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Home / Business / Wage firm collapses abruptly, leaving thousands of employees without pay cut

Wage firm collapses abruptly, leaving thousands of employees without pay cut



The sudden closure of a national payroll last week left thousands of people around the country with negative bank balances and several lingering questions: How did this happen and what can be done to prevent it from happening again? People from New York to Texas to Florida are still helping to quit MyPayrollHR, based in Clifton Park, New York. A Facebook support group for those affected has grown to more than 1,800 members over the weekend. last paycheck to be withdrawn, but many reported being hit by another move from California-based Cachet Financial Services that had been worth the same amount as their original paycheck. The move left employees with negative account balances and hit particularly hard because they arrived at the beginning of the month, after rent payments had already been made. It is not clear where they pulled the money. The Better Business Bureau said Monday afternoon that they were trying to contact MyPayrollHR, but had received no response. Times Union spoke to three experts on pay and human resources to measure how things should work and go wrong when employers use third-party payroll managers. None of the interviewees have knowledge of inner workings in MyPayrollHR. Who is involved? Michael Mann is the owner of ValueWise Corporation, MyPayrollHR's parent company. Mann has not responded to several attempts to contact him. Messages left to a phone number on the MyPayrollHR website, which is still active, have not been returned. A person who answered a phone call at Cachet Financial Services said the company would not comment Monday. How do these companies work? While payroll processors offer a variety of services, the basic transaction is quite simple: Companies send their payroll companies a sum to cover payroll and current taxes, and the company distributes paychecks to customer employees through direct deposit or a copy check. If a mistake is made, such as a typo on a check that adds $ 1

0,000 to an employee's salary, the payroll company has the power to cancel the check or, in the case of direct deposit, withdraw the excess. However, it is extremely uncommon to have a properly earned paycheck retrieved from an employee's account. Why would employers treat wages through a third party? In many cases, employers share wages to third-party companies to avoid having to navigate the minefield of laws that regulate taxes and other regulations that come with running a business and paying employees. "It seems a lot easier than it actually is," said Rose Miller, president of Albany-based Pinnacle Human Resources and a columnist for Times Union. "Salary can be very complicated – there are employment laws that must be complied with, then IRS payroll laws must be followed. You must be aware of what is available to all employees as far as their paid family leave entitlements Miller also said that recognized payroll processors have a redundancy system that backs up and saves data if something goes wrong. "You don't want to make payroll yourself because you don't have the ability to put the security measures that outsourcing your payroll has," she said. But Miller said it's crucial business owners to do their own due diligence and research before choosing a payroll provider. "I find that many people do a blind trust thing." I post my payroll contract, they know what they're doing. I don't need to look at these reports. " No, "she said. "It's your company. You have to read every single report. If you don't understand what's going on in these forms, you have to ask the right questions." Guy Maddalone, CEO and president of Clifton Park-based GTM payroll services "Many people fall into this false sense of security when they go online and they see a very great website," Maddalone said. There are some important details that business owners should take into consideration when choosing a payroll provider, Sa Maddalone, for example, whether the site has photos and profiles of the management team, and whether it lists names or awards for these individuals, such as being a CPA or HR professional. "If that company is not willing to provide that information there, it's definitely a warning sign," Maddalone said. What can go wrong? It is still unclear what caused MyPayrollHR to collapse, although the investigation has begun .ori Johnson, operations manager for Payprep Incorporated, said one of the bees The biggest problems she sees are payroll processors who capture tax funds into one pool, as opposed to doing each single business responsible for their own payments. "I don't like raising people's tax money," she said. "My feeling is that if a person has problems, it's their own problem. We make the payments on their behalf, but the money comes out of their account. – and they just crash, "she said." They are all in one big group, "she said." And if the biggest domino falls, the company lets it happen for a few weeks in hopes that they will catch up. If you continue to pay (these taxes) but no one gives you money to pay them, you ultimately have nothing left. "Maddalone said another thing that could go wrong is that the payroll company doesn't file payroll taxes on time – or just not at all. That's why openness and accountability are a big part of his company, "he said." It's a big deal and gives openness to your client, "he said. that if not done right, the company supports it. "Who regulates wage companies? The short answer: none. If something goes wrong, the ax usually falls on the employer. That's because the Internal Revenue Service requires employers to withhold federal taxes, including for income. If the business owner chooses to go through a payroll company to do these things and they fail to fulfill, the business owner is still responsible. Johnson likened the relationship between a payroll processor and a business owner to what about a plumber and a homeowner. If a plumber works in your home but causes a catastrophic flood, the homeowner may pursue damages in court, but it is still their responsibility to fix the home. The same applies to payroll companies because they are treated as suppliers, Johnson said. Maddalone agreed, saying that the responsibility "should" fall on the payroll company to ensure compliance with rules and regulations, but the responsibility remains with the individual businesses. "The payroll company should live up to the deal," Maddalone said. "But the state agencies and the tax authorities should hold the business accountable."

