As a business owner, you may never expect to experience payroll fraud or abuse within your company. Payroll fraud can happen in any organization though, and it can be detrimental when it does. Extreme financial loss and multiple years spent navigating the complex legal system are just a couple of things your company might have to endure.
What can you do in your business to help reduce fraud and abuse? Workers’ compensation payroll solutions can help. Let’s take a look at some common types of payroll fraud, workers’ comp payroll solutions, and how PEOs can step in to help prevent fraud.
Common Types of Payroll Fraud
Payroll fraud schemes come in many shapes and sizes, but one of the most common are overpayment schemes like timekeeping and overtime fraud. These schemes involve inaccurately tracking the hours you’ve worked or overtime hours accrued.
A ghost employee is someone who is on a company’s payroll but doesn’t actually work for the company. They may be a fake person entirely—created by a current employee who has access to the system—or they might be someone simply pretending to work for the company.
Claiming fraudulent expenses is another way employees can abuse payroll. By tacking on small amounts to legitimate expenses each time or creating false expenses altogether, this form of fraud could go unnoticed for some time.
How Workers’ Comp Payroll Solutions Address Fraud
Payroll software can be incredibly helpful in preventing payroll abuse and fraud. Background checks and onboarding for new hires can help ensure new employees are legitimate and have a clean record.
Workers’ comp payroll solutions also prevent payroll information from being readily available within your organization. Having a limited number of employees who can access payroll details makes it easier to track down the source of any issues should they arise.
Payroll software also makes it possible for employers to pull and review payroll reports at any time.
Role of PEO Services in Fraud Prevention
If you’re a business owner or HR manager with a lot on your plate, outsourcing payroll can be incredibly beneficial—particularly when it comes to fraud prevention. PEOs—or professional employer organizations—handle businesses’ administrative tasks like payroll, workers’ comp, and risk management.
Payroll processing can be tedious and stressful, so PEOs step in to alleviate that burden from already-busy business owners. When you partner with a PEO, they’ll handle onboarding for each new hire—thoroughly vetting them along the way.
PEOs utilize software that helps ensure employee data is secure and payroll is done accurately and on-time every time. Allowing a PEO to handle payroll processing for your company means fewer people within your organization will need access to your payroll information—further protecting your business from fraud.
Implementing Anti-Fraud Measures
Partnering with a PEO means employees will have an app where they can access their personal information. This offers a secure system for them to clock in and out, and it helps prevent users from creating and tracking time for ghost employees.
Limiting access to payroll information is a great way to help prevent payroll fraud and abuse. When you work with a PEO, it eliminates the need to give multiple employees access to payroll data. PEOs will process your payroll, and you or your HR manager can access those reports at any time to confirm their accuracy.
While PEOs handle payroll and other administrative tasks, employers are still in charge. Documentation and authorization will be required before a new employee is added to payroll.
Additionally, PEOs can run payroll audits at any time, and they’ll regularly check for unusual time-tracking activity.
Protect Your Business from Payroll Fraud
Payroll fraud or abuse can be detrimental to your company. Not only will your business take a massive financial hit after experiencing fraud, but it will likely also take a toll on its reputation.
Outsourcing your payroll processing is one the best ways to help protect your business from fraud or abuse. Reach out to the team of experts at OCMI Workers’ Comp today to see how they can help prevent payroll fraud within your organization.
Workers’ compensation and payroll processing can be somewhat complex—no matter how many employees you have. Workers’ comp payroll systems, however, can help HR managers and payroll administrators streamline the process.
When it comes to utilizing payroll systems, ensuring employee data privacy is crucial. How can you be sure your employees’ information is protected? Let’s dive into potential threats to payroll data, best practices for keeping data secure, and how PEOs can help.
Risks and Threats to Payroll Data
Everyone at your organization will have likely shared their Social Security number, home address, as well as bank details for direct deposit. If your company uses software for conducting payroll and workers’ compensation, there are certain risks to be aware of.
One possible risk is an external data breach—when someone from outside your organization gains access to sensitive information through malicious software, hacking, or phishing attacks. This can be incredibly dangerous for everyone at your company who has shared personal information under the assumption it was secure. In addition to affecting your workforce, data breaches can have a negative impact on your company financially and in terms of credibility.
Best Practices for Ensuring Data Security
Payroll software is constantly improving, with new features and functions available all the time. As payroll systems evolve, it’s important to keep your system up to date so you have the latest version available. Skipping updates could make your software vulnerable to outside threats.
Properly educating and training your employees in cybersecurity is crucial in helping ensure data protection. Phishing attacks often come through company email, so it’s essential that your employees know how to defend themselves against cyber threats. Schedule training sessions with your team regularly so everyone feels confident in knowing what to watch out for when it comes to potential cyber attacks.
Creating a secure onboarding and offboarding process is also incredibly important for protecting data. First and foremost, vetting each new hire before giving them access to any form of sensitive information is crucial for the safety of your company. As employees leave, be sure to deactivate or close their accounts so they no longer have access to company data.
Role of PEO Services in Securing Payroll Data
Professional employer organizations (PEOs) handle the administrative tasks of a business—from onboarding and offboarding to payroll and workers’ compensation. Partnering with a PEO can alleviate much of the burden placed on HR managers and payroll administrators.
PEOs typically have their own app for both employers and employees to access payroll and workers’ compensation, making the process simple and streamlined. Data privacy laws help ensure that a PEO’s data is secure. It’s also a good idea, however, to ask how they secure their data—such as data encryption and the ability to securely send and receive documents.
Implementing Robust Cybersecurity Measures
Working with a PEO means there will be safeguards in place to ensure that your data is secure. PEOs offer password management to help users generate and securely store strong passwords for their portal. Multi-factor authentication is also essential to data protection—requiring users to provide two or more pieces of information before accessing their account.
Antivirus software scans files and emails looking for potential malicious activity, making it another necessity for protecting your employees’ data.
Additionally, cybersecurity training should be a requirement for all employees so that they have a clear understanding of what to look for when it comes to possible phishing attacks.
Future Trends in Payroll Data Security
Protecting your privacy online has never been so imperative. As technology continues to advance, so does payroll data security. Going forward, AI will likely be utilized even more than it already is—identifying patterns and signs of potential threats—to quickly catch intended attacks. There will likely also be more emphasis on authentication and authorization for users within an organization, rather than focusing primarily on external threats.
Protect Your Payroll Data with Strong Security Measures
Partnering with a PEO is a great way to get support protecting your employees. Secure your payroll data with our advanced workers’ comp payroll solutions. Contact our team at OCMI Workers’ Comp to learn more!
