7 Payroll Trends Every Business Owner Should Know in 2024

Current and upcoming payroll trends will bring about significant changes in payroll systems across the globe. These trends are often the result of the ever-changing workplace demands and structures across all different types of industries worldwide.

It is important for businesses to stay up-to-date with the latest changes that help shape the future of payroll because it helps them modify their existing payroll management practices accordingly.

So, what does the year 2024 have in store for payroll systems and processes?

Let’s find out!

Key Takeaways

• The seven payroll trends in 2024 include AI integration, enhanced payroll data and cybersecurity, on-demand payroll, real-time analytics, HR integration, digital payments, and stricter global regulations on payroll processing.
• The emergence of the gig economy, along with the increasing data security issues, the higher demand for payroll transparency, and globalization, impact the future of payroll.
• Businesses can prepare for the changes in global payroll trends by staying updated with payroll and HR-related trends, providing sufficient training and seminars for their staff, conducting technological audits, and choosing cloud-based solutions.

7 Payroll System Trends to Look Out for in 2024

The seven payroll trends to look out for in 2024 mostly have to do with significant updates on payroll processing technology. This is not surprising since technology and managing employee compensation have always worked hand-in-hand.

That said, let’s take a closer look at the latest trends in payroll and how technology plays a crucial role in it:

#1. AI Integration

Topping our list of 2024 payroll trends is AI integration. Integrating AI (Artificial Intelligence) into payroll processing means increasing accuracy in calculating employees’ salaries, wages, taxes, and voluntary deductions.

Specifically, AI will analyze financial and personal employee data and identify and evaluate errors that the human eye doesn’t always catch when validating payroll information.

Next, generative AI will provide suggestions on how to recognize payroll errors and discrepancies more easily and significantly improve the efficiency of a company’s existing payroll processing strategies.

AI will also help tremendously in simplifying and automating routine tasks involved in managing payroll systems, including data entry, preparing monthly, quarterly, and annual reports, attendance management, and updating employee timesheets.

When carried out manually, routine payroll tasks are usually time-consuming, making it challenging for businesses to maximize their workforce. With Artificial Intelligence, even small businesses and startups can accomplish more on their payroll to-do list in a shorter amount of time.

Other notable contributions that AI can bring to enhance how companies implement their payroll management practices include fraud detection, overseeing tax compliance, generating tax reports, and enabling employee self-service (ESS).

#2. Payroll Data and Cybersecurity

Whether a business processes payroll for a single employee or manages a large amount of employee data, having stronger and more reliable cybersecurity systems helps keep sensitive payroll information protected from data breaches and fraud.

According to the Federal Bureau of Investigation’s Internet Crime Report for 2023, there have been over 298,878 phishing or spoofing complaints, 19,778 identity theft reports, 13,718 credit card or check fraud, and 3,727 incidences of data breaches in the US.

At the same time, the International Business Machines Corporation (IBM), one of the largest IT companies in the world, reports that the average cost of data breaches worldwide reached over $4.45 million in 2023.

In response, over 50% of businesses are looking to enhance security measures for their payroll administration practices. Some of the top cybersecurity and payroll data protection trends that companies look forward to implementing include:

• Cross-border data compliance
• Integrating firewall technologies
• Stronger data encryption and multifactor authentication
• Centralized data and user account management for a secure single-sign-on (SSO) method

Business owners are also more adamant about keeping an eye out for other potential threats that may compromise their payroll efficiency.

#3. On-Demand Payroll

On-demand payroll, or earned wage access, is a payroll technology that lets employers grant their staff access to the wages and salaries that they have already earned ahead of the next scheduled payday.

Employees who want to use the said payroll service must pay a small fee to view their earned wages in advance.

The on-demand payroll trend is an effective strategy to boost employee retention rates, considering how repetitive late payments and pay discrepancies leave workers dissatisfied with their employer’s HR and payroll management practices.

By allowing employees to view their wage information, they are given the freedom to verify that their accumulated earnings are calculated correctly. In the long run, on-demand payroll helps increase transparency and foster trust between employers and their workers.

#4. Real-Time Analytics

With real-time payroll analytics, businesses can generate timely payroll data insights and incorporate payroll analysis tools tailored to their employees’ needs and company operations.

This payroll trend encourages startup owners to focus on data-driven decision-making when modifying how they manage payroll. By using real-time analytics, employers can also monitor their labor expenses and payroll accruals more closely.

With more accurate payroll expense records, businesses can plan their finances ahead of time while taking into consideration the changes in the labor market, worker demands, potential financial risks, and future opportunities to expand their workforce.

#5. HR Integration

Having a payroll trend that involves integrating existing HR management tools and processes with payroll systems is inevitable.

The responsibilities carried out by payroll and HR departments often overlap, particularly when implementing the key components of a company’s payroll administration methods.

HR integration also involves improving attendance systems and monitoring each employee’s accumulated PTO or overtime hours. In this manner, employees can see more precise and correct vacation accruals on their pay stubs.

The said payroll trend also helps eliminate paper trails, reduce duplicated employee files, improve data accessibility for employees, and establish better compensation packages and fringe benefits.

#6. Digital Payments

The use of digital payments in disbursing employee wages and salaries has been a consistent payroll trend that continues to increase employee satisfaction in the workplace.

According to Statista, the digital payments market is exponentially growing following the inclusion of contactless and mobile payment apps such as Venmo and Cash App.

Aside from ensuring timely payments, digital payments also keep businesses on track when it comes to following their payroll cycle and meeting important payroll and tax deadlines.

They simplify processing all employee earnings and deductions, leaving HR and payroll personnel more time to comply with existing tax regulations and focus on addressing employee queries about their benefits and income.

