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BOD’s Access to Employee Payroll Checks

Is there a problem with disclosing individual employee payroll check amounts in the check register which is part of the financial reports reviewed each month by the BOD of a small non-profit corporation?

The confidentiality of payroll information is important mainly due to the sensitive nature of the data contained on employees’ paystubs such as the employee’s name and address, direct deposit information, and company financial data. All of this information can be used for fraudulent activity. Thus, employees’ paystubs should remain confidential.

It sounds like the Board of Directors (BOD) is just interested in the payroll amounts. In this case, the main concerns are will the employees’ names be listed as well, who will have access to the information, and what is the purpose of sharing the information.

Basically, the role of a BOD is to provide oversight and management of the company’s operations to ensure their alignment with the company’s missions and objectives. In doing so, the BOD is responsible for the financial resources of the company, including ensuring the prudent use of all its assets (i.e. employees).

Usually, the salary scales of each position are provided to the BOD for review as needed and the total amount spent on employees’ salaries (sometimes by department/division) are provided as part of the annual budget analysis. The BOD or its HR Committee may occasionally request a full list of employees’ names and salaries to ensure employees are being paid fairly and appropriately, and to be certain the salaries are within the budget limitations. It’s not common to provide employees’ names and salaries monthly to the entire BOD.

There may not be any legal issues with disclosing the employees’ salaries to the BOD on a regular basis but it still may not be a good idea.

Consider the risk of the information being disclosed to a third party who then shares it with an employee or two. Now employees know how much each other are getting paid. This may cause resentment among some employees, not only because someone may be paid higher than another in the same position but also because most employees feel their salaries are private.

Is there a legitimate business need for the information on a monthly basis? If not, don’t do it. If the information is really needed, then consider providing it but just without employees’ names.


This entry was posted on Friday, January 20th, 2017 at 2:06 pm and is filed under
Human Resources Management.
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