HRIS software is software used by the Human Resources department of companies and business to manage their employees. Different HRIS programs have different features and tools. In this article I’m going to talk about the different types of HRIS systems that are available and what you should look for in choosing the best software for your needs.
An HRIS will help keep all of your important employee files and information organized. As most HRIS’s save your data in the cloud, there is never a worry of misplacing the information. Instead of keeping employee data in a filing cabinet which can be destroyed, your data will be safe and accessible from anywhere. This is extremely helpful if your company has multiple locations or if you ever need to access employee info when you’re not in the office.
In today’s world when more and more companies are having employees work remotely, it’s best to keep employee data in the virtual world instead of the physical world.
What does HRIS Stand for?
HRIS stands for Human Resource Information System. However, you will find that colloquially people refer to it as an HRIS software or even HRIS system… even though you are essentially saying ‘system’ twice in a row. I’m guilty of it all the time.
Different Aspects of an HRIS
Different HRIS software will have different capabilities and features. It’s important that the software you choose meet your needs. Some of the different common features you’ll find in most software is:
- Benefits Management
- Onboarding & Offboarding
- HR Compliance
- Org Chart
- Applicant Tracking System
- Mobile App
- PTO Tracking
Benefits Management System
One of the most important features of an HRIS is its ability to help your company manage the employee benefits. Every HRIS needs to have an employee benefits management feature.
Your HRIS will allow your employees to enter their information, as well as their dependent’s info, into the system. They will be able to view their benefits and plan options. This should include the cost as well as the plan summary.
A good benefits management system will help the employees in comparing their plan options. Once an employee chooses a plan, the system should also automatically fill out the correct forms for each insurance carrier.
When the software is filling out the insurance forms for the employees, instead of having your employees manually fill out the forms, this ensures that no data is missing and that the data is legible. I can’t tell you the number of times forms have to get sent back for clarification or because they were faxed or scanned over and they are no longer readable. A good benefits management feature solves that issue and saves businesses tons of time and effort.
The HRIS will also allow your employees to electronically sign their paperwork. With the ESIGN Act passed in 2010, every insurance carrier I’m aware of now allows e-signatures to be valid.
Your employee’s enrollment application will forever be saved in the HRIS as a document that can always be referred to. This is especially important if you have employees who decline or waive some or all of the benefit options offered by the company. You always want to have proof on file that an employee chose not to enroll if it ever comes up in the future.
Benefits Management and EDI Feeds
EDI stands for Electronic Data Interchange. An EDI Feed is an electronic link between your HRIS and the insurance carrier you work with. An EDI feed will allow your enrollments, changes, and terminations to flow directly from the HRIS into the insurance companies processing systems.
This completely eliminates the need to print out any forms (even if they’ve already filled out) and send them into the insurance company. It also increases the time enrollments are processed, as well as eliminates most errors that can happen when you’re manually having to send in your forms or enter the data manually on the insurance carrier’s online portal.
It’s important to know that not all insurance carriers allow an EDI feed, even if the HRIS is capable of generating one. If you have a small group health insurance plan, (health insurance for companies with less than 50 employees), your insurance carrier will likely not allow you to have an EDI feed.
However, most ancillary insurance carriers do have the capability to allow you to have an EDI feed. You should confirm with your HRIS before you make a purchase as to which companies their EDI syncs with.
New Hire Onboarding
When you’re a new hire, you are usually giving a large packet of information that you’re supposed to read, fill out, sign, and return back to your HR department. The list of documents is getting longer and longer these days, with new compliance requirements and regulations making that new hire packet bigger and bigger.
Your HRIS will allow your employees to fill out all of the paperwork electronically!
Your HRIS should include the ability for your employees to fill out their I-9 and W-4 forms. It should allow you to upload your company handbook, policies, and documents for your employees to review and e-sign all at the same time. Different systems will have different capabilities when it comes to what you can upload as your custom company documents. If your onboarding paperwork requires that the employee fill out forms that include more than their basic information, you may need to make sure the HRIS has a custom document feature.
