Using a third-party payroll service may be convenient, but in addition to being a costly alternative to doing it yourself, household employers should be aware that the primary responsibility to protect their employee’s personal information and data still rests on them.
Use of third-party payroll service providers complicates payroll data security because employers, regardless of their own efforts to safeguard their employee’s data, might still need to respond to an identity theft issue caused by their payroll service’s insufficient security measures, according to an IRS special agent with the Service’s Criminal Investigation Division, and who is also the identity theft coordinator at the Division’s field office in Washington. “There are businesses that have been destroyed because they’ve been relying on third-party vendors that are not sophisticated or not spending the necessary dollars to protect themselves against these types of [security] breaches”, said Wade Cassamajor, IRS special agent, at the Charm City Payroll Association spring conference held in Baltimore recently.
With the rise in electronic attacks in general, payroll systems increasing are becoming the subject of such attacks because they contain a wealth of personally identifiable information (such as names, addresses, employer, and social security numbers) sought after by identity thieves. According to the IRS, Cybercriminals are using increasingly sophisticated phishing and other schemes to hack payroll systems and data.
For DIY household employers using NannyPay, the risk of data theft is very small because your payroll data remains safe on your own computer and under only your control. But if your family chooses instead to use a third-party payroll provider or other online payroll service, remember that it remains your responsibility to ensure you transmit wage and other payroll information to your payroll service securely, and that you verify your payroll service has implemented sufficient security safeguards to protect your employee’s payroll data and other personal information.