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PAUL? PAUL: THIS IS AFFECTING HUNDREDS, MAYBE THOUSANDS OF PEOPLE HERE IN WESTERN P.A IT INVOLVES A NEW YORK FIRM CALLED MY PAYROLL HR THAT HANDLES PAYROLL FOR HUNDREDS OF COMPANIES. MY PAYROLL HR SHUT DOWN SUDDENLY LAST WEEK, AND WHEN IT DID, THE MONEY THAT IT HAD DEPOSITED IN PEOPLE’S BANK ACCOUNTS DISAPPEARE >> I CHECKED MY BANK ACCOUNT AGAIN. THE MONEY WAS GONE. THEY TOOK IT BACK. PAUL: JUST HOURS AFTER CINDY FOREBACK’S PAY WAS DEPOSITED INTO HER BANK LAST WEEK, IT DISAPPEARED. CINDY IS ONE OF 130 EMPLOYEES AT LIKEN HOMECARE IN FOREST HILLS WHOSE PAYCHECKS VANISHED. >> PEOPLE CAN’T PAY THEIR RENT. THEY CAN’T FIVE FOOD FOR THEIR KIDS. PAUL: IT ALL HAPPENED AROUND THE SAME TIME SHE GOT AN EMAIL FROM THEIR PAYROLL COMPANY, MYPAYROLLHR, SAYING THEY WERE SHUTTING DOWN. >> I THOUGHT, WHAT? THIS CAN’T BE HAPPENING. PAUL: SHE CALLED THE COMPANY AND GOTTEN NO ANSWERS. SO COMPANY PRESIDENT BOB LIKEN HAD TO WRITE PAYROLL CHECKS THE OLD-FASHIONED WAY FOR EMPLOYEES DESPERATE TO BE PAID. >> A LOT OF PEOPLE LIVE PAYCHECK TO PAYCHECK AND THEY DIDN’T HAVE THE MONEY IN THEIR ACCOUNT TO COVER THE REVERSAL. THEY HAVE BEEN GETTING HIT WITH FEES LEFT AND RIGHT. PAUL ONE OF THEM WAS NICOLE FROM LATROBE. >> THAT WILL CREATE MORE LATE PAYMENTS, LATE FEES THAT MAY ACCRUE AND THAT WILL AFFECT YOUR CREDIT. PAUL: WE TRIED TO REACH MY PAYROLL HR BUT NO ONE RESPONDED. THE WEBSITE FOR THE PARENT COMPANY WAS SHUT DOWN. NEW YORK GOVERNOR ANDREW CUOMO OPENED AN INVESTIGATION, SAYING THE COMPANY’S RECKLESS ACTIONS LEFT EMPLOYEES WITH NEGATIVE BANK ACCOUNTS AND THE DESERVE ANSWERS. >> IT IS BATTLE AROUND. THESE PEOPLE NEED THEIR MONEY. PAUL CINDY AND NICOLE SAID THEY ASKED PNC TO REIMBURSE THEIR ACCOUNTS FOR THE MISSING PAYCHECKS, BUT SO FAR THE BANK REFUSED. A PNC SPOKESPERSON SAYS THE BANK REFUNDED OVERDRAFT AND OTHER

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The abrupt shutdown of a national payroll company last week left thousands of people around the country with negative bank balances and several looming questions: How did this happen, and what can be done to prevent it from happening again?People from New York to Texas to Florida are still reeling from the closing of MyPayrollHR, based in Clifton Park, New York.A Facebook support group for those who've been affected grew to more than 1,800 members over the weekend.Not only did the closure cause members' most recent paycheck to be withdrawn, but many reported being hit by a second deduction from California-based Cachet Financial Services that had been worth the same amount as their original paycheck. The deductions left employees with negative account balances and hit particularly hard because they came at the beginning of the month, after rent payments had already been made.It's not clear where the deducted money went.The Better Business Bureau said Monday afternoon it attempted to contact MyPayrollHR but hadn't received a response.The Times Union spoke with three experts in payroll and human resources to gauge how things are supposed to work and could go wrong when employers use third-party payroll processors.None of those interviewed have knowledge of the inner workings of MyPayrollHR.Who is involved?Michael Mann is the owner of ValueWise Corporation, MyPayrollHR's parent company. Mann hasn't responded to several attempts to contact him. Messages left to a phone number on MyPayrollHR's website, which is still active, have not been returned.A person who answered a phone at Cachet Financial Services said the company would not be providing a comment Monday.How do these companies work?While payroll processors offer a range of services, the basic transaction is fairly simple: Businesses send their payroll company a sum to cover their payroll and applicable taxes, and the company distributes paychecks to the client's employees through direct deposit or a hard-copy check.If a mistake is made, such as a typo on a check that adds $10,000 to an employee's pay, the payroll company has the power to cancel the check or, in the case of direct deposit, yank back the overage. It is extremely uncommon, however, to have a properly earned paycheck extracted from a worker's account.Why would employers process payroll through a third party? In many cases, employers hand off payroll to third-party companies to avoid having to navigate the minefield of laws governing taxes and other