A good HRIS will allow your employees to fill out all of their vital information, including direct-deposit information and emergency contact info. All of their data will be saved securely in the cloud for you or anyone you’ve authorized on your team to view later. You can also save your own documents and scanned copies of their identification verifications in the HRIS.
When an employee is onboarding, you want to make sure all compliance documents are also included. When that is done in an online system, you no longer need to print forms and you know it’s going to be the same documents for all new hires. After an employee has finished their onboarding paperwork, the system should automatically move them on to choosing their benefits online.
COBRA Software Integration
If you have 20 or more employees, you are required to offer your employees who are terminated or leave your company COBA continuation. Almost all companies in the United States hire a third-party administrator to handle their COBRA compliance. It’s cheap and a lot easier than trying to manage it in house.
Without a COBRA integration feature, for each employee that is hired and employee termination you’re going to need to contact your COBRA administrator and fill out the employee’s information so that they receive the proper COBRA compliance notices.
With an HRIS COBRA software integration, your HRIS will automatically notify your third-party administrator for you with all your employee’s info. You don’t have to lift a finger and your COBRA compliance will be taken care of!
HRIS With Payroll Integration
The goal of any HRIS is to make your life easier and eliminate double work. One of the easiest ways to eliminate double work is by integrating your HRIS with your payroll provider. For each employee being onboarded, that information will need to be inputted into your payroll provider. You will also need to enter the employee’s paycheck deductions for their portion of their benefit costs.
Having your payroll integrated removes the need for you to calculate the employee benefit deductions on your own and manually enter them into payroll. If there are any changes in the future, it eliminates the need for you to go back and make those changes again, since the HRIS should be updating the payroll automatically.
In 2020 most of the major payroll providers are allowing you to integrate with a few different HRIS’s.
For me and my clients, this is one of the most important features to consider when choosing an HRIS. Does it integrate with my payroll provider? If so, what exactly is the level of integration? Is everything automatic, or do I need to still generate a report each pay period and upload it to my payroll provider?
Some HRIS’s will have their own payroll build into the HRIS. When that is the case, you will pay an additional fee for the payroll portion of the software. As a rough estimate, it usually costs about $10 a month per employee per month for payroll.
List of Different HRIS Software Companies
When I first started in this business, there were less than a handful of HRIS companies available for business. There were almost no HRIS companies that a small to medium-size business could afford. These days there are hundreds of different HRIS options to choose from. While many of them are popular, it’s important to make sure that your HRIS meets your company’s needs.
Here is a list of the most popular HRIS companies, but not always the best software:
Getting a new HRIS in place is an exciting idea, but the process to get there is not always as exciting. It takes time and effort to make sure everything is set up properly for your company. If you’ve never set up an HRIS before, it’s important to make sure that the HRIS company you choose has the proper training in place if they aren’t the ones doing the implementation for you.
Some HRIS systems will do some or all of the work for you to set up your system. Some simply provide you with a login and setup is on you.
If you are a larger company looking for a highly sophisticated HR management software like Workday, there will be implementation costs associated with your software. I’ve seen Workday charge over $1,000,000 in startup fees for a large client of ours.
Make sure that you know what your HRIS setup is going to cost you wither in time or money or both.
ACA Reporting Software and Compliance
If your company has 50 or more full-time equivalent employees, you would be an Applicable Large Employer. It is absolutely vital that your HRIS software allows you to manage your ACA reporting and compliance.
There are two ACA features your HRIS needs to have:
ACA Variable Hour Tracking & Eligiblity
When you have employees that may or may not be considered full-time for ACA rules, you need to be able to track their hours each month. ACA hourly tracking feature will then calculate based on your look-back period rules, when and if an employee is considered a full-time employee and should be offered medical plan benefits. This is an absolute nightmare to try and track manually.
