Only 22 % of American businesses have adopted strategic pay compliance technology, according to a new survey conducted by the payroll tech firm Yellow Canary. More may come as they try to lessen the legal and business risks of paying staff.
Intentional individual underpayments were made a criminal act on Jan. 5 following modifications to Australia’s Fair Work policy, with individuals and businesses today possible guilty. Unintentional errors won’t result in criminal penalties, but according to Yellow Canary, underpayments account for between 1 % and 3 % of total headcount costs on the market.
The rising danger associated with underpayments, according to the Yellow Canary survey of 533 Australian compliance leaders, is influencing more technical buyers to choose strategic payroll compliance tools:
- In the next one to two years, 23 % of people intend to adopt technology.
- 21 % of firms plan to implement these devices in the next 12 months.
- 17 % said they were satisfied with human compliance techniques.
- 15 % of respondents had no idea how to apply more strategic payroll systems.
The introduction of the Closing Loopholes Acts, which also includes the criminalization of wage theft, is a turning point for American companies, according to Yellow Canary Managing Director Marcus Zeltzer in the document.
Our research indicates that while many businesses are making payroll compliance a top priority, a considerable number also rely on shoddy regular procedures or have not conducted comprehensive reviews.
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Payroll departments are concerned that they are not properly paying team.
Nearly half ( 48 % ) of Yellow Canary’s respondents, according to research firm Lonegran Research, stated that their top priority had always been payroll compliance in advance of the closing loopholes law.
However, 93 % of local companies with at least 50 employees also claimed to have at least one area of concern regarding possible staff underpayments in their businesses as the law became law. Additionally, 17 % expressed uncertainty about paying their staff correctly, while 19 % suspect an underpayment issue may exist but have not confirmed it.
In the study record, several of the main causes of concerns about payroll underpayment were identified:
- Staying current with regulations and duty was a concern for 39 % of responders, which demonstrates the difficulty of staying cooperative in an ever-evolving regulatory environment.
- 37 % expressed concerns about a lack of internal conversation, noting that collaboration and information flow between agencies helps to prevent mistakes and contradictions in payment methods.
A more 32 % expressed concern about period and resource constraints for traditional opinions and payroll reviews. In addition, 31 % expressed concern about the dependability of payroll software in ensuring compliance, as well as the integration of staffing or time and attendance techniques, which are frequently managed through system interfaces.
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Only 7 % of respondents said there are no places that raise questions about possible underpayments. Given that it had found some non-compliance in 100 % of consumers during its work reviewing$ 70 billion in compensation, Yellow Canary said it was not sure whether this was due to genuine confidence or lack of awareness.
AI and strategic compliance might increase the payroll scorecard
According to Australia’s intricate system of payment awards, there have been numerous issues with underpayments, which have affected big private and public sector organizations.
The Yellow Canary report found some companies still rely on “less credible” techniques:
- 31 % still conduct regular assessments with spreadsheets.
- 32 % review give code combinations.
- 37 % use sampling for payroll checks.
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” While companies may feel comfortable in their human methods, these processes are imperfect, prone to error, limited in flexibility, and able to keep up with the increasing difficulty of compliance”, the statement said.
By replacing more regular review procedures with normal, tech-supported audits of workforce payroll data, the trend is anticipated to reduce the issue. By adopting vigilant payroll compliance technologies, the problem will be replaced.
AI might help these work, but some businesses remain skeptical about the integration of AI.
More than half ( 59 % ) of Australian businesses with 50 or more employees are optimistic about the potential for artificial intelligence to be integrated into their payroll compliance processes in the future.
AI is not yet widely used in Australia’s pay compliance system, but the report claimed that the development of technology has “great possible for being integrated into existing operations.”
For example, AI can be used to assess payroll data patterns, and identify anomalies — such as wrong give codes, unpaid employees, or misclassifications — to deliver payroll teams with real-time insights.
Yet, 27 % of respondents still have questions about AI’s ability to improve pay compliance or believe that AI will create more difficulties and make payment processes more complicated in the future.
” Companies must navigate issues such as integration concerns, data privacy issues, and resistance to change before common adoption]of AI]”, the statement said.
