Enhancing Payroll Data Security in Integrations

Anyone working with sensitive data knows that security is paramount. A breach of customer data or personally identifiable information (PII) can have serious consequences, including harsh fines from regulatory bodies and even lawsuits. Employee data, in particular, is highly sensitive, making payroll security a top priority when it comes to integrations.

HRIS and payroll integrations are table stakes for most employment software — by automating the transfer of data across systems, they dramatically increase workplace efficiency. But integrations can raise questions about payroll data security — and rightfully so. 

Fortunately, API integrations offer a balance between modern technology and strict security measures. With the right data handling and security protocols, data can be safely transferred between applications, improving workflows without introducing new data vulnerabilities. 

Understanding payroll security 

Any business handling employee data should have procedures in place to safeguard that data, whether it’s the employer or a third-party application. Payroll security includes all measures taken to handle employee data appropriately, including employee names, social security numbers, bank account information, tax information, and salary data. Proper payroll security protects the data from unauthorized access (internally or externally), cyber threats, and fraud.  

In some cases, the law requires the protection of sensitive data. Regulations like GDPR (in Europe) and CCPA (protecting California residents) govern how sensitive data is handled. In the U.S., organizations handling sensitive data undergo SOC 2 audits to prove that they have the proper internal controls to handle such data. 

Given the combination of regulatory requirements and industry pressures, payroll data security isn't something companies can take lightly. Improper data handling can lead to fines, lawsuits, or other financial losses. Given the potential consequences, any organizations handling sensitive data have to adopt strict and comprehensive approaches to payroll security.

Common security risks in payroll integrations

Any time sensitive information is shared between software systems, risk is involved. While API-based integrations are one of the most secure ways to share data, each integration is only as secure as its configuration, implementation, and maintenance. 

Below are a few of the most common payroll security risks associated with integrations.

Improper data encryption

APIs can have inadequate or flawed encryption mechanisms that can expose data to unauthorized parties. Data should be encrypted in transit (between systems) and at rest (in databases). Without proper encryption, attackers can intercept API requests. 

Inadequate authentication

The systems that use integrations to read and write payroll data must be expressly allowed to access that information through an authentication process. Without proper authentication methods in place, unauthorized users may be able to access sensitive data. Some examples of secure authentication methods include credentials with multi-factor authentication (MFA), OAuth, and API tokens.

Misconfigurations 

When it comes to APIs, misconfiguration is a broad term that can refer to any improper setting, setup, or implementation errors that can expose the API — and by extension, the data it has access to — to security vulnerabilities. Examples can include improper permissions (granting access to the wrong users) and weak endpoint security (the protection measures for devices connected to a network). 

Additionally, improper misconfigurations can allow attackers to bypass authentication or exploit weak access controls.

Lack of end-to-end visibility

Organizations need comprehensive visibility in order to promptly detect and respond to security threats. 

Without proper monitoring, unusual or unauthorized activity within the integration may go unnoticed and expose systems to potential breaches. If organizations lack real-time monitoring and alerts, attackers have more time to exploit vulnerabilities or cause damage.

Audit trail deficiencies

While monitoring allows teams to respond to threats, poor audit trails pose another security risk. Audit trails allow the API’s users to see who made changes or accessed data when investigating security incidents. Comprehensive logging is also needed to detect unusual patterns of behavior or API abuse over time. Without a robust audit trail, an organization may be unable to attribute actions to specific users or systems, making accountability and traceability harder. 

Best practices for securing payroll data 

External threats to payroll data security are inevitable, but that doesn’t mean employment systems can’t benefit from the efficiency gains API integrations offer. By implementing payroll security best practices, applications can easily and safely send and receive sensitive data from payroll systems. 

Implement strong access controls

Access to payroll data should be based on the roles assigned to users or groups within an organization. Permissions, which determine what access rights an individual has to certain data, should be role-based — in other words, on a strict need-to-know basis. This ensures that the only people who can access the data are those who should have access. 

Authentication also ensures that only authorized users can interact with the API. Authentication methods like OAuth and API tokens are essential for ensuring an API isn’t misused. You should implement MFA for additional security and require complex passwords with regular password changes. These help prevent unauthorized access through compromised or weak credentials.

Regular audits of roles and permissions ensure that user access remains appropriate. Employees who have left the organization should have their access immediately revoked. 

Finch’s payroll API prompts employers to review and grant consent to specific data points. Since access is permissioned, only the data points explicitly granted via Finch’s product scopes will be shared with your application. 

Data encryption

In order to fully secure payroll data through an integration, it should be encrypted while in transit and at rest. This provides comprehensive protection against unauthorized access. Encryption systems should be regularly tested and monitored to detect any vulnerabilities.

Encryption should be multi-layered, so it is applied at the application layer, database layer, and network layer (as applicable). With multi-layered encryption, if the data is compromised at one layer, it is still protected by another. It’s also critical to maintain these encryption layers so they’re always up to date with the most current and secure encryption standards.

At Finch, we encrypt all data at rest in our data stores and in transit between applications. Highly restricted data fields are additionally encrypted in the end-applications. 

Conduct regular security audits

Audits should identify any security vulnerabilities and also assess who is accessing data. Audits should cover all touchpoints within application development, since vulnerabilities can be introduced at various stages. With end-to-end visibility, you’ll have a full picture of the entire network infrastructure, all devices, applications, and data flows. You can also verify compliance with regulatory requirements. 

Every change to our product at Finch is tracked and approved through an auditable process. We consider the benefits versus risks of the proposed change and its impact on the payroll data. Because of this, we perform comprehensive security-focused reviews before any product launch.

Only authorized personnel can access the Finch production environment, and only after passing through multiple security and auditing layers. You can learn more about all of our security protocols in our Security Guide or by visiting our Trust Center.

Ensuring compliance in payroll data security

Even with the best internal monitoring practices, security controls and data access should be reviewed by an independent third party. With information as sensitive as payroll data, a third-party audit can ensure that industry standards are met. Third-party reviewers understand best practices and maintain an up-to-date awareness of any regulatory requirements. Plus, they can identify any organizational blind spots that may have led to security vulnerabilities. 

Finch engages leading independent organizations to perform application-level penetration testing. This testing simulates real-world attack scenarios. If any vulnerabilities are found, they are addressed quickly and thoroughly.

Additionally, Finch is SOC 2 and CCPA compliant. Annual audits ensure we maintain strict internal protocols and adhere to those standards. 

The future of payroll integrations

Most employers recognize the need for payroll integrations to transmit data between applications. Accurate, timely data transmission between a payroll system and third-party applications is essential to administering benefits like retirement plans, keeping data up-to-date across an organization, and improving workplace efficiency. 

In addition to following all of the best practices mentioned for developing and managing APIs, vendors should keep a watchful eye on developing trends — data security is constantly evolving.

Maintain robust payroll security with Finch

Employers trust their applications and vendors to safeguard their sensitive data; but maintaining airtight security for multiple payroll integrations is no small feat.

At Finch, we build and maintain hundreds of integrations with HRIS and payroll systems so you don’t have to. Build one API connection to Finch and unlock secure access to all of the systems your customers use. 

To see Finch in action, you can sign up for free or schedule a call with our Sales team.