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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

HR Tech Weekly

Episode: 39
Air Date: September 24, 2015


This Week

This week John and Stacey discuss:

  • Equifax Workforce Solutions Achieves Historic Milestone in Form I-9 Management Marketwatch
  • CloudPay (the Cloud based Payroll Aggregator) made two announcements this month CloudPlay
  • Halliburton to pay $18.3 Million overtime wages Reuters
  • Zenefits Wants to Make Complying With Obamacare a Breeze Inc.
  • Target to Offer Fitbits to 335,000 Employees Bloomberg Business

About HR Tech Weekly

Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

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Begin transcript

John Sumser:                       Good morning and welcome to HR Tech Weekly, One Step Closer, with Stacey Harris and John Sumser. This is our thirty-ninth show and we are delighted to be with you again this morning. How are you, Stacey?

Stacey Harris:                      I’m good. I’m good. I am enjoying a little bit great weather here in North Carolina, but the temperatures have dropped so we have nice fall weather finally. It’s beautiful weather to kick off this week also.

John Sumser:                       One of the things that I miss most about living on the east coast is fall weather. Right now it’s basically summer in California. It’s hot and sunny and everybody goes a little slow and that brisk thing … That’s what our weather is like most of the time here. It goes away for a while. So I miss that. What’s-

Stacey Harris:                      Well, it should be a good fall season this year. Go ahead. What was that?

John Sumser:                       I was going to ask what’s in your bag of news? We should change the name of the show to Stacey’s Bag of News.

Stacey Harris:                      You know, dig around the night before each session. It’s funny, sort of maybe just as a side note on this, I had a friend who has been listening to us for a couple of weeks and she works over at Mercer and she caught something we had said a few weeks back about Mercer doing a partnership with SAP and Success Factors for their HR consulting and she says, “Wait, wait. No, that was just for Europe and Asia. You need to explain that to your audience.” She goes, “In the US, we’re more partnering with Workday.” I thought this is good. We’re getting people giving us feedback on what we’re hearing.

It’s probably important where we get some of this data from. We get news releases that come across and I look up each evening information about sort of what’s happening in the HR tech or technology space from a news perspective. So if anybody does have comments or requests or additional information, please be sure to send it to us. I thought that was just sort of a funny conversation I had last week.

But my news bag this week, we had an interesting news release that came out from Equifax. Equifax has hit a milestone in how many I9s they have processed. If you can think of any more fundamental HR requirement, I don’t think you could do that than the I9 form and getting that filled out. CloudPay has released a-

John Sumser:                       So are there … I9 is immigration, right? That’s an immigration form?

Stacey Harris:                      It’s the form … Yeah. It’s the form that kind of says I am legally allowed to work in the US, is what the I9 is, is my understanding, and probably all the benefits. People out there will have a better explanation of it, but that’s my understanding of it and has always been. They’ve hit twenty-one million this year, with over one thousand clients and fifteen billion dollars in potential penalties that have been avoided because of doing this I9 process for organizations.

Twenty-one million … I was trying to put a number on that, how big that was. That’s how many people actually … Companies who took our survey, right, who … We say that that’s twenty-one million employees and contingent workers that are covered in that workforce. That’s a pretty big number.

John Sumser:                       That’s something like fifteen percent of the workforce. I think it’s like fifteen percent of the workforce filled out an I9. I’d like to better understand what I9s are for. I don’t really know.

Stacey Harris:                      I think the big thing about this is that what Equifax is sort of commenting on is that this is all done electronically through their tools. I do recall the days … I used to run onboarding for a large retail organization and the I9 process was so arduous because you have to have two forms of identification while you’re filling it out. You have to have someone there witnessing it. Then you sort of have to scan and copy everything and get it all put together. It was a big part of the orientation day, which was always what you didn’t want orientation to be focused on, right?

If I understand, through the Equifax process it has sort of … Like any of the electronic processes, the electronic signature capabilities now, they have streamlined that a bit more. You still need all the same things, but they’ve streamlined it a lot more.

John Sumser:                       I asked Google what an I9 is for and every employee when they start a job is required to certify their eligibility to work in the United States. That’s what the I9 is for. So twenty million is … There are fifty million job changes every year. Twenty million I9s means that Equifax has their fingers in forty percent of the job changes in the country.

Stacey Harris:                      In the year, yeah.

John Sumser:                       That’s huge market penetration. That’s really interesting.

