Why Strong Cybersecurity Measures Are Non-Negotiable for Payroll Compliance

Most organizations nowadays rely almost entirely on cloud-based technology for payroll management. While this approach offers many benefits – for one, it’s much more efficient and convenient than the traditional method – it also leaves many businesses open to cyber security threats. 

This is particularly worrisome in an age where data breaches are becoming increasingly common. Just last year, three giant companies – the BBC, British Airways, and Boots – had their payroll data hacked.

What can businesses do to protect their sensitive payroll data and, by extension, protect their employees and their reputation? 

As it happens, plenty. In this blog post, we delve into why strong cybersecurity measures are crucial for organizations of all sizes and what you can do to ensure your payroll data remains safe and your business compliant.

Importance of Payroll Security

First, why is payroll data so irresistible to cyber criminals? In short, because it’s a figurative goldmine.

Payroll data is like catnip for criminals because it contains a lot of sensitive information that can be stolen and misused, such as home addresses, social security numbers, bank account details, and more. 

If this type of information got into the wrong hands, not only could it lead to fraudulent activities like identity theft or unauthorized transactions, but it could also severely damage your employees’ trust in your organization and, ultimately, tarnish your reputation.

Payroll security is also essential from a compliance perspective, as your company has to meet certain legal and regulatory requirements. For example, if your company is based in California or you manage California payroll taxes for some of your clients, you have to ensure compliance with the California Consumer Privacy Act (CCPA). 

Same goes if you’re somewhere in the EU or have clients from the EU – you need to be compliant with the General Data Protection Regulation (GDPR), which is the world’s largest set of data protection rules.

Why is this so important? Aside from making sure sensitive information about your employees is safe, remaining compliant with legal and regulatory requirements is crucial if you want to avoid fines and legal consequences.

Risks of Inadequate Payroll Security

What happens if your organization fails to adequately protect its payroll data? One common threat is phishing attacks. This is when your employees receive deceptive emails with the goal of making them reveal their login credentials or other sensitive information. If successful, the hackers behind phishing emails can gain access to your payroll system and wreak havoc.

Another risk is ransomware, which is a type of malware. As you can probably tell by the name, this attack works through malicious software that locks users out of their systems until a ransom is paid. Naturally, payroll systems are attractive targets for ransomware attacks due to the urgency in restoring access, making organizations more likely to consider paying the ransom.

And then, there are possible inside threats. Even if you try your best to only hire and work with good people, it’s always possible to have someone on your team looking to make a quick profit. This person or even persons might misuse their access to payroll data to either profit off of it, or to cause your company or other employees harm.

How to Improve Your Payroll Security?

The conclusion is this: the importance of your payroll data should be one of your main priorities. Here’s how to ensure it’s as protected as it can be.

• Keep Your Software Up to Date: To make sure the payroll software you use offers maximum protection, regularly update it to patch known vulnerabilities.
• Have Strong Authentication Methods: Require multi-factor authentication (MFA) for accessing payroll systems so you can add an extra layer of security beyond just passwords.
• Encrypt Your Data: Any payroll data you have should be encrypted so that even if it’s stolen by a third party, it will be (next to) impossible to read it.
• Use Secure Networks Only: Make sure that your payroll systems are accessed only through secure, encrypted connections. Never use public Wi-Fi for payroll-related activities.
• Limit Access to Payroll Software: Grant access to your payroll system only to those employees whose job requires it to have it.
• Backup Data Regularly: Finally, regularly back up payroll data and store it securely so you can recover from data loss if ransomware or other incidents do occur.

Note: sometimes, it’s possible for attackers to hack your system even when you do everything right. If this happens, it’s crucial to report the breach as soon as possible.