ADP: Non-compliance Penalties Mount for American Mid-sized Companies

In a May 2012 study on mid-sized business owners and executives, ADP Research Institute found that33 percent of mid-sized companies in the U.S. had incurred federal penalties for non-compliance with government regulations over the past year. Of those 33 percent, the average number of penalties sat at 6.4. The study also found that businesses with in-house payroll processing received almost three times the number of penalties than those with outsourced payroll processing. Organizations with in-house payroll processing had an average of 5.7 fines compared to 2 fines for companies with outsourced payroll operations, according to the survey.

“A growing number of midsized companies are outsourcing their payroll processing to help mitigate risk in an increasingly complex regulatory environment,” said Regina Lee, President of ADP Major Account Services, National Account Services, GlobalView, and ADP Canada. “As more mid-market organizations realize the value that outsourcing can offer, we’re also seeing increased demand for our ADP Workforce Now solution, which helps midsized companies simplify the regulatory compliance process, reduce their administrative burdens and focus more squarely on growing their business. In fact, more than a quarter of our new midmarket sales come to ADP from companies previously performing payroll in-house.”

A second study by ADP in 2011 found that the percentage of companies processing payroll in-house compared to those using and external vendor has declined. Between 2005 and 2007, in-house payrolls at midsized businesses have dropped from 54 percent to 48 percent while companies outsourced payrolls rose from 46 percent to 52 percent. More companies with outsourced payroll processing also recorded, for the first time, a higher satisfaction rate when compared to companies with in-house processing at 62 percent and 61 percent, respectively.