The sudden closure of a national payroll last week left thousands of people around the country with negative bank balances and several threatening questions: How did this happen and what can be done to prevent it from happen again?

People from New York to Texas to Florida are still rolling from the end of MyPayrollHR, based in Clifton Park, New York.

A Facebook support group for those affected has grown to more than 1,800 members over the weekend.

Not only did the closure cause members' last pay cut to be withdrawn, but many reported being hit by another move from California-based Cachet Financial Services that had been worth the same amount as the original Payroll. The deductions left employees with negative account balances and hit particularly hard because they arrived at the beginning of the month, after rent payments had already been made.

It is not clear where they pulled the money.

The Better Business Bureau said Monday afternoon it attempted to contact MyPayrollHR, but had not received a response.

The Times Union spoke with three experts on pay and human resources to measure how things should work and could go wrong when employers use third-party payroll processors.

None of the interviewees have knowledge of MyPayrollHR's internal operations.

Who is involved?

Michael Mann is the owner of ValueWise Corporation, MyPayrollHR's parent company. Mann has not responded to several attempts to contact him. Messages left to a phone number on the MyPayrollHR website, which is still active, have not been returned.

A person answering a phone call at Cachet Financial Services said the company would not comment Monday.

How Do These Businesses Work?

While payroll processors offer a variety of services, the basic transaction is quite simple: Companies send the payroll company an amount to cover payroll and current taxes, and the company distributes paychecks to customer employees through direct deposit or a copy of check.

If an error is made, such as a typo on a check that adds $ 10,000 to an employee's salary, the payroll company has the power to cancel the check or, in the case of direct deposit, backed up. However, it is extremely uncommon to have a properly earned paycheck retrieved from a worker's account.

Why should employers process pay through a third party? In many cases, employers share wages to third-party companies to avoid having to navigate the minefield of laws that regulate taxes and other regulations that come with running a business and paying employees.

"It seems a lot easier than it actually is," said Rose Miller, president of Albany-based Pinnacle Human Resources and a columnist for the Times Union. "Salary can be very complicated – there are employment laws that must be complied with, then the IRS payroll laws must be followed. You have to be aware of what is available to all employees as far as their rights to paid family leave and workers' comp."

Companies that manually file payrolls can be on the hook for "big fines" if they miss a deadline, Miller said.

Miller also said renowned payroll processors have a redundancy system that backs up and stores data if something goes wrong.

"You do not want to make payroll yourself because you do not have the opportunity to set the security measures outsourcing your payroll has," she said.

But Miller said it is crucial for business owners to do their own due diligence and investigations before choosing a payroll provider.

"I find that many people do a blind thing." I put out my paycheck, they know what they're doing. I don't need to look at these reports. "" [19659004] "No," she said. "It's your company. You have to read every single report. If you don't understand what's going on in these forms, you have to ask the right questions."

Guy Maddalone, CEO and President of Clifton Park-based GTM Payroll Services Company, agreed.

"Many people fall into this false sense of security when they go online and they see a really great site," Maddalone said.

There are some important details that business owners should take into consideration when choosing a payroll provider, Maddalone said, for example, whether the site has photos and profiles of the management team, and whether it lists names or awards for those people, such as being a CPA or HR professional.

"If that company is not willing to put that information there, it's definitely a warning sign," Maddalone said.

What can go wrong?

It is still unclear what caused MyPayrollHR to collapse, although investigations have begun.

Lori J ohnson, chief operating officer of Payprep Incorporated, said that one of the biggest problems she sees is payroll processors who collect tax funds in one pool, as opposed to making each business responsible for its own payments.

"I don't like to raid people's tax money," she said. "My feeling is that if a person has problems, it's their own problem. We pay on their behalf, but the money comes out of their account. "

If a payroll company drops its customers' taxes and falls behind on payments," Everybody falls – and they just crash, "she said.

" They are all in a large group, "she said." And if the biggest domino falls, the company lets it happen for a few weeks in the hope that they will catch up. If you continue to pay (these taxes) but no one gives you money to pay them, eventually you have nothing left. "

Maddalone said that another thing that could go wrong is that the payroll company doesn't file payroll taxes in time – or just not at all.

That's why openness and accountability are big parts of his company, he said.

"It's a big deal, and provides transparency to your client," he said "And the reassurance is that if it is not done right, the company supports it."

Who regulates wage companies?

The short answer: none. If something goes wrong, the ax usually falls on the employer.

It is because the Internal Revenue Service requires employers to withhold federal taxes, including for income and Social Security. the relationship between a pay processor and a business owner to it as a plumber and a homeowner. If a plumber works in your home but causes a catastrophic flood, the homeowner may pursue damages in court, but it is still their responsibility to fix the home.

The same goes for payroll companies because they are treated as suppliers, Sa Johnson said.

Maddalone agreed, saying that the responsibility "should" fall on the payroll company to ensure that rules and regulations are followed, but the responsibility remains with the individual companies.

"The payroll company will live up to their agreement," Maddalone said. "But the state agencies and the tax authorities are going to make the business accountable."


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