HR compliance has an important place in the corporate world. Businesses that do not comply with local, state, and federal employment laws can face fines, lawsuits, and other unnecessary troubles. When business leaders actively work to understand the importance of HR compliance, they can effectively incorporate it into their company's strategic goals.
HR compliance refers to ensuring that your employment and work practices follow the policies and procedures of applicable laws and regulations.
As the number of employment laws and regulations increases, companies of all sizes face increasingly complex HR issues, and the risk of penalties for non-compliance may never be greater. For example, when developing HR policies and procedures, business owners should know:
Employers must comply with employment laws, including applicable federal, state, and local regulations.
Businesses may be subject to audits by law enforcement agencies, which may impose fines and penalties for violations.
Not knowing or understanding your compliance obligations is not an acceptable legal defense.
A lawsuit settlement can bankrupt the company.
Research shows that about 50% of business owners say it is extremely difficult or very challenging to maintain regulatory compliance. 1 Regardless of the size of the business, it is critical to comply with federal, state, and local employment laws and regulations in a timely and proactive manner. As the frequency and scope of organizational audits increases, organizations must comply with ever-changing HR regulatory compliance requirements or address the adverse consequences that can result from non-compliance.
It is not enough for businesses to know and understand the rules and regulations related to their industry. Employees should also be aware of their roles and responsibilities in the day-to-day operations of the business. Consider providing training and support to employees on company policies and expectations so that your organization can benefit from employee engagement and minimize errors or violations.
As the business grows and the number of employees increases, new opportunities and new risks arise at the same time. Business owners often deal with complex OSHA regulations and want their safety policies to be compliant. Without a clear HR compliance policy, worker safety can be compromised, and businesses themselves may face legal issues based on federal and state regulations.
In short, non-compliance is not worth the risk. HR compliance efforts support close monitoring of ongoing changes in employee-related laws and consistent (and non-discriminatory) HR policies.
In addition, about 56% of business leaders see risk management and managing employee compensation as the top HR challenge in the next 12 months. 1 When a company has multiple locations or employees work in different states where the business operates, it becomes more difficult to manage human resources, especially to maintain regulatory compliance. Specifically, remote employees can be subject to penalties of up to $1,240 per employee per year for employer-related violations (record keeping, regulations, assurances, etc.). 2
What can HR leaders do to help achieve their company's larger HR goals while complying with applicable laws and regulations?
A key role for HR in compliance is to bridge the gap between a company's growth trajectory and goals and compliance practices that impact activities such as recruitment, employee development, and retention. Striking a balance between HR strategy and compliance starts with a well-defined set of goals.
Many HR compliance regulations require the attention of a company's HR team. Unfortunately, many business owners, while looking to stay compliant, feel overwhelmed by this challenge (in addition to all the others). Too often, business owners only realize the need to comply with HR-related regulations when they are contacted by state or federal law enforcement agencies. It's often too late.
Common HR compliance responsibilities include complying with laws and regulations on:
Non-discriminatory positions and hiring.
Fill out the I-9 **
Conduct background checks.
Classify employees as exempt and non-exempt.
Payroll deductions. Pay wages and taxes.
Medical insurance is available.
Administer workers' comp insurance.
Dealing with conflict in the workplace.
Understanding the company's strategic focus is to better understand how compliance issues affect the basis of decision-making. HR objectives should be designed to support corporate strategy, but compliance implications must also be considered.
Business owners are faced with time demands from all sides and may be required to wear many hats – including compliance officers. Most business owners want to comply with the regulations but often feel overwhelmed and unsure of what they should do to meet the requirements. Too often, business owners don't realize they need to comply with HR-related regulations until they are contacted by law enforcement agencies, and by then, it's often too late. Institutional auditors are unlikely to be randomly reminded.
Let's take a look at a few important compliance topics that every business owner should be familiar with:
The I-9** is used to verify the new employee's identity and authorization to work in the United States. Business owners should make sure they are up to date with the following items:
1.Document storage requirements.
2.How to fill out the I-9** and completion deadline based on the employee's date of hire.
3.Learn what specific documents you can't force new employees to show (they can show any of the permitted documents listed on **).
4.Impact of the error: If any section of ** is filled out incorrectly, the fine can be high.
You must ensure that the I-9** is completed in a timely manner in accordance with the regulations and guidelines and that it is properly kept in a file (the best practice is to keep it in a separate system from the general employee file.)
1. Safe place).
Since non-compliance can result in hefty fines, employment checks should be at the top of a business owner's HR compliance checklist.
