Paychex HR and Payroll Services in Massachusetts

If you hire employees, you want their employment to be a positive experience. However, an applicant, or current or former employee may take legal action against your company that could put the company at risk. To help mitigate your exposure from costly claims, employment practices liability insurance can offer some protection. Learn more about EPL insurance, how it compares to other common types of business insurance policies, costs associated with such a policy, and how EPLI can help protect your business.

What Is EPLI?

Employment practices liability insurance, commonly referred to as EPLI or EPL insurance, is a type of business insurance policy that helps cover company losses associated with certain employment claims alleging violations of the rights of an employee or applicant for employment. If a job applicant, or current or former employee takes legal action against your business, EPLI may help cover defense costs and damages, regardless of the outcome of the action. Learn more about what may be covered under EPLI policies.

EPLI may be purchased as a standalone business policy. It's also common to bundle this coverage as part of a business owner's policy or general liability policy.

What Is the Difference Between EPLI and Workers' Compensation Insurance?

EPLI and workers' compensation insurance are separate types of coverage. EPLI helps protect the company against certain employment-related claims including wrongful employment practices. Although there is no legal requirement to carry this coverage, it may be a good business decision for any company hiring employees. Workers' compensation insurance policies, on the other hand, cover medical expenses and lost wages for employees who experience a work-related injury or illness. Workers' compensation insurance is mandatory for most employers in most states.

Is EPLI the Same As Errors and Omissions Coverage?

No, EPLI and Errors and Omissions (E&O) insurance are distinct coverages. Generally, EPLI provides protection from certain employment-related claims, while E&O covers liabilities stemming from customer or client claims. For example, errors and omissions would help cover court costs and settlements if a customer were to file a lawsuit alleging negligent actions in your professional services. A common claim errors and omissions might cover is a suit for breach of contract. E&O policies often cover the business owner and employees.

What Is the Difference Between EPLI and Directors and Officers (D&O) coverage?

D&O coverage is a form of professional liability insurance that protects the personal assets of company executives, officers, and board members in the event they are sued for alleged wrongful acts in managing a company. It can provide coverage for employment issues (but only for covered individuals, i.e., directors and officers) and can also cover things like breaches of fiduciary duty. Additionally, any business with a board of directors, including small companies, can have a D&O insurance policy. While EPLI can also be beneficial for businesses of any size, the policy’s aim is to protect the company from allegations from applicants and current or former employees. Whereas D&O insurance provides liability protection for claims brought by people outside of a company, such as dissatisfied clients or investors.

EPLI Claims Examples

Employment-related claims can result in significant negative impacts to a business's bottom line, reputation, and productivity. Common EPLI claims may include:

• Wrongful termination: While many employees are employed at-will (meaning that the employee or employer can terminate the employment relationship for any reason or no reason at any time except where prohibited by state law or public policy), employees may claim that they were wrongfully terminated.
• Charges of workplace harassment: An alleged harasser can be the victim's supervisor, a supervisor in another area, a co-worker, a subcontractor, or someone outside the company, such as a delivery person or vendor. Harassment victims may include any individuals affected by the offensive conduct, not just the person targeted by the harasser.

Who Needs Employment Practices Liability Insurance Coverage?

With the number of employment-related claims filed with the EEOC, given the steep costs associated with employment related claims, nearly any business with a workforce can benefit from EPLI coverage and mitigate their financial exposure. While no industry is immune from employment-related risk, a few examples of industries that could particularly benefit from EPLI coverage include:

• Retail, an industry known for high turnover rates, may be susceptible to claims alleging age discrimination, harassment, or wrongful termination.
• Hospitality, which could experience claims of harassment.
• Professional services, in which businesses may have to handle claims around issues such as harassment, gender and age discrimination, failure to promote, and wrongful termination.
• Manufacturing and construction, where ebbs and flows in the amount of work a business has can lead to layoffs which increases the chances that employees will claim they were wrongfully terminated.
• Healthcare, where employees may allege experiencing harassment.

How Much Does EPLI Cost?

The cost of EPLI insurance policies will vary, and depend on your industry, employee count, the jurisdiction where you operate, whether your business has any history of similar employment-related litigation, and if you have established and consistently enforced employment policies, often documented in an employee handbook, in place. Often, an EPLI policy covers legal defense fees and settlement costs or damages (up to your policy's limit), whether you win, settle, or lose a case.

