At a recent National Payroll Institute webinar, several panelists had a wide-ranging discussion on how AI is shaping payroll today and where it’s headed next. With nearly 900 attendees from across the country, the session reflected both the growing curiosity and cautious optimism surrounding AI in the payroll space.
Here are the key takeaways from that webinar:
You’re already using AI.
Many payroll professionals are already using AI through tools embedded in their payroll systems, enterprise software or even in their inboxes. For instance, think of the chatbots to get help from your service provider, anomaly detection in your software programs or suggested phrasing in your email provider.
“It’s so embedded in what we’re already doing from day to day that we can’t even recognize it anymore,” said Marty Sokolov, PLP, a longtime payroll leader and Senior Customer Success Manager at Workday. The question isn’t whether you’re using AI. It’s whether you’re using it intentionally.
Tracee Bowles, CPP, SHRM, Global Advisory Practice Leader at The Hackett Group, shared the example of a multinational company using AI to help expatriate employees navigate complex tax rules. Employees can input scenarios and instantly see how changing locations or assignments would affect their pay and tax obligations — something that would have previously taken a payroll professional hours or days to research.
Another growing use case is fraud detection. For example, companies have trained AI to detect payroll fraud by gathering unclassified data from across their different systems and having it flag unusual patterns. Using the issues identified, they have then built examples for AI to look for.
AI helps reduce errors, not eliminate them.
One of AI’s biggest promises is increased accuracy. Payroll professionals have historically been cautious with new technology, and rightly so, given the sensitive data they handle. However, as systems become more secure and sophisticated, more professionals are ready to take the leap.
Automation alone won’t replace human oversight or good data. For example, AI can flag an unusually high bonus amount, but it’s still up to the payroll professional to know whether it’s a legitimate payout or a data entry mistake.
“We still need our payroll intelligence to actually make sense out of the data,” explained Max van der Klis-Busink, a global payroll leader and PayrollOrg’s Vice-President of Global Strategy. “Most of the payroll professionals I’ve met across the world, regardless if they work in Egypt, the Netherlands, Canada or the U.S., have a principle of trust but verify.”
No tool will ever remove the need for human accountability — and that’s a good thing.
Don’t use AI tools for payroll compliance advice.
While AI tools like ChatGPT can be useful for summarizing content or drafting communications, they should not be trusted to interpret payroll legislation or answer compliance questions. AI can misunderstand jurisdiction-specific laws, industry nuances, the context and intent of regulatory language and more. When in doubt, consult official sources or reach out to the National Payroll Institute’s Payroll InfoLine.
AI literacy is becoming a core skillset.
Rather than replacing payroll professionals, AI is creating new opportunities for upskilling. The panel encouraged payroll professionals to build AI literacy, understand ethical use, and maintain strong core skills like payroll calculation and data validation.
“I think AI literacy is probably the new Excel proficiency,” said van der Klis-Busink, explaining that you need to understand how AI works, its risks and its limitations. “You are still the data guardians. And without good data, AI will be biased.”
Bowles also encouraged professionals to lean into strategic thinking. “Once AI takes over all the processing pieces… [take] some time to think deeply about how we can better serve our organization and our industry.”
She also stressed the importance of cross-functional collaboration. As AI solutions often span multiple departments — from payroll to HR to finance — strong relationships across the organization will be key.
AI presents ethical concerns.
Data privacy, bias and accountability were all raised as ethical concerns. Payroll teams must remain vigilant about where and how employee data is processed. AI tools should be transparent, auditable and designed to prevent algorithmic bias, especially because payroll increasingly intersects with other sensitive areas like benefits and performance management.
“Transparency has come up a lot,” said Bowles. “It’s really important that employees understand where you’re utilizing AI and understand where they have recourse if they believe there are errors that have occurred.”
In addition, when something goes wrong, organizations are accountable. That’s why it’s critical to understand how the tools you are using are trained, who has access to what data and how decisions are being made. You should also have clear governance structures in place.
“Understand that it’s not perfect. It’s not fully formed. It’s forming,” explained Sokolov. We will consistently need to oversee and guide it.
This webinar was hosted by the National Payroll Institute. Members can request a login link to view the entire webinar here.
Photo by Immo Wegmann on Unsplash