Benefits

It’s no secret that the employee experience is critical to an organization’s ability to attract and retain talent—according to a 2023 SHRM survey, employee experience influences about 49% of all job satisfaction. To reduce employee turnover, organizations are increasingly investing in employee recognition and engagement software; but these tools are only effective if they’re frequently used. 

If you sell an employee engagement application that requires too much manual intervention, you run the risk of low employer adoption and customer churn. To maximize your product’s ROI, you need to make it as easy to use as possible—and the best way to do that is by automating employee recognition and rewards through HRIS integrations.

Benefits of automating employee recognition and rewards

Typically, employee recognition involves rewarding employees based on milestones (work anniversaries, birthdays), performance (meeting goals, promotions), and peer recognition. Employee engagement tools typically include basic automation tools that will send rewards to employees based on the data in the application (like automatically sending a digital gift card to an employee on their birthday or work anniversary). 

But this only works if the data in your application is up to date, which means the employer has to manually update the system constantly as employees are hired or terminated, promoted, reach quarterly or annual goals, and so on. At small companies where the HR team may be a single person, they likely don’t have the bandwidth for such work. And at enterprise companies, there are far too many employees to keep up with.

By integrating your application with your customers’ HRIS, you can enable the seamless flow of data from their source of truth to your application. Whenever the data in the HRIS is updated, it’s automatically updated in your application, creating a hands-off experience for employers and greatly increasing the value of your product.

Step-by-step: Automating employee recognition and rewards in your product

When you rely on data directly from a customer’s HRIS platform (their source of truth), you can ensure that your product contains accurate, up-to-date employee information and eliminate the need for manual updates.

1. Identify the required HR data

Depending on your application, you’ll need specific data from the HRIS. At a minimum, you’ll probably need the employee’s name, start date, birthday, and employment status.

You may also need the employee’s address (if sending gifts) and manager (if your rewards require manager approval). If your platform supports sending rewards or gifts for employee promotions, you’ll also need the employee’s current job title or level.

2. Access the HRIS data

One way for employers to get employee data into your product without an integration is through a bulk upload. They could extract data from their HRIS into a file (like a .csv), and you can build an upload tool that maps the fields in the file to the fields in your app. The uploader will need to recognize any changes, such as an employee status change from active to inactive or an employee promotion.

While a bulk upload is certainly faster than manual data entry, it’s still a multi-step process that needs to be repeated on a routine basis. Employers would need to create the extract from their HRIS and initiate an upload. Depending on the size of the company, this might be necessary quarterly, monthly, or even weekly.

Integrations between your product and the employer’s HRIS are the alternative. Integrations are mostly “hands-off” for the employer and automatically transfer data between two systems. 

3. Build HRIS integrations

Integrations between products can happen in several ways, but the most common are a Secure File Transfer Protocol (SFTP), an integration platform as a service provider (iPaas), or APIs. 

SFTP

SFTP is a secure file transfer that automatically moves your customer’s extracted HRIS file to a specific location and ingests it into your product. However, SFTP integrations are often a source of friction for customers as they are very finicky and can cause errors. APIs are a more direct connection to send/receive data between two products. 

Either way, you need to build an integration. If you do this internally, it can require significant development resources. Ideally, your product supports multiple HRIS systems, and each integration will be unique. More than likely, you’d have to form relationships with the HRIS vendors to ensure your integration can “talk” to vendors.

iPaaS

Another option is an iPaaS provider, or Integration Platform as a Service. iPaaS solutions are low-code options that allow companies to build workflows to connect different products. iPaaS relies heavily on APIs.

While they’re designed to be low-code, iPaaS solutions still require development efforts to initiate connections to new HRIS providers, map data fields, and manage workflows and triggers, putting a strain on internal resources. iPaaS connections act like middlemen that require your team to instruct the tool on which data fields to pull from the HRIS and where to map them in your product, so you’ll need to take care to ensure that all the fields are accessible and mapped correctly. And you’ll need to maintain those integrations and workflows every time there’s a change in the underlying HRIS or when you want to partner with a new HRIS platform. 

PerkUp, an employee engagement platform to send gifts and swag to employees globally, considered using an iPaaS provider. However, PerkUp realized that creating and managing workflows would still burden internal resources, so they opted for a unified API instead.

APIs

APIs connect two systems using a set of standardized protocols. They offer users a seamless data exchange, refreshing your application with the employee data from the HRIS on a daily or weekly basis.

If you build API integrations internally, you’ll need to dedicate technical resources and plenty of monetary investment to the project. The work would be ongoing as you support additional HRIS platforms. For many companies, building and supporting APIs takes focus away from their core product—and by our estimates, a single integration can cost upwards of $187,000.

Alternatively, you could opt for a unified API. Unified APIs like Finch act as integration aggregators. By building one integration between your application and Finch, you can access seamless API integrations to hundreds of HRIS providers, ensuring you can offer a fully automated experience to any customer, regardless of the HRIS system they use.

You can also use Finch Flatfile, a solution for organizations with limited technical resources. Flatfile relies on existing integrations with HRIS providers to pull data from their systems in a standardized file. That file can then be delivered to an SFTP server, rather than building to the Finch Unified API. 