EPL Insurance Can Help Protect Your Business

Employment practice claims have become one of the fastest-growing sources of litigation. Make sure your business is prepared to mitigate the cost of these claims with protection through employment practices liability insurance. You may also want to learn more about how you can manage overall risk with our comprehensive guide on business insurance basics.

A compensation plan includes a company’s set of guidelines for delivering employees’ base pay, bonuses, and equity. A well-designed plan may also provide strategy for future company goals around employee compensation.

Having a compensation plan is a major component of your business. An employee's compensation and benefit options may significantly affect the quality of your workforce and your company's ability to attract and retain talent. A comprehensive compensation plan not only sets the value of what you’re paying, but also defines roles, levels, and outlines how performance will be evaluated.

Your business compensation costs, however, are more than simply an expense.

A compensation plan can play an important role in an organization’s overall budgeting and planning process. It can assist an organization in setting their budgets for employment-related expenses. Employers may also use a compensation plan to document benefits for employees to qualify for federal or state tax incentives. A documented compensation plan can establish guidelines and assist in complying with state and local pay transparency laws.

Compensation plans should comply with applicable state, federal, and local laws while striving to achieve internal fairness among similarly situated employees. It is important to note that where a state or local law provides a higher protection or benefit to the employee than exists under federal law, employers usually must comply with the more generous state or local statute. It’s always a great idea to have the compensation plan reviewed by an HR professional or outside counsel to help ensure competitiveness and compliance.

The Importance of a Compensation Strategy and Its Benefits

Generally, a compensation strategy includes the goal of attracting, motivating, and retaining top talent for the organization.

A compensation strategy should align with the company's values and objectives along with an explanation of how the plan will be implemented. The strategy should support the company's overall mission, vision, corporate culture, and strategy.

In developing a compensation strategy, the organization should determine whether they will set compensation at, above, or below market values and the degree to which employee benefits should complement the compensation package.

A company should also be aware of external factors (comparison of your pay practices within an industry), pay transparency laws, and internal factors (how you pay your existing employees versus each other and as compared to new employees).

Having a comprehensive and documented compensation strategy helps when an organization is looking to hire and retain talent. With a solid strategy in place, an employer can:

• Set pay ranges that can be used to assist in planning and budgeting
• Show employees how their compensation is tied to company values and the strategic plan for success
• Guide compensation decisions for newly created positions within the company
• Implement a methodology that helps to ensure that employees with similar knowledge, experience, and job duties are paid in a fair and consistent manner

When based on a solid strategy, a compensation plan can provide the following benefits to employers:

• Helps the company attract and retain talent
• Improves job engagement and job satisfaction for existing employees
• Sets parameters around compensation spending and provides a resource employers can use to evaluate their compensation practices against the industry standards
• Assists with compliance with pay transparency laws

What Is an Employee Total Compensation Package?

An employee's total compensation summary can be described as an employee’s direct compensation plus the benefits and incentives your organization offers. An employee total compensation package stretches beyond an employee’s rate of pay and often includes things such as benefits, bonuses, stock options, and non-monetary perks.

What's Included in a Total Employee Compensation Package?

When negotiating compensation with an employee or prospective employee, they may ask for certain items, such as a retirement savings plan, or a performance-based bonus, depending on what is most important to them.

A Total Employee Compensation Package will generally detail how the employer intends to pay the employee for their services (e.g., per-hour, weekly salary, etc.). If the employee is eligible for commissions or bonus programs, they should also be included. In addition to direct payments, compensation packages may outline indirect pay such as benefits plan options available and non-financial perks.

Additionally, the employer may opt to include a statement of other, nonfinancial items associated with employment, such as an in-house fitness center, career development programs, or employee recognition awards.

To attract top talent, Total Employee Compensation Packages should align with industry benchmarks and the relevant job market. Employers should audit their benefits packages regularly to ensure the total compensation they're offering is cost-effective and a good fit for employees.

Types of Compensation

A compensation plan typically identifies the different types of compensation offered to employees. There are two categories of compensation: Direct Compensation and Indirect Compensation.