#7. Stricter Global Payroll Regulations

The last payroll trend on our list involves adherence to stricter global payroll regulations.

Most international pay transparency laws focus on ensuring full compliance with tax laws and responsibilities, reducing risks of misclassifying employees, and adhering to international requirements on employee benefits and minimum wages.

Hiring or outsourcing internationally has also pushed employers to embrace flexible work setups and welcome talents and skills from different parts of the world. This payroll outsourcing trend has led to more job opportunities and a diversified labor market.

Companies looking to hire workers globally should also have the necessary resources and a concrete contingency plan. Consequently, business owners can successfully expand their workforce and uphold local and international labor rights policies at all times.

4 Factors That Impact Payroll Trends

Here are four factors that directly impact the significant changes and updates in payroll processing:

#1. The Rise of the Gig Economy

The gig economy, also known as the freelancing work industry or the freelancing market, has raised over $1.21 trillion for the US economy during the COVID-19 pandemic.

Considered one of the most remarkable global payroll trends since the COVID era, freelancing has also shaped and revolutionized traditional workplace practices.

As more businesses open their doors to freelancers and independent contractors both locally and internationally, they are also immersing themselves in a thriving market that demands flexible payroll solutions.

#2. Data Security Issues

From imitating government agencies and creating fake pay stubs to attempting to breach the payroll systems of unsuspecting companies, data security issues remain apparent in most payroll management methods.

A significant percentage of emerging payroll trends highlights the need for a more layered model to keep employee data secure and prevent potential financial losses caused by payroll-related scams and cybercrimes.

#3. Demand for Transparency

The more accessible and innovative payroll systems become, the higher the expectations employees have with their employer’s payroll practices.

They expect their supervisors and HR personnel to be ready to address their most common payroll questions and explain more complex details on their paychecks, such as taxes and contributions.

In that regard, pay transparency is one of the most crucial factors for employees. Pay transparency shows openness on the part of their employers when discussing clarifications and queries about their earnings, benefits, and deductions.

Employees are not just focused on how they can receive their salaries and wages in a convenient manner. They also demand fairness, consistency, and integrity in terms of how they are compensated.

#4. Gradually Increasing Globalization

Globalization impacts payroll trends in such a way that businesses hiring job applicants worldwide must consider a more diversified range of payment gateways. After all, banking services and payment apps are not as universal and seamless across all countries.

Also, aside from complying with international labor, tax, and payroll regulations, businesses must also ensure that all applicable and relevant taxation rules and pay adjustments are reflected on their employees’ payroll records.

5 Effective Ways Businesses Prepare for Changes in Payroll

There are five effective ways that you, as a business owner, can stay equipped for all the big and small changes in payroll. It is not enough just to know what these trends are—you need to know how your operations can keep up with these technological trends and global demands as well.

That said, here are some practical methods that will help you be more prepared for the latest trends in payroll processing and payroll management:

#1. Keep Up With the Trends

Expect to encounter more payroll trends in the years to come. The future of payroll trends may mirror the ones that emerged in 2024, but it may also introduce a completely new way of managing your payroll practices.

Either way, you must always stay on top of all payroll trends, no matter how big or small, to ensure your employees and your operations are not compromised by these developments.

#2. Invest in Change Management Training

Change management training entails equipping and guiding employees amid upcoming technological updates on payroll processing.

In other words, employers must provide the necessary skills training and support so that their staff will know how to seamlessly implement all relevant updates without committing any errors.

Aside from imparting new information on payroll tech innovations, it is also important to ensure employees are knowledgeable about key wage trends, as well as the basic aspects of preparing the payroll, such as pay cycles, payroll taxes, minimum wage, FLSA regulations, and IRS tax implications.

#3. Conduct Technological Audits

Conduct technological audits to assess whether your existing payroll systems can still keep up with the most recent payroll trends or not.

You can also pinpoint any areas or aspects of your payroll mechanism that you can improve, modify, or change with a more modern and suitable infrastructure.

Alternatively, consulting with industry experts or hiring third-party payroll service providers will help you assess your payroll systems better. Better yet, consider augmenting your payroll management process with practical online tools such as a pay stub generator.

Paystub.org’s online paystub generator lets you create multiple pay stubs in one sitting. Our generator comes with ready-made templates and a built-in calculator to help minimize mistakes in calculating wages and inputting your employees’ payroll data.

#4. Decide on Your Operational Setup

Your operational setup determines whether you will hire third-party payroll software providers or stick to in-house payroll staff to implement your payroll practices.

It is also essential to decide between using a centralized or decentralized payroll system and designating specific payroll and HR responsibilities to the most suitable personnel in your team.

The goal is to have a payroll system that adheres to current payroll trends and industry demands. More importantly, your operational and payroll setup must be instrumental in resolving existing payroll issues in your company and helping you make more informed decisions in managing your company’s finances and employees’ earnings.

#5. Choose Cloud-Based Solutions

If you’re new to the idea of cloud-based solutions, it is an automated system that lets you expand your data storage seamlessly and enables collaboration between your HR and payroll teams despite geographic distance.

With cloud-based systems, you can easily execute your payroll processes, even if you hire both office-based and remote-based employees.

As such, your employees can easily access their pay and employment information, monitor their contributions and benefits, and easily keep in touch with your payroll staff for any assistance they may need.

The Future of Payroll: Final Thoughts

Payroll trends reflect the prevailing needs of employees in terms of attaining satisfaction at work and demanding fair and reasonable pay.

At the same time, these trends underscore the need to be adaptable to change, particularly the expansion of AI capabilities and innovation in revolutionizing outdated payroll practices.

Whether you have the budget and the workforce that allow you to integrate all the trends described in this article or not, you can use them as your guide in enhancing your payroll operations as a whole.