How Payroll Influences the Government

Payroll government issues

We know that large federal agencies, including the IRS, the Social Security Administration and the Labor Department, and individual states, implement laws and policies that directly impact payroll processes. But how is payroll represented as these initiatives are being developed? During a recent Source by DailyPay podcast, the American Payroll Association’s Director of Government Relations described how the payroll angle is communicated to help legislators and regulators understand the implications of proposals and initiatives.

The APA is the nation’s leader in payroll, education, publications and training, with more than 20,000 members.

The organization approaches proposed legislation with an eye on “potential impacts on payroll administration, legislation or regulations that would interfere with payroll best practices, or that could impact an employer’s decision-making process,” said Alice Jacobsohn, Esq., director of government relations for the group, who runs government outreach for the association.

“APA does not take positions on controversial issues, or take sides with one party or the other,” Jacobsohn said. In terms of recent federal minimum wage proposals, for example, the APA asks only “for a phased approach so that payroll managers would have sufficient time to implement the changes, in particular to compare federal requirements and state requirements, to make sure that they’re in full compliance.”

The APA is focused mainly on three broad issues at the federal level, Jacobsohn commented — working with agencies on systems modernization, unemployment insurance and management of employment taxes.

When the COVID-19 pandemic took hold and the first federal responses to it were being drafted, there were proposals to use employer payroll operations to cut payroll and federal employment tax withholding to help provide amounts to workers in the near term. 

“We went into Congress and we said, ‘That’s a novel idea, but our payroll systems cannot turn over that quickly to accommodate this.’ And we convinced them that the best approach would be a direct stimulus payment to individuals rather than running it through payroll in doing that,” Jacobsohn said. And we all know what has transpired since then.

State tax and unemployment issues have loomed large as well since the pandemic began. 

“The biggest issue for us on the state side is what’s referred to as temporary presence,” since many employees began to work remotely in states other than where they worked before, Jacobsohn said. “We run into the question ‘What’s the definition of temporary in terms of where an employee should be paying their taxes?’”

Also, government activity has been percolating around on-demand pay, sometimes called earned wage access, according to Jacobsohn. The APA’s position is to help represent employers who decide to “make an arrangement with a service provider, such as DailyPay,” she said.

Jacobsohn discussed state proposals for on-demand pay that the APA has opposed and some still going through legislatures that the APA has supported. Overall, “we want employers — who know their employees better than anybody — to be able to select a program that makes perfect sense for the employer and their operations, rather than being dictated to or restricted on what they can do,” she said.

For her role at the APA as technology moves forward, Jacobsohn notes “companies come up with different ways of managing the payroll to make improvements on the electronic side. And our members have to traverse all of that. And our role here is to help them as much as we can.”

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DailyPay, the recognized gold standard for on-demand pay delivery, sometimes called earned-wage access, is a sponsor of the American Payroll Association and also partners with the Bipartisan Policy Center to help bring more awareness of policies that can assist Americans in building financial security.

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