Direct Compensation

Direct compensation is the monetary amount given directly to an employee. This amount is typically based on an annual salary amount, hourly rate, piece rate or a commission percentage and is included in the paycheck. Monetary bonuses and other financial incentives are also included in direct compensation.

Indirect Compensation

On the other hand, indirect compensation is the non-monetary amount given to an employee. For example, benefit programs, profit sharing plans, or other incentives that are not paid directly to the employee. Paid time off, the employer's contributions to benefit plans, and other benefits such as student loan assistance are considered indirect forms of compensation as well.

Indirect compensation may also include non-monetary perks with values that are more difficult to measure. Flex time or remote work arrangements, career development programs such as in-house mentorship, and employee recognition awards are examples of non-financial compensation that can provide value to employees.

Incorporating the Different Types of Compensation Into an Overall Plan

Within an overall compensation plan, different types of compensation are used to attract and retain employees. These types of compensation may be non-financial, benefits or direct monetary payments.

Direct compensation can be calculated using an employee's base pay, variable pay, or a combination of both.

Base pay is typically paid to an employee for performing specific job responsibilities. It can be paid as a salary or hourly amount.

When building a compensation plan, each position and its associated responsibilities should be reviewed to determine the appropriate base pay for the position.

In addition to base pay, employers may choose to offer variable-based monetary compensation in the form of bonuses for example. Variable pay can be used to incentivize employees toward achievements that help the company meet or exceed its overall strategic goals. Variable-based pay may include things like performance-based bonuses, profit sharing programs, employee recognition bonuses or safety bonuses.

Employee Compensation Plan FAQs

What Are the Top Employer Costs Related to Employee Compensation?

Employer costs for compensation may include the following items:

• Base Pay
• Overtime
• Payroll taxes
• Employer's share of benefit plan costs
• Bonuses
• Wellness programs
• Tuition reimbursement
• Student loan assistance
• Expenses related to the use of a company car
• Employee stock purchase or stock option plans

What Is Total Compensation?

Current and prospective employees often make career decisions based on the concept of total compensation. Some prospective hires may be willing to trade a lower salary for a richer benefit plan or more flexible work hours. Presenting employees with their total compensation from all sources, not just their base pay, can help the organization increase their ability to attract top talent and will better assist prospective employees with weighing career decisions.

How Do You Structure a Total Employee Compensation Package?

Employers can create a standard template listing all elements of compensation and fill in the line items as they apply to each individual employee. The compensation package template can be used to create offer letters and annual compensation reports for employees. Total Employee Compensation Packages may include the following items:

• Base pay, such as an hourly rate, weekly salary, or annual salary
• Variable pay, such as bonus or commission
• Value of benefits offered to employee
• Additional rewards such as flex-time options that can be described in non-monetary terms, or quantified, if possible

How Do You Calculate the Cost of a Total Employee Compensation Package?

On an annual basis, total employee compensation can be calculated based on the direct and indirect payments made throughout the year. The payments should include any compensation given to the employee in connection with fulfilling their job duties.

What Are Total Compensation and Total Reward Statements?

To increase employee understanding of how they are being paid and the cost of benefits being offered by the organization, employers may consider providing a total compensation or total rewards statement to employees. Both statements explain to employees how they are compensated or incentivized for their work.

Total compensation statements typically cover the amounts included in a compensation package: pay, bonus, commissions, and employee benefits.

In comparison, a total reward statement generally includes the components of a total compensation statement plus additional items. Job perks that are more difficult to measure on a cost basis but still make an impact on employees may be found on a total rewards statement. This may include (but is not limited to):

• Service or recognition awards
• Career development services available to employees
• Vacation and Leave benefits
• Retirement benefits such as pensions and/or 401(k) matches
• Health Care Benefits
• Child or Elder Care
• Legal Assistance
• Tuition Reimbursements

Ultimately, it's up to the employer to decide which statement option works best and when they should be distributed. A system such as Paychex Flex^® Analytics and Reports Center can be used to generate a Compensation Summary Report at any time during the year. This type of report provides employees with access to their total compensation, including monetary earnings, bonuses, and medical and retirement benefits, providing an increased level of transparency.

Stay Competitive With a Well-Developed Compensation Plan

Solid data and analytics are the building blocks of a fair, competitive compensation plan. In addition to broader compensation studies and benchmarking reports, in-house data gathered in systems such as Paychex Flex Analytics and Reports Center can provide information needed to help create a competitive compensation plan.