Stacey Harris:                      Yeah. I think it’s huge in the fact that Equifax has really made a business out of managing what I would say is the compliance end of onboarding, right? This is their claim to fame right now, is that they will address your needs, particularly if you’re a large organization with a lot of turnover. They will address your needs on this compliance end faster, quicker, at least from their perspective, than anyone else might be able to, and they’ll do it all sort of underneath one umbrella. It’s an interesting approach. Although user experience is important and all the things about how easy it is to access this information is important, their big focus is on the compliance side of this.

John Sumser:                       Yeah. They do amazing things. Their ACA related programs are … I believe we’re going to talk about this some more later in the show, but their ACA compliance stuff is so successful that they can’t afford to take on new customers.

Stacey Harris:                      Yes. Maybe we’ll jump … That’s the next article we picked up. Zenefits put out a big announcement. Zenefits is a benefits platform with a couple of other things sort of attached to it, depending on … HR and other elements to go along with it, but primarily it’s a benefits platform. It has announced it’s offering free tools to help business owners meet ACA requirements.

This is a pretty big announcement because there’s different levels of what you need to do to meet ACA requirements. Some of it is sort of making sure all your hours are tracked and that you know who in your organization was eligible at any one point in time, at any one point of year for your ACA benefits. But there’s other requirements about how you report that information and who you report it to, and it’s all sort of coming to a head tax time next year.

What ACA has done is say we’re going to do this with a free tool. Just sort of looking across some other organizations here, I don’t know of anyone else who’s offering these services as free. As you said, there are some organizations who have basically said we’re so busy analyzing, gathering this data, crunching this data for organizations, that in some cases we can’t afford to take on new clients unless they meet certain criteria or unless they’re really a client that has been working with us in the past already.

I have heard, and this is from a presentation that I will admit that I saw at IRM last week on benefits, a gentleman was talking about some of the organizations, ADPF actually somebody had named, who basically were not taking on clients doing this type of work anymore. I think this is a pretty big announcement if Zenefits can actually do everything. Not having seen what Zenefits is doing here, I can’t say what that is.

John Sumser:                       What a difficult situation to be in if you are somebody in need of help here. You’ve got free tools being offered, but free tools don’t generally come with legal defenses, right? So if the free tool doesn’t work, what do you do? If you’re only choice is to use a free tool because so many people have so many problems that the suppliers are mobbed, it’ll be an unsettling time for some people in HR I guess is what this will be.

Stacey Harris:                      Yeah. Definitely. I think those who are unable to comply, I think the important part is that this isn’t just a slap on the wrist in some cases. I mean we’re talking some [inaudible 00:09:30] for particularly organizations who are in that sort of mid-market, small range. A hundred and seventy dollars per month, per person that’s employed, that’s the penalty if you don’t appropriately do your data here. That could get quite large for a small organization that maybe has five hundred to seven hundred employees just sort of trying to manage this from a budgeting perspective, so it is a necessary effort that organizations have to take right now.

John Sumser:                       Right. That sounds like a lot of negotiations going on because it’s not a tax, and so the IRS will be more able to negotiate discounts on the file on that. That’s going to be interesting. I bet we talk more about that over the coming year.

Stacey Harris:                      I think we will. I think we will. It might be interesting maybe to get some details from all the organizations maybe managing various ACA models to see what’s the differences among them. I think this is much like COBRA. People bemoan having to do COBRA and COBRA efforts. When it first went into regulation, it was horrific for the first couple of years and then after that it sort balanced out. I think we’ll get the same thing with ACA.

Another thing I think is going to start really hitting people, which we’ve talked a lot about but was an interesting point that I picked up today, was Halliburton is now being charged to pay $18.3 million to overtime wages to more than one thousand oil and gas workers because it improperly exempted from overtime pay workers who were actually under the salary requirement for exempt and non-exempt employees.

This gets back to if you remember, I don’t know, it’s probably about a month ago now, Obama proposed a doubling of the income threshold for those people who qualified for overtime pay, even if they were considered an exempt employee, was basically what it came down to. Right now the threshold is four hundred and fifty to five hundred dollars a week and that you have no management duties. I always kind of chuckled at that. I’m like really if you want to make overtime pay don’t take on any management duties.

