Third Party Payroll Providers Benefit Franchisees and SEI
BY PAUL LOBANA, NCASEF VICE CHAIRMAN, PRESIDENT, SOUTHERN CALIFORNIA FOA
According to our new contract, payroll is now the franchisee’s responsibility. This effectively transfers payroll processing from SEI to a third party provider, either ADP or Payality. There’s a very simple reason our franchisor made this change: they don’t want to be perceived as a co-employer of our store workers. This is very understandable, as it shields SEI from any labor or legal issue between a franchisee and a store employee.
Thankfully, the transition to the third party payroll companies has been very smooth with barely any issues. Franchisees who use ADP can have the payroll money withdrawn directly from their general funds, so they don’t have to create a separate ADP account.
I haven’t heard any negative comments about ADP. Franchisees are sending all of their employees’ hours and all their employee information to the 7-Eleven system, and ADP is picking it all up and making the payroll exactly as it was before. A few of my FOA members had a couple of issues, where ADP did not process a few paychecks because the social security number provided did not match the employee name. It was sent back to the franchisee to correct and was then processed correctly.
With the second provider, Payality, the franchisee has to open an account and set up all of their employee data at one time. That includes all of the information about the employees and how they want to be paid: rapid payroll card, check or direct deposit. We are good with that. The franchisee can call in the payroll, they can text it, or they can download Payality’s software and send the payroll info from their computer at home. Franchisees can also buy a system from Payality so employees can check in with their fingerprint. This is a great feature with Payality. I haven’t heard any negative feedback with either service. It appears franchisees are happy to go along with this change. Both payroll companies are similar and both transitions were almost seamless. There were some small hiccups, but that is to be expected with any change. There were some small training issues. I personally had to make about four or five calls to the help desk, but after a week we were ready to process my payroll.
We did discover one minor difference between using ADP and Payality, and this applies to me, and to the people who signed under the same criteria I am going through. I signed the new contract in one of my two stores in April of this year. Say you have two or more stores, and you signed the new agreement on one store, and the other store has several years left on its agreement. If all your stores have the same EIN number, and you choose to go with Payality in one of your stores, 7-Eleven will not pay for ADP in the other stores. In other words, they don’t want you using ADP for some stores and Payality for the other stores. If you stay with ADP, they will pay for all of your stores. Payality is $99 per month, so the savings to a franchisee is approximately $1,200 per year times five years, or $6,000 in total. If you have three stores, the cost would be $18,000, so it’s a little bit of leverage to get more stores to stick with ADP.
The move to a third party payroll provider is not good or bad, it’s something that we had to do based on the new agreement. The message here is that every franchisee has to make the right decision for themselves, and for their businesses. 7-Eleven has been in the press numerous times over I-9s and undocumented workers. This contractual move now takes the heat off of SEI and transfers more responsibility for payroll to the franchisee, which to date hasn’t been an inconvenience.