If you're creating or revising your company's compensation policies, the HR professionals at Paychex's HR Consulting Services can offer guidance and support. We can work with you to create a benchmarking report. We'll also help by making recommendations to boost your recruiting and retention efforts.

Integrating payroll and a time tracking solution in your business can help you save money and increase efficiency by eliminating unnecessary redundancies in key business systems.

Integrating a time and attendance system with payroll software can have a positive impact on your company's budget and level of employee engagement. For many leaders managing employees' time and attendance is a significant and time-consuming task related to operating a business. Companies that are currently using separate, non-integrated systems for payroll and time tracking are likely still experiencing inefficiencies and added costs that an integrated system can help alleviate.

What Is Time Tracking and Why Is It Important?

Time tracking is the process of collecting information related to the time worked, for each employee, as well as paid time off. Accurate time tracking is an essential function needed to complete the payroll process. Additionally, well-maintained time records serve as a foundation for a company's budgeting, planning, staffing, and compliance efforts.

The Disadvantages of Manual Time Tracking

When the time and attendance process is manual entry and it functions separate from payroll, the potential for errors and inaccuracies can be high. For instance, employees who use paper-based time and attendance systems may forget to complete their time sheets by the deadline, and then may make errors when rushing to submit their hours. They also might not recall precisely what time they came to work, the length of their lunch breaks, or the exact time they left for the day.

This opens the door to businesses either not paying employees for all time they've worked — a significant area of risk for businesses — or overpaying them. Issues revolving around payroll (such as not being properly paid) can negatively impact employee morale, which in turn can affect productivity in the workplace. It can also result in fines/penalties from an enforcing agency.

Using Separate Systems for Time Tracking and Other HR Tasks

Even if HR departments use software programs to track various HR tasks, different systems can lead to inefficiencies, increased costs, and frustrations.

For example, a company may have purchased a standalone license for a payroll processing software package, but that software doesn't integrate with electronic time clocks or other tools. When an employee has an address change, it may be processed in one system but not the other, leading to a paycheck being sent to an outdated address. HR staff may also be frustrated with the inefficiencies of having to enter this information into various systems multiple times and the difficulties they encounter trying to find and correct mistakes.

Integrating time tracking, as well as other systems like payroll and accounting, into your HR systems can save everyone time and headaches.

Benefits of Integrating Time and Attendance With Payroll

Integrated payroll time tracking systems can help ensure that information is consistent across all systems. When information is transferred and updated automatically, it also reduces the workload on HR staff from having to input changes multiple times in different work systems.

A well-integrated system that leverages the intelligent logic of automation allows companies and their employees to reach maximum efficiency. For example, electronic time tracking software can collect, track, and manage employee work hours, freeing up HR staff to work on higher-level tasks that cannot be automated. Data is analyzed on a real-time basis, enabling managers to review and approve employee time for payroll processing with greater efficiency and accuracy.

Automated systems can track time in several ways, such as reading:

• A magnetic stripe or bar code on an employee's company ID card
• Biometric information (eliminating the problems of lost badges or of one employee clocking in and out for another)
• Times logged in and out at the employee's computer

Additional core benefits of an automated time and attendance system can include:

Managing an Efficient Workforce

Automated time and attendance solutions give managers the ability to align scheduling to workload projections. This can help increase efficiencies, meet production goals, and manage costs. An analytics dashboard also can allow managers to review data over time, watch for opportunities to be more efficient, and head off problems that can derail productivity. Integrated solutions can then import those projections into other scheduling or budgeting systems, allowing managers to make more effective decisions with all the available data at hand.

Less Paperwork

A significant reduction in paperwork is another immediate benefit to employers and their workforce. With an integrated payroll system, there's no more printing of paper time sheets or data entry into the payroll system. Once the data from electronic time clocks is added to the system, it can automatically calculate and process payroll for the current period. With some solutions, records can also be integrated into individual employee portals, giving workers access to payroll records and providing an alternative to physical paper checks.

Freeing Managers and HR Staff From Repetitive Administrative Tasks

Relieving supervisors and HR staff of time-consuming administrative tasks is another big plus for employers. Information from tax forms, benefits data, and performance reviews only needs to be entered one time and into a single interface. In this way, your HR staff can turn their attention to broader and more strategic activities, such as new and more efficient ways to recruit and retain valued employees.