It’s interesting to see that Halliburton basically … They said they caught this in one of their own audits and they have started to back pay, but then I think to get to the rest of the back pay they had to go through some legalities with their employees. What was interesting is the person who … I was thinking about the poor HR person who was going through this process. Somebody just marked all exempt employees in some system and somewhere in the payroll as not getting overtime. This is a payroll system and a workforce management system issue as much as it is sort of Halliburton maybe not doing the right thing.

John Sumser:                       Wow! So you’re blaming the payroll people?

Stacey Harris:                      I’m not. I’m not. I shouldn’t say that.

John Sumser:                       You said the payroll people did it. It’s not evil Halliburton after all. It’s a … You know what? You could get a job in management in a company like this and blame the low level people for the problem, so that if you’re a big financial institution and you get caught manipulating markets always try to send a low level person to jail.

Stacey Harris:                      Exactly.

John Sumser:                       That’s what you’re saying. Nice move, Stacey.

Stacey Harris:                      But I’m thinking about someone who can figure this, right? Maybe there was some knowledge beforehand. We’re assuming not. We’re assuming the best. When you configure the system, you’re making that decision who gets overtime and who doesn’t, right?

John Sumser:                       I think that’s probably a singularly important thing to remember. We should say that every show. When you’re configuring the system, you’re making legal decisions.

Stacey Harris:                      Yeah.

John Sumser:                       I don’t know any implementation team that really thinks that hard about that. God help you if you had to have lawyers on every implementation team.

Stacey Harris:                      Everything would be sort of taking an extra year to get done.

John Sumser:                       Slow. Everything would be slow.

Stacey Harris:                      Yeah.

John Sumser:                       One of my favorite stories is the reason that lawyers are so verbose and hard to understand is the profession began as scribes, and scribes were paid by the word. So all of legal writing is an evolution of a discipline where the more words you use, the more money you made.

Stacey Harris:                      Since you have a lawyer there in the family, John, I’m assuming that probably she can give you some insight as to whether or not that has continued as a practice, right?

John Sumser:                       We’ll tell you some more about Heather and the law one of these days. There’s some good stories coming up about Heather and the law. What is CloudPay been doing?

Stacey Harris:                      CloudPay is a payroll aggregator. They made two announcements this month, which I thought was interesting to get two on a back-to-back. I don’t know if they’re huge announcements. I guess it depends on what you’re looking for from your aggregator. It might be helpful if anybody is more interested in the payroll space to know that there are true outsourcers, there’s aggregators, there’s sort of your on-premises payroll. There’s a lot of ways to do payroll that we’ve talked about in the past.

CloudPay is a cloud aggregator. They basically put a cloud environment over top multiple payroll environments that are done in each region or each country. That’s basically what it ends up being. They’re exactly what their name says. What they’ve done this week is they have rolled out both an update to their existing system, which they are calling … I was just actually looking to see if I had actually labeled it in my notes, and I don’t think I have; oh, CloudPay Control 2.0. That’s what it is.

They’re CloudPay Control, which is sort of the manager/user side of it. 2.0 has been rolled out, so an update to it. It’s adding things like tracking payroll checklists, like a checklist creator that you can do in there, as I understand it. Post-approval performance reporters. My understanding is that after something has been approved, some tracking of whether or not there’s some audit issues is my understanding of those reports. Enterprise calendaring of events, which I thought was sort of interesting. When you think about all the various things that have to kick off on payroll, you might do them by region or by country, but having an enterprise calendar is a really big and important element.

Then monthly payroll performance metrics. This is something that’s interesting, because we had actually talked a little bit about this last week, monthly payroll performance metrics. Very few organizations actually track metrics around their payroll solution other than get it processed or get it not processed. We’re going to talk a little about this at a panel me and you are going to be doing next week with the Global Payroll Institute, if anyone is interested in learning more about that and what people are doing, both around metrics and other things with payroll.

The other thing in their announcement was that they have a single location local payroll solution now. This, I thought, was sort of basically they’re now saying that they have a local payroll data entry tool. If you have local payroll data that needs to be tracked, a lot of times it’s tracked outside of your HR system or outside even of your cloud aggregator, like in spreadsheets. This is like fields that aren’t needed by an entire organization, but are needed by a specific region or country.

Maybe it’s religion that doesn’t get tracked anywhere else or it’s a code that doesn’t get tracked anywhere else. A lot of times that stuff is kept by spreadsheets outside of the systems. Now they’re creating tools that you can track all that inside the system for each country. It’s a big mouthful.