Let employers focus on retention, not data management

Much as employers may want to offer employee engagement tools, data might be a sticking point. They need a seamless integration that simply runs in the background, without any manual processes or difficult setup.

Finch is the way to scale—both for you and for your customers. With Finch’s Unified API or Finch Flatfile, your customers don’t need to put in any additional work to use your platform, even as they add more employees. And since Finch connects to more than 200 HRIS and payroll providers covering nearly 90% of U.S. employers, you’ll be able to offer your product to more customers and expand your market potential. 

By leveraging HRIS integration through Finch, your employee recognition platform becomes more efficient and valuable to your customers. It will allow them to truly take advantage of automated employee recognition.

To learn more about Finch, you can try it for free or schedule a call with our sales team.

Inflation and rising costs have made tax advantaged savings accounts more attractive for employees, since contributions reduce their taxable income. Whether it’s a doctor’s visit, paying for mass transit, or saving for a kid’s future college expenses, these accounts make it easy to set aside money for expenses they would incur anyway. 

Inflation and rising costs have made tax advantaged savings accounts more attractive for employees, since contributions reduce their taxable income. Whether it’s paying for a doctor’s visit, saving for an emergency fund, or commuting expenses, these accounts make it easy to set aside money for expenses they would incur anyway. 

For employers, tax advantaged accounts make their benefits packages more attractive, plus it saves money on the employer’s share of payroll taxes. However, such accounts come with administrative overhead and strict requirements to meet IRS guidelines. 

Employers might be more inclined to offer such benefits if technology makes the benefits easy to manage. Payroll integrations are critical for benefits providers since they enable a seamless experience without additional strain on HR teams. 

What is a tax advantaged savings account?

Most employers are familiar with tax advantaged savings accounts like health spending accounts (HSAs), flex spending accounts (FSAs), and retirement plans like 401(k)s. Employees can take advantage of setting aside pre-tax dollars in these accounts to pay for qualified expenses, such as out-of-pocket medical costs and dependent care, or to save for retirement.

However, other types of tax advantaged savings accounts have become popular in recent years — commuter benefits, Individual Coverage Health Reimbursement Arrangements (ICHRAs), and student loan assistance. Each of these can come with tax advantages, saving money for both the employer and employee. 

For example:

• Employers can offer a commuter benefits account, which allows employees to make pre-tax paycheck contributions to pay for commuter expenses.
• ICHRAs are employer-funded health benefits that provide tax-exempt funds for employees to pay for their own health insurance plan. 
• Employers may contribute to their employees’ student loan balance to help them get out of debt faster, either through the employee’s paycheck or by making direct payments to the lender. The first $5,250 in annual student loan assistance per employee is tax-free for both the employer and employee through at least 2025.

Related: Read more about how technology has enabled a rise in employer-sponsored benefit programs in our white paper: Unlocking Scale: The Revolution in Employer-Sponsored Benefits. 

Key steps to administer tax advantaged savings accounts

In addition to offering tax advantaged savings accounts, employers have to be prepared to administer such accounts. 

For employers, these steps can create additional administrative burden. Technology has substantially changed the game with products that make it easy for benefits providers to manage most of these steps on the employers’ behalf. In order for this to work, however, you as the benefits provider need to be able to access data from the employer’s HRIS or payroll system and make changes to those systems.

Step 1: Enrolling eligible employees

HSAs, FSAs, and ICHRAs have specific enrollment windows: when an employee joins a company or during the annual open enrollment period. 

Some commuter benefits accounts have very specific criteria, requiring employees to work at least 120 days before they are eligible. After the waiting period, employees can enroll at any time. 

It’s critical that employees are invited to participate in these benefits as soon as they become eligible. 

Step 2: Managing account contributions

The complexity of managing contributions to a tax advantaged savings account varies depending on the benefit. Since HSA and FSA enrollments are limited to new employees or the open enrollment period, the contributions are easier to manage — the contribution is determined once during open enrollment, and can only be changed with a qualifying life event (such as the birth of a child). 

But other benefits, like ICHRAs, are more complicated. The amount the employee receives with each paycheck will vary based on the insurance plan they’ve chosen, and in some cases, the employee can pay for costs that exceed their reimbursement limit through payroll deductions — an amount that can vary from month to month, meaning the deduction amount needs to be adjusted frequently. 

Then there’s the added complexity of employer contributions: HSAs and commuter benefits allow employers to contribute to the account. In this case, employers need to factor that into the contributions, as well as determine when the contributions will occur. Contributions might occur with each paycheck, or be offered as a lump sum one or more times per year. Additionally, since HSAs and commuter benefits have legal maximums, an employer contribution may change depending on how much the employee contributes to the account. 

With commuter benefits, employees can opt to change their contribution amount at any time, resulting in more updates to the payroll system. 

You have to capture any changes that employees make to their contributions and ensure the changes are reflected in both your product and the employer’s payroll system. 

Step 3: Managing payroll deductions

Employee contributions to most tax advantaged savings accounts are deducted from the employee’s gross pay. The employer needs to know how much to deduct (pre-tax) so both the employee’s and the employer’s payroll taxes are calculated appropriately.

