Why Your Company Should Look for a SOC-Compliant Payroll Outsourcing Partner

Why Your Company Should Look for a SOC-Compliant Payroll Outsourcing Partner featured image

Outsourcing payroll processes can be beneficial to your organization, but it’s natural to worry about how payroll is being handled and if it is secure. That’s why you should seek a payroll service provider that meets SOC Compliance—a third-party validated and verified set of leading practices, including payroll controls, security, and processes.

There are two levels of SOC compliance reports: Type 1 and Type 2. The Type 1 report validates that a payroll service provider has the necessary controls and processes in place. Type 2 verifies that the controls and processes are being enacted in a real-world environment.


SOC Type 1 Compliance: Verifying the Right Controls are in Place

The SOC Type 1 report gathers evidence to show that controls for protecting the customer’s privacy, security, availability, processing integrity and confidentiality are in place. The payroll provider must ensure that it is doing its due diligence for the trusted services it delivers. Here are the Trust Service Principals assessed, which support the CIA triad of information security:

  1. Privacy (Access Control, Multi-factor authentication, Encryption)
  2. Security (Firewalls, Intrusion detection, Multi-factor authentication)
  3. Availability (Performance monitoring, Disaster recovery, Incident handling)
  4. Processing Integrity (Quality assurance, Process monitoring)
  5. Confidentiality (Encryption, Access controls, Firewalls)


SOC Type 2 Compliance: Confirming that Processes are Sound

Transparency is the focus for SOC Type 2 compliance. At this step, external auditors use the SOC Type 1 report controls to conduct a deep analysis using chosen evidences. The objective of the audit is to validate that the controls in place per the SOC Type 1 report respect the five categories outlined in the Trust Service Principals. Auditors will request evidence for processes over a specified timeframe—often about six months’ worth of information.

The verification doesn’t end with a single audit, it is ongoing. The SOC Type 2 Audit will undergo annual or semi-annual audits depending on the period the auditor chooses. Additionally, a payroll provider could be requested to assist clients with their SOC Type 2 Audit.


Payroll outsourcing SOC


Why SOC Compliance Matters to Payroll Customers

If you are looking for a payroll service provider, you should ask about SOC compliance. Through verification and audit, SOC compliance provides a level of trust and peace of mind that your payroll service is being conducted the right way with the right controls and security.

Beyond that peace of mind, there are other benefits to working with a SOC compliant payroll provider. In order to be compliant, the vendor will have implemented leading payroll practices, so you’d be getting those right out of the box. This is valuable if you are fully outsourcing your payroll because you know that the provider will be operating within industry-proven standards via Type 2 compliance. It also helps if you are implementing a payroll system via a pre-packaged solution, as your Type 1 SOC compliant Implementation partner will build those leading practices into your payroll system.

For example, Rizing is SOC compliant while offering three levels of payroll support through Synchrony Payroll. At the first level—called Enabled, Rizing helps implement and maintain your system with leading Type 1 SOC compliant practices, while your organization still runs payroll. At the Managed and Comprehensive levels, Rizing can run your payroll for you with Type 2 SOC-certified processes. At those levels, you have the option to keep face-to-face payroll actions in-house or leave that to Rizing to focus on strategic HR services.


Payroll Outsourcing


At any level of outsourcing, with a SOC verified provider, you’ll know that that leading practices in controls, security, compliance, and payroll processes will be utilized. Choosing a provider like Rizing, which offers flexible outsourced payroll service offerings, that are SOC certified means you are getting a verified level of quality, and an assurance that your payroll will be operated securely and effectively.

If you aren’t working with a SOC compliant payroll provider, then you will be missing the peace of mind and guaranteed leading practices that come through third-party review and verification.

For more on how payroll is evolving, and why your organization might need to examine how it conducts payroll to meet new trends, read the eBook Rethink, Reimagine, Redesign Payroll with SAP SuccessFactors.