Implementing electronic pay statements is one of the biggest savings opportunities that exist in Payroll, with a potential savings of multiple dollars for every paycheck issued.  Implementing doesn’t mean “electronic in addition to paper”; it means eliminating the cost and headache of creating, printing, and distributing paper pay statements.  If your company’s statistics are good for direct deposit, it’s time to complete the puzzle and increase the adoption of electronic pay statements.

As every Payroll professional knows, a pay statement is a very important document every employee receives frequently throughout the year that contains highly sensitive and confidential information.  The procedural and technology issues to implementing electronic pay statements are pretty straightforward; however, the associated change management issues are often a significant stumbling block.  While involving employees in the process, and remembering the rule to “communicate, communicate, communicate”, it is also very important that the project has high-level senior management support.

An iPoll in the Payroll research area asked about the status of using “only paperless-pay statements” (in other words, not doubling up, with Electronic Pay Statements in addition to paper pay statements).   The results show that 57% have implemented and 18% have approved the idea, with implementation incomplete.  25% are either evaluating or have decided not to implement.  Here are the details:

When we consider the biggest challenges to implement, 42% cited issues with providing secure access for employees to their statements as the biggest obstacle.  20% of the companies cited issues with state regulations as the biggest obstacle.  For 15% of the companies, no significant challenges exist.

To explore this topic in more detail, a Peercast^TM in the Payroll research area featured a global $5B manufacturing company that had outsourced much of its Payroll process to a 3^rd party.  Even though their implementation used a third-party electronic solution, the implementation was designed and managed by company employees.

Here is a bullet point list of key discussion points:

Cost Savings Identified

• Cost per statement to print
• Postage or overnight delivery charges
• Time spent in physically handing out advice
• Time spent in handling undeliverable advice

Benefits Achieved

• Reduced cost for printing pay advice provided immediate savings
• Employees benefit by having 24/7 access
• Provides additional protection against identity theft
• Ability to provide faster proof of employment for financial verifications
• Implementation included the ability to view or print current or prior year W-2s

Timeline

• Nov 2007 – Introduced electronic pay statement services to employees (yawn)
• Dec 2008 – Reminder to employees to use the service (with little impact)
• Dec 2009 – Reminder to employees to use the service (with little impact)
• March 2010 – Electronic pay statements use was mandated (immediate impact)

State Regulation Issues

• Basic Requirement States – HI, OR, NV, VT
  • Must provide written notification about the plan to issue electronic statements to employee
  • Requires electronic permission from the employee
• No Defined Regulations States – AL, FL, GA, MO, OH, PA, PR, SD, TN, TX
• Special Requirement State – CA
  • The employee has the option to receive a paper statement
  • Requires a secure website for retrieval of information
  • Access must be available 24/7
  • If accessing from work, employees must be able to print at no cost and viewing must be private
  • Statements must be available online for at least 3 years
• Special Requirement State – OK
  • Requires sending the statement electronically.  Per Oklahoma regulations, “Merely placing the statement on a website where an employee has to retrieve it is not permissible”.

Roll-out of the March 2010 Mandate

• May 2010 – Email to employees in HI, OR, NV, VT for authorizations to go paperless
• May 2010 – Communication mandating all Headquarter employees to go paperless
• June 2010 – Turn off all Headquarters employee statements

For our feature company, mandating Headquarter employees to go paperless created an immediate critical mass of users that could be pointed to as an example for other employees around the globe.  For these employees, paperless continues to be strongly encouraged, with ongoing efforts to have all employees make the transition.

How does your company approach implementing Electronic Pay Statements and what role does Shared Services or your Payroll organization play?

Who are your peers and how are you collaborating with them?

“Peercasts^TM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer Mail^TM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.

Peeriosity members are invited to login www.peeriosity.com/shared-services/to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity for Shared Services, Click here.