NEWSFLASH: Payroll or Pay Cut?

Payroll is an integral part of businesses operating with employees. In many cases, payroll processing is outsourced to third-party companies for efficiency and cost-saving purposes. Based upon a few recent events, some employers may be wondering: what happens when payroll funds go missing?

The FBI is currently investigating two payroll companies that have allegedly diverted millions in payroll funds, leaving hundreds of thousands of employees without paychecks. Most recently, MyPayrollHR, a payroll company servicing roughly 4,000 clients, purportedly transferred $35 million in payroll funds improperly, leaving employers scrambling to pay their employees.  The other alleged incident occurred earlier this year, when a lawsuit was filed against another payroll firm, Interlogic Outsourcing, Inc., claiming that the firm orchestrated a similar scheme to defraud employers and their employees out of millions of dollars.

With little regulation in place on payroll companies and third-party processing, it is typically the employer that remains liable depending on the situation. As such, it is critical for business owners to perform their due diligence before entering into any agreement for payroll processing services. For those businesses already outsourcing payroll, the policies and procedures of that payroll company should be reviewed to ensure that they have protections in place to avoid improper handling of payroll funds.

For more information, please contact John W. Campbell, Esquire at jcampbell@satclaw.com

To subscribe, please send “NEWSFLASH” to info@satcltd.com