John Sumser:                       That’s really interesting because that suggests that there are now two radically I think different approaches to payroll. Approach one I would describe as the Dayforce, probably Workday is like this as well. The Dayforce approach is everything all in one place, real time, no trial closes; you put the data in and the payroll comes out. Everything is fixable on the fly and it is a [fast 00:19:04] product.

This is a vision of payroll that’s more like automation of the way things are. If the Dayforce thing is automation of the way things could be, this is how you introduce a cloud solution that fits with the existing payroll workforce. It addresses things like nobody can build a system that’s global, that services all countries, because the essence of payroll is that the social contract is different in different locations.

What you actually have to do to get payroll done varies so profoundly from location to location that you can’t really put a layer of automation over it that way, so these guys are automating the other stuff, the workarounds that payroll people have to do to make disparate systems function together. Does that make sense?

Stacey Harris:                      Yeah. I think it completely makes sense. The only thing I would add to that is that even organizations like Workday and Ceridian have to have partnerships with aggregators, because there are just some countries their systems aren’t connected to that it can handle at this point as well. I think the cloud play aggregators play a major role right now, even with environments where you’re trying to get it all in one in some cases.

John Sumser:                       You say the more complex your global … What would that be, globalness? The more complex your globalness is … Probably not; but the more complex your global strategy is, the more countries you have payroll in, the more you’re going to need something like this, maybe even in addition to the higher end solutions?

Stacey Harris:                      Exactly. Yeah. I will have to say I have talked to quite a few large global organizations recently and it’s not unlikely at this point I would say … I couldn’t give you the percentages, we don’t have that analyzed yet. We don’t ask about aggregators, but it’s not unlikely that they are using some form of aggregator or they have found a partner who has an aggregator working for them. It’s a part I think of the market right now and the reality of it.

Sort of along that line, the other thing that we were talking about is this idea that payroll is one of those areas where we just haven’t had a great deal of innovation in. My data is showing, and your data I think is showing the same thing; that people just don’t turn over their payroll systems very often. They want to keep those things stable. There’s not a lot of I think investments being made in the market at all really on the payroll side. There’s a lot of small companies doing it, but as far as innovation goes, I wouldn’t say there’s been a lot of innovation here.

John Sumser:                       I would probably disagree with you. I know the Dayforce product well enough to say that the thing that happens with a real time payroll tool that is tightly integrated with the rest of the HR suite is that you get the ability to rapidly make informed decisions because the payroll data is so central to understanding how the company actually works.

When you take the complexity out of payroll, which is what the new systems do; they’re complexity killers. The Dayforce system allows you to do payroll at the push of a button without a trial close because it’s all in one system real time. So much of the hassle of doing payroll gets eliminated with the new tools, and that’s what innovation is in an area like that. Once you do that; once you eliminate the hassle, the data becomes available for thinking about other projects.

Imagine if it was easy for the recruiting department to get feedback directly from payroll on the fly in a report that tells them how long the people they hired stayed on the job. Collecting that data from hiring managers is impossible. You can’t get it there, but you can get direct feedback about how the recruiting process is going by looking at the tenure of new hires and new payroll systems make that very easy to do.

One of the big problems that HR departments have had historically is being able to tell how many people work there, and that’s largely because payroll is such a complicated activity. When you simplify it, you can get to that answer very, very quickly. I think that’s where the innovation is. I think that the new generation of payroll tools are extremely innovative if you know how to see it, and it’s hard to see it because it’s innovation in payroll and it’s hard not to feel like that’s the most boring thing you ever heard of.

Stacey Harris:                      Maybe that’s exactly it. I think payroll is quite interesting, but I agree. It just feels like we’re speeding up or simplifying what we’ve been doing for a long time. I guess my hope is that maybe we’ll innovate a whole new way to think about payroll. I’m not sure that’s going to happen, because each country and region has to do it differently, but that would be my hope in the future.

John Sumser:                       It kind of has to happen because the mix of contingent and employee workers is changing so rapidly and it’s changing everywhere. It’s changing around the world, so payroll means something different today.

Stacey Harris:                      Maybe then the last two articles … The one that I picked up that sort of maybe fits on this is this … There was an interesting article about corporate venture activity booming, with last year being the strongest year for corporate investing since 2000 and next year on track to be another boom year. I just thought this was really intriguing. Then it listed out where people are spending most money. On this list, not surprising, is almost nine hundred and twenty-eight investments in software.

