Ask anyone who processes payroll… if there’s one task they don’t need, it’s filing another report. Make it a time-sensitive, penalty-threatened report, and the topic becomes grim quickly.
Here’s an example hitting some of our clients: In June of 2012, Illinois governor, Pat Quinn, signed the Save Medicaid Access and Resources Together Act, more commonly known as the SMART Act. The Act included a mandate for Illinois employers to file a report with their employee wages on a monthly basis. It went into effect in January of 2013 for employers with 250 or more employees, and that threshold has been systematically reduced to employers with 25 or more employees over the last year and a half. Critics say (quite rightly, in our opinion) that the required monthly wage reporting has presented employers with yet another burden of risk and increased administration costs.
The monthly wage reporting has been a hot button issue since it was enacted. Prior to the Illinois monthly reporting mandate, most payroll departments were only equipped with software to report wages on a quarterly basis. Employers and payroll service providers were given a short six months to develop software that would fit the specifications to meet the electronic filing requirement. Meanwhile, the Illinois Department of Employment Security has been quick to assess penalties for companies that have not been in compliance. The penalty for filing late ranges from $5 to $10 per $10,000 in wages filed.
Unfortunately, monthly wage reporting does not appear to be going away. In fact, it may be slowly catching on with other state employment agencies. In May of 2014, New Jersey introduced a bill that, if passed, would require employers with 50 or more employees to report employee wages to the agency within 20 days after the end of each month. This mandate would include “every form of remuneration.” The American Payroll Association notes that this would be an even bigger burden than the Illinois mandate because both the due date is ten days earlier and the types of payments/benefits that would qualify as remuneration in New Jersey can be difficult for a payroll department to calculate on a monthly basis.
The costs associated with developing and administrating these monthly wage reports along with the potential penalties have made this mandate a gloomy topic in the payroll world. Small businesses that process payroll in house feel the increased costs and frustration with these ever-changing mandates most acutely. No good news here… sorry to say that the reporting mandates don’t appear to be going anywhere.