What Is a payroll lock and how do you use It?

What is a payroll lock?

Simply put, a payroll lock is a feature in payroll systems that prevents any changes to employee payroll records after approval. Payroll locks protect time-tracking records, employee work hours, and work schedules. Another plus? They prevent unauthorized personnel from locking or unlocking a pay period.

Once a payroll lock is applied, users must have override access to create, revise, or reject time cards or adjust employee records. For most payroll software providers, a lock icon will appear on the locked pay period.

For some companies, a payroll process is only complete once a payroll lock is activated for the current payroll period.

Why are payroll locks worth learning about?

There are several benefits to using a payroll lock:

1. Data integrity: Prevents people from accidentally making any unauthorized changes to approved payroll data.
2. Compliance: Maintaining accurate records helps businesses follow labor and tax laws.
3. Audit transparency: Provides a clear record of payroll changes and all payroll lock activities.
4. Efficiency: Eliminates the need to repeatedly review and adjust payroll data.

Locking a payroll period can reduce the risk of paycheck errors or discrepancies. Next, let’s cover some of the typical payroll schedules employers choose from since the one you choose will determine how you apply payroll locks.

Types of payroll schedules

The most common payroll schedules are biweekly, semimonthly, and monthly.

Monthly payroll

Monthly payroll is common in organizations with salaried workers whose pay is consistent month to month. With just one payday per month, businesses can streamline payroll processes, saving time and administrative costs.

Biweekly payroll

A bi-weekly pay period involves paying employees every two weeks, resulting in 26 paychecks a year. This is common for both hourly and salaried employees. It is more efficient than processing a weekly payroll and allows employees to get their paychecks regularly.

Semi-monthly payroll

A semi-monthly payroll schedule involves paying employees twice per month. This may seem the same as a biweekly schedule, but it actually results in only 24 paychecks per year compared to biweekly’s 26. This method is less consistent because the number of days per month differs from month to month.

Payroll locks can help ensure accurate data for multiple paychecks per month, especially since some months have three pay cycles to process.

Supplemental payroll

Supplemental payroll covers additional payments outside of regular salaries, such as bonuses or commission payments. A payroll lock can keep supplemental payments from interfering with regular payroll data.

How to use payroll locks

The process for applying a payroll lock is based on your payroll system or software. Most, however, follow the same steps.

Steps to use a payroll lock:

1. Finalize all updates: Make sure all time card entries, work hours, and records for the payroll period are accurate and updated.
2. Apply the lock: Using your payroll software, apply a lock to prevent changes to the payroll period. In some systems, this may involve activating a lock icon for the specified dates. Be sure to apply the lock after the payroll period has officially ended.
3. Lock past timeframes: Apply locks to historical data more than a year old to ensure no historical edits are needed.
4. Double-check before locking: Once locked, historical edits and changes can’t be made.
5. Check your employee’s signed policies: Depending on the most recent policy acknowledgment form your employee signed, it might be possible to sign or unsign a locked timecard.
6. Audit the data: Use tools like a payroll lock audit form to review all payroll lock activities for auditing purposes.

How to unlock payroll periods

There may be times when you need to unlock a payroll period to adjust for an overpayment or underpayment.

Steps to unlock payrolls:

1. Access payroll settings: Log into your payroll software and locate the locked payroll period.
2. Request authorization: Ensure that you or an authorized manager have the necessary permissions to unlock the period.
3. Make necessary adjustments: Make the necessary changes once the payroll is unlocked.
4. Relock the period: After adjustments are complete, relock the payroll period.