The Effectiveness of Effective Dating

September 27, 2023
Jim Kohl

Head of Payroll Operations

by 
Jim Kohl

The most efficient payroll administrators use the tools they have available to ensure timely and accurate payroll each pay period. Effective Dating is a powerful payroll tool to do just that.

What is Effective Dating?

Effective Dating enables the ability to keep historical, current, and future-dated information and provides the ability to update existing information without losing or overwriting the data. In payroll, Effective Dating is a method used to track changes to an employee's pay information, benefits changes, and even tax updates. The effective date is the date on which a change within payroll will take effect or a past date in order to recalculate prior data. For example, if an employee makes an update to their health insurance plan, the effective date of the change would be the date on which the employee's new insurance coverage will begin.

Here is how this example would play out:

  1. The employee notifies the payroll administrator that they’ve made changes to their health insurance plan that become effective on July 15th, two weeks from today. 
  2. The payroll administrator immediately enters the change into the payroll system with the July 15th effective date.
  3. Two weeks later, the employee's health insurance coverage changes, and the new amount is deducted from their next paycheck in accordance with the health insurance changes.

Most payroll systems should allow the effective date to be entered alongside the change in advance of the effective date. In the example above, the employee’s health insurance update takes effect two weeks from now, but if there is a payroll run between now and then, both the payroll admin and the employee would want to ensure the current health insurance amount is deducted (if there is one). By using Effective Dating, the new amount will update once that date is reached, but preserve the current rate until that time. 

What are the benefits of Effective Dating?

Payroll administrators have a lot on their plate. Regardless of their workload, payroll must be timely and accurate. Relying on memory or sticky notes for upcoming changes is burdensome and error prone. Effective Dating gives payroll admins the ability to make the revision immediately, rather than waiting until the change should go into effect. This system ensures efficiency and accuracy. 

Additionally, certain states will update their unemployment rate with a notice in the mail. This notice will arrive before the rate goes into effect. Using Effective Dating, a payroll administrator can quickly add the new rate into their payroll system with the effective date and rest easy knowing that the new rate will begin exactly when it is set to begin. 

Get Effective

By using Effective Dating, payroll administrators can help to ensure that their employees are paid correctly. In addition to the benefits listed above, Effective Dating can also help to improve communication between employees and payroll administrators. Payroll administrators can use this to their benefit. When employees know when changes to their benefits or pay will take effect, they are less likely to have questions or concerns about changes to their pay. This can lead to a more positive employee experience and a more efficient payroll process.

Payroll providers built on top of Check are able to take advantage of Effective Dating in multiple fields including benefits, deductions and tax parameters. Since Check empowers a multitude of businesses across multiple sectors, we offer the most proactive tools for payroll administrators. The Check platform empowers payroll administrators with features like Effective Dating.

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