Federal anti-discrimination laws enforced by the Equal Employment Opportunity Commission (EEOC) include the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Genetic Information Nondiscrimination Act (GINA), and Title VII of the Code of Civil Procedure Bill of Rights of 1964, all of which prohibit employment discrimination based on a protected class. It is important to ensure that there is no discrimination in the workplace and that applicable federal, state, and local labor laws are followed.
When complying with these laws, employers should ask themselves:
Do I know what federal, state, and local employment laws that prohibit hiring and hiring discrimination apply to my business?
Has my manager recently been trained on these laws?
Do I have a policy to communicate our efforts to comply with these laws?
Have I analyzed the company's practices for making hiring decisions, including hiring, hiring, promotion, and training opportunities?
The Fair Labor Standards Act (FLSA) rules regarding the classification of exempt vs. non-exempt status employees are often confused with the designation of payment methods by the hour versus salaried employees.
The U.S. Department of Labor (DOL) aims to ensure that employees' wages comply with federal wage and hour laws. Under this law, employees are categorized into categories that are exempt or non-exempt from some or all of the provisions of the FLSA. Non-exempt employees must be paid at least minimum wage for all hours worked up to 40 hours per week and appropriate overtime pay for hours worked in excess of 40 hours. State wage and hour laws may also apply.
To help achieve and maintain compliance with applicable wage and hour requirements, it is important for companies to work as a team across payroll, HR, legal, and other teams. Consider whether you and your partners need to address the following potential risks to help your business avoid DOL audits
Does your regular pay include wages, commissions, shift or work differentials, bonuses for hazardous work, non-discretionary bonuses, and other incentive payments? If applicable, include them in your overtime calculations and avoid shortcuts.
The employer must pay the employee all wages that are considered hours worked, regardless of whether the work is performed on the employer's premises, another designated place of work, the employee's home, or another location. It's your responsibility to ensure that your employees are paid correctly.
In general, non-exempt employees are not required to be compensated for training time if all of the following conditions are met: attendance is outside of the employee's normal working hours, the training is voluntary, not directly related to the employee's work, and the employee does participate in the training. You are not allowed to engage in any productive work during the training.
The FLSA doesn't require you to provide meals or breaks, but some states do. If your business does offer breaks, the FLSA stipulates that employees must be paid for breaks that last 20 minutes or less. These breaks must also be counted as working hours when calculating overtime hours for non-exempt employees.
If your business offers meal breaks (typically 30 minutes or more) and employees are completely dismissed, they generally don't need to be compensated as working hours.
Travel to and from home to the duty station generally does not count as paid travel time, but travel from one duty station to another may be compensable and count as working time for non-exempt employees.
For employees working from home, transportation to the office may be compensated with working hours. Other types of travel may also be compensated under federal and state wage and hour regulations.
Here are some recommendations to help you achieve HR compliance (and more specifically, about the changes that affect your business):
The laws governing HR compliance and related matters change frequently. Compile a user-friendly ** outlining specific HR compliance issues impacting your business. Include your business on the updated subscriber list of the Department of Labor and other agencies. Study press releases issued by local, state, and federal human resources-related legislators.
Once you've got a working knowledge of HR compliance, you can conduct a company-wide HR audit to ensure your policies and procedures are up-to-date and comprehensive. It is also a great opportunity to provide managers with appropriate compliance training to ensure that the importance of this practice is properly recognized.
Many businesses outsource certain HR functions to help reduce potentially costly HR pitfalls. This option provides access to experienced professionals who act as HR compliance resources and can provide up-to-date knowledge of federal, state, and local laws and regulations.
There is a misconception that outsourcing HR compliance functions is too costly or only suitable for large companies. In fact, the financial risks that businesses may face from failing to provide full compliance can far outweigh the expense of outsourcing this important function to a knowledgeable third party.
HR compliance is not something that some businesses should adhere to and others that they don't. All companies, regardless of size, must comply with local, state, and federal employee-related regulations. For example, failure to do so can be costly, damage the company's reputation, and make it difficult to attract and retain qualified talent.
Outsourcing this function can save costs and reduce administrative burdens. A trusted provider with extensive experience and knowledge in HR compliance matters can help ease concerns and help you ensure HR compliance, not to mention their access to innovative technologies that might otherwise be too costly for businesses to maintain on their own.
With the compliance knowledge, depth of expertise, and technology refresh that professional HR outsourcing services can provide, HR managers (and the companies they work for) can focus on strategic issues and help shape the future of the organization.