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Outsourcing payroll? Be sure someone can explain the math

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in Small Business Tax Deduction Strategies

These days, with employers having to do more with less, lots of companies outsource some functions that take a lot of time. If a vendor handles your payroll, make sure someone on the inside understands exactly how the outside provider calculates tricky things like overtime pay. Also make sure the vendor has someone on staff who can testify in case you get sued.

Recent case: Robert Valladon sued the city of Oakland on behalf of himself and other police officers, claiming the city hadn’t properly paid them overtime.

The claim rested largely on the way the city calculated the officers’ base pay using a complex computer system. The trouble was that none of the city witnesses seemed to understand exactly how the program worked.

That was enough to send the case to trial. (Valladon v. City of Oakland, No. 06-07478, ND CA, 2009)

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