Advanced Reporting

Payroll can be a large expense that can affect many areas of a business. Given the relationship between hours worked and metrics like productivity, employee satisfaction, or employee retention, a fully integrated payroll system offers the ability to dive into the data. For instance, you can use time tracking information to identify seasonal trends, or to evaluate the efficiency of different business lines.

Protecting Against Non-Compliance

An automated time and attendance system can help your company maintain its compliance with wage and hour laws. For example, depending on applicable federal, state, and local laws and regulations, staff members may have to be paid at specific rates of pay after working a certain number of hours per shift or per week. An integrated system can, for example, help with this by automatically applying a different rate when the hour mark is reached.

Time and attendance software can help you maintain compliance with laws like these by providing daily and weekly overtime functionality which is integrated with the payroll system to help ensure hours are paid at the appropriate rate.

Archived time records and policies (and more consistent data collection overall) can help make complying with various wage and hour laws and regulations much less onerous for employers. In the event your business is audited for allegations of wage and hour violations, the data accuracy generated through an integrated payroll system may help facilitate the audit process.

Improving Employee Engagement

Scheduling and handling time-off requests are important elements in maintaining an engaged workforce. When employee engagement increases, issues like turnover may decrease. Companies that offer staff enough hours to maximize their incomes, while being flexible enough to accommodate vacation requests or scheduling needs, generally foster a desired employee experience. With automated systems, it's possible to quickly review, approve, or address such requests and manage planned absences to minimize their effect on your company.

Employee reviews and pay increases can also have a significant impact on employee satisfaction. Automated alerts within the system can notify HR staff of upcoming employee anniversaries, benefits eligibility dates, and other important milestones. Once reviews or pay increases are entered into the employee's file, an integrated system can automatically update the employee's pay rate, enabling the raise to go into effect at the appropriate time designated by the employer. When HR has the tools to act quickly on these types of actions, employees can feel valued and more satisfied at work.

Fully integrated systems also give employees expanded self-service opportunities. When they log in to enter their time, they can also access payroll data, tax deductions, and benefit selections. Connected payroll and time tracking increases efficiency and helps to provide employees with the information they need, all in one user-friendly platform.

Boosting Data Access and Security

Streamlining data entry can also help increase the accuracy and security of your payroll and HR information across platforms. Because fewer authorized people are entering information and accessing the system, data is more likely to be accurate and there is less chance of unauthorized changes or incompatible information across different platforms. This can ultimately help prevent costly errors and save the time and money it would take to correct inaccuracies.

An integrated interface can also help improve data security, since payroll and HR benefits systems contain highly sensitive company and employee information, such as salary and Social Security numbers. By integrating these systems into a highly secure HR platform, you can help lower the chance of data breaches. By reducing the number of access points into the system through an integrated platform and eliminating disparate systems, companies can help reduce the opportunities for internal or external hackers to gain unauthorized access to sensitive information.

What To Look For in an Integrated Time & Attendance and Payroll Management System

Depending on your company size and the complexity of your payroll, there are a number of features within integrated payroll systems that work to reduce errors, streamline reporting, and provide useful information. When evaluating integrated payroll systems, look for the following items:

• Cloud-based software with automatic updates
• Employee self-service capabilities
• User-friendly reporting dashboards
• Ability to set up alerts and reminders
• Compliance tools

Time Tracking as Part of an Integrated Payroll and HR System

When payroll and HR information are available together through a single interface, self-service features are much more effective. Employees can log into the system and quickly access information about payroll, available vacation and sick time, current tax deductions, and benefits. This allows employees to find answers to basic questions themselves, which can boost satisfaction and decrease the amount of time that management and HR spend resolving simple issues.

Using an integrated payroll service can also make it easier for HR staff and managers to access employee information on demand, saving time and enabling them to make more informed decisions. Managers can also feel more confident that the information they are viewing is accurate and up-to-date.

Don't let outdated, manual, or separate time tracking processes drag down your productivity. Switch to a payroll system that is fully integrated with a powerful online timekeeping solution to help you effectively manage HR processes while minimizing inefficiencies.