If you only have employees that are all full-time and only allow your employees to work less than 30 hours a week no matter what, this feature isn’t needed for your company.
ACA 1095 Reporting
The IRS requires that you keep track of all employees and their benefits status each month. This means you’ll need to track each month whether the employee was offered benefits, in a waiting period, declined an offering, and whether or not those benefits were affordable based on different safe harbor rules.
Manually trying to keep track of this each month or going back through your payroll and insurance bills is extremely time-consuming. From there you would need to then write the applicable code for each month of the year for all employees who worked for you last year.
A good HRIS will do all of the tracking and reporting for you. Sometimes the ACA feature is an add-on that will cost an additional monthly fee. Regardless, it is absolutely worth it. Employers are now seeing the ramifications of not filing or incorrectly filing their ACA reports with hefty fines from the IRS in the six-figures.
Who Manages the HRIS System?
Unless you are spending a large amount of money every month on your HRIS, your HR department will likely be the team that manages and keeps up to date the documents and HR software for your company.
The benefits management piece of your HRIS will need to be updated every year when the benefits renew. Your medical insurance policy will likely change to some degree each year and new documents and plan information will need to be updated. Depending on your arrangement with your employee benefits broker, this be managed annually by them. We recommend that your broker manages at the very least the benefits portion of your HRIS to ensure that your information is accurate and that all compliance is properly in place.
Each state will have different requirements and notices that need to be given to employees annually and when they enroll in a plan. There are also federal requirements required. For example, your HRIS should give the employees the Summary of Benefits and Coverage (SBC) for their specific plan. It’s required that employees be shown that document when they enroll in a plan. Building the SBC into the benefits enrollment process ensures that the employee gets the notices and allows them to refer back to it at a later date.
HRIS vs HCM
HCM stands for Human Capital Management. Human Capital is defined as the intangible assets of your worker’s skill and experience. Human Capital Management software is simply software that helps manage your workforce.
When using HRIS versus HCM, they can essentially be interchangeable at first glance. You’ll find that many people don’t see a difference between the two, whereas the HCM companies will generally advertise that there is a big difference.
When it comes to the companies that promote themselves as an HCM, their software platforms tend to have more features and abilities to manage the employees on a day to day or month to month basis. This can include workflows, employee reviews, and providing an environment to better assist teams within your company to work together on projects. You’ll find that HCM’s will focus more on the productivity of the company, rather than the HR information and management of the employees from a compliance and informational perspective.
Free HRIS Software
There are many different free HRIS systems out there. To be frank, they are all missing key pieces or extremely bare-bones in functionality and information. There are no free HRIS systems that are worth your time and effort. However, there are HRIS platforms that can be free to you.
What’s the catch? There isn’t one! I’ll explain…
One of the key pieces of an HRIS is its ability to help manage your company’s employee benefits. Good brokers around the country now realize that they need to help companies and their HR departments manage this process by providing the HRIS for them. These “free” HRIS software are being paid by the insurance agency. A good agency will even setup the benefits management side of the platform for you.
Different brokers will provide different HRIS systems, but they usually only provide one option to choose from. They don’t like the headache or have the man-power to learn and manage multiple systems.
How is Benefit Leader is different from everyone else?
Benefit Leader is a full-service employee benefits management and employee concierge service agency.
When it comes to an HRIS, we don’t believe in a one size fits all solution. Different companies have different needs and finding the right HRIS for your company is part of our job.
Not only do we provide free HRIS options, but we implement and fully manage those HRIS platforms on an ongoing basis for our clients. This takes the work off your shoulders, ensuring the benefits information is accurate and that your company is in compliance with all regulations. Benefit Leader manages all aspects of your benefits from employee questions, onboarding and offboarding, COBRA, and ACA compliance.
Stop doing so much work and let our trained professionals do it for you. It’s all we do and we’re pretty good at it.