How can we secure payroll processing and prevent fraud?

Use strategies like keeping your payroll software up to date, providing online security protocols for employees, restricting payroll access, being wary of third parties, disposing of older documentation properly, and physically securing payroll areas.

Who should have access to payroll data?

Allow access to payroll and the sensitive information it holds only to the select one or few employees whose job it is to run processing, and keep an updated list specifying who has access to check in the event of suspicious activity.

How should we handle third-party requests for payroll data?

Consult your state labor department for clarification on work-related information releases, and create a documented procedure that requires anyone requesting payroll data to sign and acknowledge it for auditing purposes.

What online security risks can put payroll data at risk?

Employees who practice bad online security put themselves and their organization at risk to phishing schemes, malware, ransomware, spyware, viruses, and more.

How should businesses dispose of older payroll documentation?

Audit sensitive payroll documentation—whether held online or as hard copies—for older and unneeded materials and dispose of them properly to reduce the risk of it getting into the wrong hands.

Best Practices to Secure Payroll Processing

The article outlines best practices to secure payroll processing by emphasizing the importance of keeping payroll software updated, implementing strong online security protocols to prevent human error-related threats like phishing and malware, and strictly restricting access to sensitive payroll information to only essential personnel to protect against fraud, embezzlement, and legal risks.

Payroll processing is a core function for organizations to compensate their employees for the work they do. A payroll system also holds a massive amount of sensitive employee information. If best practices to secure payroll processing are not properly implemented, sensitive information is left vulnerable, which can put both the employee population and the employer at serious risk of fraud, embezzlement, and a host of legal issues potentially resulting in millions of dollars in damages.

To prevent that outcome from happening to your organization, you can use these strategies to help keep your payroll processing secure from inside and outside threats of fraud.

How to Secure Payroll Processing and Prevent Fraud

Keep your payroll software up to date (if you are using an automated platform currently)

For organizations using automated software to run their payroll processing, the number one thing to do is make sure the software is up-to-date. This ensures that payroll processing has all the latest deployed codes and firewalls to help prevent malicious intent from online thieves outside the organization.

Businesses should work diligently with their IT department to keep up-to-date on the best security practices.

Provide common sense online security protocol for employees

Failure to secure payroll processing can often be attributed to human error. Employees who practice bad online security put themselves and their organization at risk to the following hazards:

Phishing schemes
Malware
Trojan horses
Spam
Ransomware
Spyware
Viruses and more

Human resources, IT, and leadership need to decide on strategies and company initiatives to help keep payroll processing secure from fraud by putting data security at the forefront of their operations.

Restrict payroll access diligently

Allow access to payroll and the sensitive information it holds only to the select one or few employees whose job it is to run processing for the organization. Stakeholders in different departments may need access to payroll data; however, everyone needs to be accounted for in this process.

Organizations should keep an updated list specifying who has access to payroll. This allows them to immediately check back on their list in the event of suspicious activity.

Be wary of 3rd parties

It’s normal for internal people or departments to need specific information from the payroll department at various times. However, businesses are often contacted by 3rd party companies seeking access to their data.

If your organization is considering sharing payroll processing data with a 3rd party, consult with your state labor department for clarification on work-related information releases. Create a documented procedure that requires anyone requesting payroll data to sign and acknowledge it for auditing purposes later.

Disposal of older documentation

Businesses need to keep their legal documentation cleaned up and disposed of properly. Even old information can lead someone with fraudulent intent to other places that can harm employees and employer interests.

Organizations should audit their sensitive payroll documentation, whether held online or as hard copies, for older and unneeded materials. By cleaning out older, sensitive data, businesses reduce the risk of it getting into the wrong hands and have less to sift through during tax season or audits.

Secure your payroll area(s)

Whether the department is on-premise or located on another campus, organizations should:

Position desks so computer screens are not facing windows or doors
Lock up all physical documentation when not in use
Keep payroll department doors locked, with access only for assigned personnel
Apply these rules to offsite operations as well

The Arcoro platform offers payroll service providers and ERP consultants scalable solutions such as Payroll and a full Human Capital Management platform in one solution. The HCM platform includes the following modules:

Payroll
Applicant Tracking
Benefits Management
Employee Self-Service
Performance Management
Reporting
Surveys
Time and Attendance
Time-Off Tracking
Workflow Management
EZSign (electronic signature)

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