If the employee’s contributions change, the employer needs to make timely updates to the payroll system to ensure the changes are reflected in the employee’s paycheck. If you don’t get the changes written to the employer’s payroll system, the employee’s deductions, payroll taxes, and net pay may be incorrect, leading to a poor customer experience and potentially fines or penalties.

Note: Some other types of accounts have tax advantages, but aren’t included in this article because the contributions are made post-tax. For example, Emergency Savings Accounts (ESAs) can be tied to a retirement plan, but aren’t subject to the same withdrawal penalties because the contributions are made on a Roth (after-tax) basis.

Step 4: Creating year-end reports for tax reporting and auditing

Since tax advantaged savings accounts have implications for an employee’s taxable income, some contributions have to be reported on the employee’s W-2. HSA and FSA benefits are reported, since employees can claim medical and dependent care expenses as deductions.

For all benefits, employers need to maintain accurate year-end reports for compliance and potential audits; but the actual filing is typically outsourced, meaning the employer needs to send a year’s worth of granular data to a third party, which can be difficult if they don’t fully understand what data is necessary.

How payroll integrations benefit tax advantaged savings accounts

Benefits providers need timely, accurate payroll data in order to administer the accounts properly. HR departments need to know how much to withhold from each employee’s paycheck, as this impacts the employee’s net pay. Since contributions are pre-tax, they also impact the amount of the employer’s share of taxes.

Without payroll integrations, HR departments and benefits providers would be making a lot of manual changes — particularly if the company has a lot of employees or if the contribution amount changes. Payroll integrations automate this process with a seamless connection between the payroll system and the benefits provider. 

1. Better, more reliable data access

Without payroll integrations, employers are manually moving data between systems. Data can quickly fall out of sync, and human intervention makes the data prone to errors. Changes such as employee hires, terminations, or changes to monthly contributions are constantly in need of updates when offering benefits such as tax advantaged savings accounts.

For smaller companies, the administration of such benefits can be prohibitive. For larger companies, the burden is overwhelming. 

With Finch’s unified API, your benefits solution can securely connect to an employer’s HRIS and payroll system, allowing you to access the most accurate and timely employee data. Because the connection refreshes the data every day or week, you can automatically identify employees whose eligibility or contributions have changed and invite them to enroll, rather than relying on the employer or your Operations team to flag these changes.

2. Automated payroll contributions

Since contributions to tax advantaged savings accounts impact the amount of taxes paid by both the employer and the employee, it’s critical that contributions are accurate within every pay period. Whether it’s new employees enrolling in benefits for the first time or contribution changes to a commuter benefits account, changes to contributions have to be timely. 

With payroll integrations, contributions and deductions are updated automatically between your product and the employer’s payroll system. A bi-directional integration captures any changes and writes the appropriate amount back to the employer’s payroll system for the proper deduction, all without involving the employer. 

That way, payroll taxes are calculated automatically based on the after-tax wages or salary. This greatly reduces the risk that payroll isn’t calculated correctly due to a delay or human error, and reduces the administrative burden on the employer.

3. Greater efficiency

Payroll and HRIS integration makes it easy to enroll new employees into tax advantaged savings accounts, a process that can otherwise be cumbersome, especially for companies with a lot of employees. 

Lane Health uses Finch to enroll employees into HSAs and additional benefits like Health Payment Accounts (HPAs). Before Finch, administrators within Lane Health’s customers would spend 8-12 hours keeping information in sync. Employers would manually update employee information in Lane Health or export and import flat files between the two systems. Now, Lane Health uses Finch to provide secure access to employee data and track contributions to HSAs and payroll deductions for other benefits. 

If it’s easy for HR teams to enroll employees in HSAs and manage their HSA deductions, more employees will be likely to participate — a benefit to any employer looking to offer HSAs and similar accounts. 

4. Compliance and tax management

Tax advantaged savings accounts are regulated by the IRS, including when employees are eligible for enrollment and how much they can contribute with pre-tax dollars. You have to monitor and enforce annual contribution limits outlined by the IRS and ensure employer contributions don’t exceed these limits. 

Payroll integrations make it easy for you to maintain compliance because you can verify when employees are eligible to participate and maintain compliance without a lot of back-and-forth with the employer. 

Integrations also allow you to easily pull year-to-date data at any time, ensuring the information you have for year-end reporting is complete, accurate, and delivered on time. Without integrations, employers may struggle to pull the data for year-end reporting — they may not understand all of the information that is needed, putting a burden on your team to help them.

Seamlessly integrate with hundreds of HR and payroll systems with Finch

Even if you build your own payroll integrations, they can be costly and difficult to maintain. You’re forced to integrate with multiple HRIS platforms and payroll systems to have the biggest market reach, which can be a drain on your internal resources.

Finch’s Unified API for HRIS and payroll has done the heavy lifting for you. With Finch, you need to build only one integration to our API, which connects you with hundreds of HRIS and payroll systems. Our integrations cover the systems used by nearly 90% of U.S. employers. 

To learn more about Finch, you can try it for free or schedule a call with our sales team.