6 Payroll Questions That Every Employer with Hourly Workers Should Be Ready to Answer

9 minutes read

These days, paychecks are more important than ever, especially to hourly workers. After all, 78% of U.S. workers lived paycheck to paycheck before the COVID-19 crisis. Now, in this era of financial uncertainty, they’re scrutinizing their paychecks more closely and asking their employers more payroll questions. To make life easier for your frontline managers and HR professionals, we collected the most common payroll questions and answers geared to the hourly workforce. Here’s the ones to be ready for!   

1. Why’s My Paycheck Smaller than What’s on My Paystub?

Sometimes, workers are disappointed to see that the net pay shown on their paycheck is smaller than the gross pay listed on their paystub. The answer to this payroll question lies in explaining the difference between gross pay—the total amount they earned during a pay period—and net pay—the amount that’s left once all their deductions have been processed.

2. What Are FICA Taxes?

Many workers have heard the term FICA, but don’t know exactly what it means. While no one likes paying taxes, most workers are pleased with the answer to this payroll tax question: that the FICA tax they pay helps fund their Social Security retirement and Medicare benefits. Make sure your workers know that you contribute that same 7.65% of their earnings on their behalf—6.2% for Social Security and 1.45% for Medicare.    

3. What Are Pre-tax and Post-tax Deductions?

Another common payroll tax question! Explain to your workers that pre-tax deductions—which include their health insurance premiums—are taken out of their gross pay before taxes are applied. Worker’s should know that they lower their total taxable income, and by extension, the taxes then deducted from their paycheck. 

This makes it easier to explain that post-tax deductions—such as life insurance premiums and garnishments—are taken out after taxes have been applied, so they don’t affect taxes at all.

4. Why Am I Paying ‘Employer Contributions’?

Some workers may find their paystubs tricky to read. Once in a while, a worker may interpret the employer contributions section of his or her paystub to be deductions—leading to a flurry of panicked payroll questions. Reassure them that ‘employer contributions’ are paid by the company on their behalf, and represent your portion of their health insurance premiums and other benefits. 

5. Why Should I Switch to that Pay Card?

If you offer pay cards, you know the many advantages they offer to both employers and hourly workers. Unfortunately, workers don’t always—and sometimes they’re reluctant to give up their paychecks. Whenever you get this particular payroll question, consider it an opportunity to highlight the many benefits of pay cards, especially for unbanked employees. These include:

  • Faster access to wages – Instead of cashing a check and waiting for it to clear, pay cards offer the immediate access of direct deposit, but don’t require a bank account.
  • Fewer fees – Pay cards spare workers the necessity of paying check-cashing and bill-paying fees, which means more money in their pockets.
  • The ease of debit cards – Workers can use their pay cards at stores and ATMs and to pay bills online or by phone.
  • Bank account-like amenities – Depending on your pay card program, it may offer employees benefits like text alerts, personal checks, and cash back rewards programs.
  • Remote reloading – Because pay cards can be electronically reloaded each pay period, workers don’t need to come in to work to pick up their paychecks—a tangible plus right now as employers works to observe social distancing.

6. What’s a Payroll Audit—and Will It Affect Me?

When workers ask payroll audit questions, it’s usually because they’re worried how it might impact them. Will it hold up their paycheck, for example? Or, will it give an outsider access to their financial information?

When answering payroll audit questions, be sure to stress that the audit is in workers’ best interests, because it ensures that their wages are processed accurately. Reassure them that while payroll audits do examine company-wide pay rates, wages and withholdings, the information is highly confidential and the audit will not interfere with scheduled payroll processing activities. 

What about Your Payroll Questions?

Obviously, it’s important that employers can answer common payroll questions and ease their workers concerns, especially now. It’s equally important that your payroll software provider do the same for you.

Is your payroll provider doing right by you? If you’re unsure, see our nine-point evaluation guide, When You Know It’s Time to Switch Payroll Providers. The answer becomes clear when you know where to look! 

If it is time to see what else is out there, we invite you to learn about EPAY’s payroll processing solution. Our pay engine is designed to handle the complexities of hourly wages, such as correctly calculating split shift payments, applying union rules, and processing garnishments. In fact, we process close to $1,000,000 in paychecks, direct deposits and pay card deposits per year.

We invite you to watch a quick, 1-minute video—and we’re happy to answer your payroll questions anytime.

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