, or by the month?  Are there extra charges for such things as delivery, reporting, tax reporting, hiring/terminating employees, year-end processing (W-2s), direct deposits, etc.?
• Support.  Is it separately charged?  Is it provided by phone, as well as Web/email?  How do current clients rate the payroll service provider’s responsiveness?
• Application ownership.  Does this provider own the software that powers its service, or do they simply front-end another vendor’s software?  If the latter, you can probably expect significant wait times for enhancements and/or problem resolution.
• Breadth.  Do they provide for related HR functions such as HR newsletters, tracking of employee training and certifications, company property accountability and employee performance reviews?
• Expertise.  Can this vendor provide expert consulting services on HR issues beyond payroll, such as EEO and general labor law, training and development, hiring and promotion?

The right online payroll service can certainly be a boon to your productivity and your business.  Just make sure the one you chose is right for you.

Underage workers – typically high-school kids working after-school, evening or weekend hours – can be a real boon to your business;  they can be just the thing to fill in those little gaps or help out in overload situations, without having to add full-time/permanent staff with all their attendant overhead.

The only caution is that underage workers are a uniquely protected species, guarded by a sizable body of Federal and state law.  So right up there with on-the-job training and assigning a mentor should be reviewing the child labor laws.  And as those of us following the “Jon & Kate + 8” saga are discovering, they even apply to employees who happen to be your children.

For starters, there are child labor provisions in the Federal  Fair Labor Standards Act (FLSA), which applies broadly (with certain exemptions) to most businesses with annual revenue of $500,000 or more.  The Act establishes minimum wage, overtime pay, record-keeping and other rules affecting full- and part-time workers in the private sector.  The rules vary depending upon the age of the young worker and the specific occupation involved.  The Labor Department has kindly provided an online “Advisor” to guide you through the FLSA thicket, and even a self-assessment tool which you can use to gauge your level of compliance.

As if this weren’t enough, the Occupational Safety and Health Administration (OSHA) gets into the act as well.  OSHA prescribes and enforces general workplace safety rules for a broad spectrum of US companies, and some of these are specially tailored to protect younger workers.

In view of the variability across states, it would be unwise to generalize here at a detailed level;  however, you may expect the child labor laws to affect such things as...

• permissible types of employment:  e.g., bars, liquor stores and overly hazardous jobs (among others) may be off limits
• maximum number of hours that may be worked (per day and week)
• minimum mandatory rest periods after consecutive hours worked
• specific times of day that may be worked
• minimum wages
• work permit requirements

Do your homework.

What you’ll need to do is either study up on the laws that apply to your work location(s), or seek counsel from a labor-law attorney.  Supporting the self-study approach are a couple of very useful government websites:

www.osha.gov/smallbusiness is a good resource on OSHA’s rules, and includes an excellent list of Frequently Asked Questions (FAQ)

www.youthrules.dol.gov from the Labor Department, providing almost everything you need to know about both federal and state rules

What you definitely don’t want to do is to take the ostrich approach and risk getting caught by a state or Federal audit, whether random or triggered by a concerned parent of one of your teen workers.  The cost to your business may be considerable;  and so will be the chagrin of living with the realization that it was a readily preventable cost.

No one likes managing through a downturn (although it usually beats unemployment or Chapter 11):  there will be unpleasant but necessary policies to implement;  there will be brutal-feeling decisions to make;  there will possibly be people that you like and respect who must be shown the door ... very likely with you or your staff involved in the showing.

If there’s a silver lining, it is that by doing this often unpleasant job well, you can literally create competitive advantage for your company that will help it gain ground as the economy recovers.

So what do I mean by doing the job right?  Well, here are six elements to consider:

• Purge marginal employees.  Let’s be honest:  every company has some.  In good economic times, they hold on by doing just enough to get by (think Wally in the “Dilbert” comic strip).  In tough times, the company just can’t afford them, and they demoralize other employees who are working even harder than usual to help the company get through the downturn.