The other thing is that who’s doing the investing. The biggest investors are Google, Intel, Qualcomm, Salesforce, Comcast. Talking about these type of innovations, these major innovations … We’re not talking about just a couple of little programs, but these major innovations like whole big changes in how we think about payroll; do you think that’s where these things are going to come out of, John? Is this kind of corporate venture investments in the future?

John Sumser:                       I don’t think that payroll innovation will come out of this. This is how companies do R&D today. What you’re really seeing is that companies who are being extremely successful are starting to invest in their own future. It’s not a surprise that the top five on the list, Google, Intel, Qualcomm, Salesforce, Comcast, are hyper-successful high tech companies. Cisco is on there, and then there are bioscience things. These investments are nurturing companies that might get brought into the fold or made a part of the ecosystem. I think the strategy probably varies by company, and we ought to talk about that. The Workday and Cornerstone OnDemand venture funds are starting to change the face of our industry, so this is a big topic for a later conversation.

Stacey Harris:                      Yeah. I would agree. It’ll be interesting to see how many other … How much innovation can you do inside. That’s part of what I’m going to this week and we’ll talk a little bit more about next week, where I’m going to ADP’s innovation lab up in New York today. It’ll be interesting to sort of compare the internal innovation versus this idea of external innovation, so very cool.

John Sumser:                       Yep.

Stacey Harris:                      We got two minutes left. Want to talk about Target and Fitbits? Target is offering Fitbits to all three hundred and thirty-five thousand employees to do a wellness program that you can opt into. This didn’t surprise me, but I was sort of blown away that with all the other things that Target is dealing with, that this was … They want to become the wellness organization now.

John Sumser:                       You know, there’s so much irony in this that I don’t even know where to start. This is … A, it’s amazing. It’s amazing. What a wonderful thing that a company of that magnitude would do this; will effect the state of health in the entire country. That’s amazing. That’s amazing.

Now we still don’t know … You know I’m a big fan of Fitbit and measuring yourself to understand how you’re doing. I’m almost an Apple Watch kind of guy. The question that we don’t have an answer to is this a hula hoop? Is this going to look so stupid ten years from now, that people walk around slapping themselves on the forehead and going what were we thinking? That’s piece A.

I’m not sure that personal measurement for health reasons is something that’s going to stick in the way that it looks like right now, so Target has taken the risk of looking stupid. That’s great, because it’s a big company and it doesn’t really do that all that often. That’s exciting. The fact that those workers will … I don’t know. I imagine that the Target workers are pretty thin. It’s a very physical job.

Stacey Harris:                      It’ll be interesting to see. I think the interesting thing will be that … We’ve seen this in other organizations. This isn’t a new concept, but like you said it’s new at this magnitude and with a more conservative organization. The end of that article had some commentary about data privacy around this. Data privacy for office workers is very different from data privacy for retail workers who come in and out of a job, who might leave.

I’m interested in seeing where is this going go from that end as well, which is in an environment where you have high turnover. Even Target, which has lower turnover than some in the retail industry but still has high turnover, this could have some interesting conversations that where does that data go when that person leaves and what happens with all that information on an aggregate level.

John Sumser:                       You know what? If you’re a cashier at Target and you’re walking ten thousand steps a day during the workday, they probably are going to fire you, right, because you’re supposed to stand still and do your job. Of all the places in the world, Target is a business where classes of employees, to pump their productivity could probably be actually judged by the number of steps that they take. So how far away is that? As soon as somebody has enough data to make an assertion about that, people start to be measured on the relationship between footsteps and productivity. Target’s a great place to watch that emerge, because that’s where it will emerge.

Stacey Harris:                      Well, we’ve gone through all the articles today. John, I know you have to jump, but I have to jump for an airplane, so this has been a good week.

John Sumser:                       Okay. Enjoy your visit to … You’re going to New Jersey or New York City or something, huh?

Stacey Harris:                      Yeah. Yeah.

John Sumser:                       Oh, you might see the Pope.

Stacey Harris:                      I haven’t thought about that, but yeah.

John Sumser:                       Expect traffic jams.

Stacey Harris:                      Exactly.

John Sumser:                       Okay. Great conversation. Thanks, Stacey, it was a lot of fun. Thanks, everybody, for listening. You’ve been listening to … What have you been listening to? HR Tech Weekly, One Step Closer, with Stacey Harris and John Sumser. Thanks for being here. Thanks again, Stacey. It was great, as usual.

Stacey Harris:                      Thanks, everyone.

End transcript


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