Payroll Compliance

Scope

This policy applies to all Indiana University campuses, Responsibility Centers, departments, and employees.

This policy applies to all Indiana University units and employees. 

In the event of a conflict, this policy shall supersede all campus, school and college, program, department, center, institute, and unit policies on any core or regional campuses of Indiana University.  

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Policy Statement

It is the policy of Indiana University to pay its employees in a timely and accurate manner in compliance with the university’s legal obligations.

Employees expect and should receive prompt and accurate payment for their work. Therefore, processing and maintaining accurate payroll records is a critically important university function requiring strict controls and close management.

Indiana University will comply with applicable federal and state laws and regulations regarding payroll, including, without limitation:

1. Recording hours worked;
2. Calculating gross and net payroll;
3. Processing payroll taxes;
4. Processing payroll deductions, both voluntary assignments and those required by law, such as levies and garnishments;
5. Timing and payroll delivery methods; and
6. Maintaining required supporting documentation and payroll records.

It is the policy of Indiana University to ensure that all employees are paid timely and accurately in compliance with applicable laws and regulations. All compensation for services rendered by employees must be processed and recorded through the university’s official payroll and timekeeping systems.  

The Office of the University Controller (UCO) has established the IU Accounting Standards, which detail procedures that support compliance and controls to ensure timely, accurate payment to employees. These procedural standards, while not exhaustive, are mandatory and must be followed for all payroll-related activities.  

Special Considerations  

• Additional employment and payroll restrictions may apply to U.S. citizens and permanent residents working internationally, nonresident aliens and, employees living and working in states other than Indiana. 

• Payments to individuals who will be paid as independent contractors and meet the criteria as defined in policy FIN-ACC-630 must be processed through the university procurement system. 

• This policy does not govern employee compensation levels or university benefit programs, which fall under the direction of University Human Resources. Compliance with human resource policies and procedures is essential to ensuring timely and accurate payroll processing.

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Reason for Policy

Payroll is Indiana University’s largest operating expense. Salaries, wages, benefits, payroll taxes, and other payroll deductions are subject to regulations imposed by the federal government, various state governments, and other agencies. It is important to the university from both compliance and control standpoints that its employees are neither underpaid nor overpaid. For these reasons, the university has established payroll and timekeeping systems and processes to promote compliance with applicable laws, regulations, and its own financial management responsibilities and objectives.

Timely and accurate payroll is critical to IU employees and comprises the university’s largest operating expense. Payroll is subject to extensive state and federal regulations, which requires significant compliance oversight. As a vital function of the university,strong internal controls—particularly segregation of duties—are essential to mitigate risk and prevent fraud. 

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Procedures

University Payroll shall establish and manage payroll systems to issue salary and wage payments to all university employees. University Payroll has the authority and responsibility to create, implement, monitor, modify, and enforce operating procedures and internal control processes consistent with this policy to ensure accurate and timely payment of Indiana University’s employees in compliance with the university’s legal obligations and financial management goals.

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Additional Contacts

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History

This policy was established in 2017.

[Month] 2025- Substantive revisions. This policy replaces policy FIN-PAY-010.

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