• Recruit some top performers.  They may become available due to downsizing by your competitors, or may simply be nervous about their current employer’s stability.  Very likely you can get them for less than would be the case in more normal times.  But they may well be worth acquiring even without a recession discount;  because these are people who will help your firm really take off, once the recession is over.

• Insulate against losing your top talent.  Create vehicles to publicly recognize outstanding performance;  be sure that your top talent realizes that they’re appreciated.  Stay on top of employee reviews:  make sure they get done on time, and that the process properly classifies employees by performance level and sends unambiguous messages to at least the top and bottom categories.  Make sure that job descriptions are documented and accurately reflect each employee’s actual job content.

• Over-communicate with the employee population.  Be mindful that they will be nervous in difficult times, and that negative rumors typically fill an information vacuum;  it’s a situation that can foster attrition among your top people, since they’re the most mobile.  Also, ensure that communication is two-way:  mine your employees’ input for new ideas about operational savings and potential new markets or products.  It’s certainly another way to help make those employees feel valued;  and you may actually get some good ideas, even if they can’t all be acted upon in the current climate.

• Lose unprofitable clients.  Not all clients are equally valuable:  a very few of them cost you employee time (not offset by sufficient revenue) that could be better used servicing your “good” clients.  Subtly aiding those few to drift on over to a competitor can be a triple win:  you handicap that competitor (since such clients aren’t likely to change their ways), reduce your costs without having to cut headcount, and potentially increase revenue and profitability!

• Be mindful of litigation.  People become more litigious in downturns, in part because they are times of perceived scarcity.  You need to be prepared with “bulletproof” processes that cover voluntary departures as well as downsizing programs (if planned).  Stay on top of all new HR-related regulations, from wage and hour to COBRA and EEOC.  The last thing you need is a dearly departed employee harming the company by exploiting its trade secrets, recruiting its top talent, or launching a frivolous lawsuit.

 
In sum:  even though it’s difficult and at times unpleasant, managing HR right during an economic downturn can help your company outstrip the competition once the recovery begins, in part as a result of actions such as those just recommended.  If you would value guidance on the subject tailored to your specific business situation, companies such as MyPayrollHR offer clients expert advice at no extra charge.

When I talk to potential customers, at some point in the conversation I will be asked to answer the question “What’s in it for us?” ... or, more formally, characterize the benefits of an online payroll service to the inquirer.

I've actually found that the best answers to this question come from our own customers.  So here are some of the most frequent answers I've heard over the years;  you might call it a “Top Nine” list of the benefits of an internet payroll solution ...

1. I get to do things when I want, through a user-friendly payroll dashboard;  I don't have to conform to someone else's schedule or batch of rigid forms.
2. I can access my information (and therefore pay my people) anywhere there is an Internet connection.  The world doesn’t have to come to an end just because I’m on vacation or away on a business trip.
3. Because the system is truly online, I can preview my entire payroll before I actually run it.  This goes a long way toward eliminating embarrassing (and costly) errors.
4. I’ve set up our account so that our employees can access their own information (to the extent I’ve authorized).  Now I’m no longer indispensable to getting the answer to every routine question that comes up.
5. I control our firm’s payroll/HR information.  If a mistake occurs, there’s no need to search around for who’s responsible;  I can just focus on getting it fixed.
6. I can print my own checks locally, saving the cost of overnight shipping and the possibility of delay.
7. Knowing that the system is totally secure and frequently backed up gives me tremendous peace of mind, especially since I didn’t have to hire a whole IT department to achieve this.
8. According to our pre-purchase analysis, this approach was more cost-effective than either a traditional “black box” payroll service provider or acquiring application software and the expensive IT people to manage it.
9. It’s allowed us to “go green” by greatly reducing our reliance on paper.

A lot of growing companies are rethinking payroll performance, especially in consideration of today's economic environment. When you consider the control and convenience you gain with an online payroll service with built-in HR support, it's definitely worth looking into. If you’re thinking of doing your own comparison, you might want to check out the side-by-side comparison on our website.