How to ensure payroll security at your business

From Social Security numbers to bank account credentials, running payroll involves a lot of sensitive information. You don’t want those private details about your business and your employees to get in the wrong hands.

That’s why it’s essential to use a secure payroll service that has extensive protections. Make sure your payroll provider has these key security features:

• Account security: Prevent hackers from accessing private information by making sure all user accounts are protected by features such as strong passwords and multi-factor authentication.
• Fraud alerts: A smart payroll system will proactively monitor unusual activity, such as a new login from a previously unknown IP in France, for example, and let you know. This helps you catch payroll fraud before it starts and keeps sensitive data secure.
• Bug fixes: Make sure your payroll software is regularly updated with the latest security fixes. While computer-based software usually requires manual updates, most cloud-based payroll software will take care of updates automatically.

Payroll security best practices to follow

While security threats can stem from insecure payroll software, they can also happen when employees and payroll administrators don’t follow the right protocols. For example, poor password management practices can allow people to fudge timecards or change their pay rates.

To safeguard your company and employees’ sensitive payroll information, follow these best practices.

1. Create strong passwords.

All passwords should be strong and complex to prevent hackers from gaining access.

Consider encouraging your employees to use a password manager, which will create randomized passwords and store them in an encrypted database.

2. Roll out smart email policies

Use email spam filters, and instruct your employees on how to spot common phishing schemes. For example, a hacker could gain access to your payroll system by emailing your payroll administrator and telling them it’s time to reset their payroll software password.

3. Have strong account admin changes and permissions.

Knowing who the designated admin is on your account is important, as it unlocks privileges over other parts of your payroll system. Make sure you have secure procedures in place whenever an admin change is initiated.

Also, if you need to give multiple employees access to your payroll software, ensure that you only give them access to the functions they need. For example, perhaps managers who need to approve employee time cards can only see the time tracking section of your payroll software.

4. Don't run payroll in front of employees.

It's best to avoid running payroll in front of other employees. This prevents employees from seeing pay rates, Social Security numbers, passwords, and other private information.

5. Implement a log-out policy.

Make sure all employees log out every time they use your company’s payroll software. Leaving a computer logged in may allow someone to sneak in and make changes without your consent.

Secure payroll providers also have forced log-outs after a certain time frame to prevent this type of situation from happening.

6. Conduct regular payroll audits.

Auditing your payroll regularly will help you catch issues related to time tracking, incorrect pay rates, and other irregularities.

Two common types of payroll fraud are timesheet fraud and pay rate fraud.

• Timesheet fraud: This can involve an employee changing the number of hours worked, noting PTO time improperly, or asking a friend to clock in for them when they’re actually absent.
• Pay rate fraud: This type of fraud requires someone with direct access to your company’s payroll to adjust an employee’s pay rate, either permanently or only for a few payroll cycles.

To prevent these two things from happening, make sure to require manager approval on employee hours worked before syncing the information with payroll. The extra step of having a manager sign off on an employee’s hours and pay rate can reduce the chances of incorrect hours and rates getting paid out.

7. Regulate external information requests.

Sometimes, creditors, banks, and other entities may need information about your business or your employees’ pay history. One common example is banks evaluating a loan or mortgage application.

Make sure you train your employees in the best ways to handle these requests to prevent security hacks. Many online payroll providers also have employee portals where your team can access their pay stubs and pay history, making it easier for them to get the information they need.

Keeping your company’s payroll data secure requires teamwork from you, your employees, and your payroll software. With proper training and education, and by choosing a best-in-class payroll service, you can help stop payroll security issues before they start.