regulations that come with running a business and paying employees."It appears much more simple than it actually is," said Rose Miller, president of Albany-based Pinnacle Human Resources and a columnist for the Times Union. "Payroll can be very complicated — there's employment laws that have to be adhered to, then there's IRS payroll laws that have to be adhered to. You have to be aware of what is available to all employees as far as their rights to paid family leave and worker's comp."Businesses that file payroll manually could be on the hook for "big-time fines" if they were to miss a deadline, Miller said.Miller also said reputable payroll processors have a redundancy system that backs up and saves data if something goes wrong."You don't want to do payroll by yourself because you don't have the ability to put the security measures that outsourcing your payroll has," she said.But Miller said it's crucial for business owners to do their own due diligence and research before choosing a payroll provider."I find that a lot of people do a blind-trust thing. 'I outsource my payroll, they know what they're doing. I don't need to look at these reports.'""No," she said. "It's your company. You need to read every single report. If you don't understand what's happening in those forms, you need to ask the right questions."Guy Maddalone, the CEO and president of the Clifton Park-based GTM payroll services company, agreed."A lot of people fall into this false sense of security when they go online and they see a really nice-looking website," Maddalone said.There are some important details business owners should pay attention to when choosing a payroll provider, Maddalone said, such as whether the website has pictures and profiles of its management team, and whether it lists designations or accolades for those individuals, such as being a CPA or HR professional."If that company isn't willing to put that information there, that's certainly a warning sign," Maddalone said.What can go wrong?It's still unclear what exactly caused MyPayrollHR to collapse, though investigations have begun.Lori Johnson, operations manager of Payprep Incorporated, said one of the biggest issues she sees are payroll processors who escrow tax funds into one pool, as opposed to making each individual business responsible for its own payments."I don't like escrowing people's tax dollars," she said. "My feeling is, if one person has trouble, it's their own problem. We make the payments on their behalf, but the money comes out of their account."If a payroll company escrows their clients' taxes and falls behind on payments, "Everybody takes a fall — and they just crash," she said."They're all in a big group together," she said. "And if the biggest domino falls, the company lets that happen for a few weeks hoping they catch up. If you keep paying (those taxes), but nobody's giving you money to pay them, eventually you don't have anything left."Maddalone said another thing that could go wrong is the payroll company not submitting payroll taxes on time — or just simply not at all.That's why transparency and accountability are big parts of his company, he said."That's a big deal, providing transparency to your client," he said. "And the assurance is that if it's not done right, the company backs it up."Who regulates payroll companies?The short answer: nobody. If something goes wrong, the ax usually falls on the employer.That's because the Internal Revenue Service requires employers to withhold federal taxes, including for income and Social Security. If the business owner chooses to go through a payroll-processing company to do those things and they fail to meet , the business owner is still liable.Johnson likened the relationship between a payroll processor and a business owner to that of a plumber and a homeowner. If a plumber does work in your home but causes a catastrophic flood, the homeowner can pursue damages in court, but it's still their responsibility to fix the home.The same is true for payroll processing companies because they're treated as vendors, Johnson said.Maddalone agreed, saying the responsibility "should" fall on the payroll company to ensure rules and regulations are followed, but the responsibility is still on the individual businesses."The payroll company should live up to their agreement," Maddalone said. "But the state agencies and the IRS are going to hold the business accountable."