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The Cloud: What it is and How to Stay Payroll Compliant

by Corie Stark | Jul 07, 2017
Stay compliant in the cloud with the following information.

“The Cloud” is a phrase used consistently in today’s modern technology age. So what is it?

The cloud is a network of servers, each with different functions. One server may store data, while another uses computing power to run applications. “Cloud computing” makes it easier for businesses to store and process their data without having to keep tangible documents. All the information is easily accessible - generally instantaneously - and makes sharing information throughout businesses easier than ever.

Examples of popular cloud programs and resources include:

Amazon Web Services (AWS) - AWS stores a company’s data in a server farm monitored by Amazon, freeing up storage in house for said company. The information is available at all times through the Internet. AWS is far-reaching, helping companies like Instagram host its data. When someone posts a photo to Instagram, he or she is using the cloud, as that photo will exist online without having to be stored on a device.

Google Drive - Google Drive allows anyone to create documents, spreadsheets, photo albums, and powerpoints and share them with whomever without having to store any of it on a personal computer.

Dropbox - This service allows consumers to store and synchronize files. Dropbox is especially helpful for sharing large documents that do not fit through email messages.

Facebook, Twitter, YouTube - Essentially every social media platform is a cloud program. Every status update and photo is stored on these websites, and not on a personal device, should the consumer choose.

With any type of cloud program, storing and sharing information is a cinch. That data is also accessible anywhere - whether a person is on a home computer, work laptop, or smartphone. Utilizing cloud programs also reduces costs, as businesses and consumers don’t have to spend money for extended data storage. Another benefit is avoiding the loss of information should a computer crash occur.

But what does this have to do with payroll? For the longest time, payroll professional managed their jobs (and still do, likely) through meticulous record-keeping. Stacks of papers, time-sheets, and tax forms were a likely familiar sight. But with payroll providers also moving to the cloud, these are a thing of the past. But compliance is still very much a present reality.

How do you stay compliant with such important information when operating in the cloud? General habits like maintaining checklists in regards to forms and due dates is vital to compliance. Choosing the correct provider should a business enter the “cloud” can also greatly help. Consider the following questions when making the switch to the cloud:

-Is data encryption used to store and transmit data?

-What level of security is used?

-Do you get electronic copies of forms employees fill out, such as W-4s?

-How quickly is information backed up in event of an outage?

-How quickly can you reach your information in event of an outage?

-How often are you given updates for rates such as federal, state, and local taxes?

-How often are other components (timekeeping, tax forms) of your provider updated ?

-Are you notified in time of updates?

-Can you easily reach someone at your cloud-provider should you need assistance?

It is important to note the Fair Labor Standard Act (FLSA) requires employers to maintain certain practices to remain compliant from the get-go. These forms mentioned below can be hard copies or electronic (in the “cloud”):

-Employee payroll records must be stored for at least three years after the last entry date.
-The IRS requires these records be held for four years after the employee quits or is fired.
-Any workplace with 50 or more workers must keep records regarding any employee leave in compliance with the Family and Medical Leave Act (FMLA).
-In addition, each state adheres to individual laws governed by unemployment agencies that require businesses to retain employment records. This time frame to hold onto these records can be between four to seven years.