Your Continuity Plan Should Include Alternative Payroll Options
It's important to have a plan in place to pay employees if a disaster strikes.
Whether it's a bridge collapse that closes commuter routes, a regional power outage that shuts down operations or a flood that destroys employees' homes, a disaster of any type or origin can create both trauma and financial expenses for you and your employees. One important part of your organization's disaster plan should be alternative payroll options. This will not only help your organization meet its legal obligations, but also help ensure that employees receive their pay on time.
Include Payroll in Your Disaster Plan
Payroll may not seem as significant a component of your business continuity plan as, say, protocols for evacuation and for data recovery, but it is a factor. Employees may face real financial costs that stem from disaster recovery, anywhere from the small (buying bottled water) to the large (rebuilding housing). Disaster aid and insurance checks may be slow in coming, so getting employees the money that they earned in a timely and efficient manner can go a long way toward helping them recover and contribute to the organization's success.
Have Alternative Payroll Options
Because people need money to help recover from a disaster, banks will most likely be operational before most other organizations in the post-disaster period. Banks have robust requirements to ensure they can operate in times of disaster. As a result, payments on credit and debit cards will likely be processed after a disaster, while ATMs will be dispensing cash, quite possibly before your office is able to open.
Employees who are waiting for a paper paycheck may not have access to their money. On the other hand, employees who are enrolled in direct deposit or have paycards will be paid as soon as banks are up and running. But those who rely on paper checks will be without funds.
Use Payroll Cards to Help Meet Needs
Paycards can be incorporated into the business disaster plan to help get workers the pay they've earned on time and in a form that they can use to cover regular personal expenses, as well as expenses related to recovery. Paper checks may not be able to be processed and distributed in time to accommodate employee needs and meet payroll regulations.
Make a Comprehensive Disaster Plan
The redundancies in your system should be able to accommodate transfers of funds and allow for operations to resume off-site. They can't do anything about paper checks that were ruined by floodwaters. As you develop your organization's disaster recovery plan, consider alternative payroll options, such as paycards, which may allow your organization to remain compliant and give your team the ability to get their lives quickly back on track.
This story originally published on SPARK, a blog designed for you and your people by ADP®. ADP is an NJCPA member benefit provider providing payroll and HR solutions. Learn more.