Dear CEOs and CFOs - Blind Trust Can Be a Costly Mistake

Over a cup of coffee with a local Southern California CFO, I heard a phrase that made my compliance radar light up like a Christmas tree: “We trust our PEO and HRIS system. Payroll? Finance handles that.”

Cue the alarm bells. While PEOs, HRIS systems, and finance teams all play critical roles, blindly relying on them without digging into the details is like trusting a weather app in the middle of a hurricane—it’s a setup for disaster.

Payroll: It’s More Than Just Number Crunching

That same CFO assured me their payroll was in good hands with the finance department and some shiny payroll software. But here’s the deal: managing payroll isn’t just about processing numbers. It’s about understanding the layers of complexity in wage and hour laws, compliance regulations, and state-specific nuances that no software or finance team alone can guarantee.

Here’s where the cracks usually show:

• Wage and Hour Laws: That “trusty” payroll system doesn’t know California’s meal and rest break laws—or how to educate leaders and hourly workers on their responsibilities.
• Meal Periods and Breaks: Automations miss the real-life nuances of employee schedules, leaving you exposed.? Cautionary challenges with rounding.
• Overtime Compliance: Misclassified employees or untracked overtime are lawsuits waiting to happen.
• FLSA Issues: Missteps in classifying contractors or exempt employees? That’s back pay and penalties knocking at your door.

Take Note: PAGA Reform Is Here – ?Just to spice things up, California Governor Gavin Newsom recently signed a reform act for the Private Attorneys General Act (PAGA). Translation: if employers demonstrate reasonable steps, then organizations can cap financial exposures.

And this, dear CFOs and CEOs, is where “we trust our PEO” falls flat. Compliance isn’t a spectator sport. It demands hands-on effort, tailored strategies, and regular oversight.

At The HRRX, we’ve got the tools and expertise to help you stay ahead of the game. Here are the five reasonable steps every employer should be taking right now:

1. Internal Audits: Deep dives into your processes reveal potential risks before they turn into compliance crises.
2. Policy Updates: We ensure your policies evolve alongside the ever-changing legal landscape.
3. Leadership Training Programs: Compliance starts at the top. Educating your leaders can prevent most issues before they arise.
4. Forensic Payroll Reviews: From wages to classifications, we make sure no stone—or paycheck—is left unturned.
5. Compliance Plans: We craft actionable, specific plans to address your company’s unique needs and challenges.

HRRX: Turning Compliance Confusion Into Confidence

Here’s the reality: trusting systems, finance teams or some HR practitioners to handle compliance without oversight is like letting a GPS drive your car. PEOs and HRIS systems are great tools, but they’re just that—tools. They need the right people to steer them in the right direction.

At The HRRX, we’re here to be your compliance co-pilot, your risk management experts, and your secret weapon. Whether it’s helping C-suite leaders to rethink their reliance on systems or ensuring you’re proactively protected, we bring the experience, insight, and solutions to keep your business out of the danger zone.

Let’s chat—protect your people and profits as compliance is too important to leave to chance [email protected]. 949.393.9676