March 10, 2020 | HR Compliance | Posted by Ascentis
HR Compliance: What Does it Mean for Your Business?
On its surface, compliance doesn’t seem like an issue that should require much evangelizing. After all, no reputable organization sets out to violate regulations, ignore established best practices, or otherwise put itself in harm’s way. Even so, human resources compliance can take some serious investments in time, money, and energy. Those three words tend to give pause to upper management, so bolstering the case for HR compliance is in everyone’s best interests.
Fortunately, there are a number of strong arguments to be made for the importance of compliance for all modern HR departments. Let’s look at some of the biggest factors.
The employment landscape is changing
Independent contractors make up a big portion of the modern employment landscape, with some polls showing 20% of the American workforce doing some manner of contract job. As the way people work continues to shift and evolve, it falls to HR professionals to make sure their organizations are keeping up with the times.
For any workplace that regularly employs contractors, classifying your workers accurately is a major concern. Recent years have seen a crack-down on misclassified workers at every level from highly compensated office workers to minimum wage delivery drivers, resulting in substantial fines and lawsuits for the employers at fault.
Aside from avoiding liability, properly classifying independent contractors can benefit your organization by encouraging a more structured, accountable workplace. Setting up well-defined parameters for who is and is not considered a contract employee and what roles different kinds of contractors occupy in your business. A compliance program that presents clear roles for both contract and full-time employees will help you build a more organized and rewarding work experience for everyone, from the recruitment stage on.
Legal compliance matters
Probably the most obvious concern for a non-compliant business is the risk of legal action. Nearly every HR regulation carries with it a possibility of fines and other penalties, including lawsuits and criminal charges. Something as seemingly minor as not having I-9 forms for all applicable employees can carry a fine of up to $1,100 per missing form. Failure to post OSHA-required safety notifications can earn a business a fine of $10,000 per violation, while fines for repeated OSHA violations can reach into the $100,000 range.
Beyond the purview of federal regulations, state and local employment regulations vary widely in both their requirements and their penalties. It’s a human resources professional’s responsibility to know and comply with the applicable laws everywhere your organization does business.
Obviously no business wants to court the kinds of penalties mentioned above. That makes it crucial for human resources teams to clearly and thoroughly communicate to leadership and other departments exactly what is expected and required of them under the law. Creating HR compliance checklists and conducting regular internal HR compliance audits are excellent, proactive ways to stay on the right side of the law. After all, it’s far better to discover and amend violations on your own terms than to wait for outside investigators to judge you on theirs.
Hiring and recruitment
Compliance factors into the employment process even before it officially begins. Everything from the language of your application form to the steps of your interview process to the type of personal information you request from potential hires is subject to some manner of regulation.
Before making new hires or even conducting interviews, it’s vital to familiarize your HR leaders with federal employment laws such as Title VII of the Civil Rights Act and proper completion of Form I-9 for employment eligibility verification, state HR compliance laws such as those regarding at-will employment, and any local or industry-specific rules that may apply.
Education and training
One of the biggest challenges of maintaining legal compliance in HR is sheer volume. There are a whole lot of laws that impact the human resources segment, and staying compliant with all of them requires a whole lot of attention.
That means implementing regular training and educational sessions to ensure that all HR employees are up to speed on the latest legislation and best practices. It also means setting up learning sessions for the other departments within your organization to make sure that all parties understand exactly what is required of them from a legal standpoint. That could include training on everything from harassment policies to safety laws to medical leave. As the old saying goes, ignorance of the law is no excuse. By educating your company on HR compliance, you can help stamp out ignorance and avoid potential legal pitfalls.
As always, communication is key for human resources operations, both inside and outside of your department. That’s why it’s so important to not only set guidelines for HR compliance, but also to make sure those guidelines are communicated clearly throughout your organization.
That communication might include things such as an producing an annually updated employee handbook, clearly communicating company policies on everything from social media to health insurance and other employee benefits, making sure that all legally required employee notices are properly posted, and creating HR compliance checklists for all relevant departments. Once those guidelines have been clearly laid out, it’s equally important to enforce them uniformly and consistently across the board.
Audit your compliance
Avoiding common human resources compliance issues across your organization entails holding yourself to a high standard. That could mean hiring a dedicated HR compliance manager or compliance officer. These are HR professionals tasked with monitoring how closely your organization is following applicable laws, and with administering internal policies that help you stay compliant.
Even if a compliance manager doesn’t fit into your strategy, you should at least budget time and resources for regular HR compliance audits covering key areas like pay, health care, medical leave, and equal opportunity employment is essential for identifying and correcting problem areas within your organization. Focus on common problem areas such as:
- Outdated or incomplete policies
- Proper designation of exempt and nonexempt employees
- Objective and equal-opportunity hiring and recruitment practices
- Outdated or missing information in employee handbooks
- Incomplete or missing personnel files, including I-9 forms
- The presence of clearly stated and communicated policies regarding harassment, discrimination, safety, drug use, etc.
- General review of relevant HR analytics such as employee satisfaction, turnover rates, internal and external grievances, numbers of open positions, etc.
Know the laws
As mentioned earlier, one of the challenges of human resources compliance is that there is a lot with which to comply. Depending on your industry, you will likely need to familiarize yourself with a number of regulations specific to your state and locality, in addition to dozens of pertinent federal laws. A few of the most visible national regulations include:
- Title VII of the Civil Rights Act protects employees against discrimination based on race, color, national origin, sex, or religion
- The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations for individuals with disabilities
- The Family and Medical Leave Act (FMLA) gives workers the right to take extended leaves for major medical and family emergencies and events
- The Fair Labor Standards Act (FLSA) establishes workers’ rights to a minimum wage, overtime pay, and various other workplace protections
- The Age Discrimination in Employment Act protects employees over 40 against discrimination based on age
- The Genetic Information Nondiscrimination Act (GINA) prohibits employers from making employment decisions based on the use of genetic information
- The National Labor Relations Act gives private sector employees the right to organize and bargain collectively
- The Uniformed Services Employment and Reemployment Rights Act (USERRA) provides civilian employment services to military personnel
- Many other Equal Employment Opportunity Commission (EEOC) regulations protect employees against various forms of workplace discrimination
Most of these laws and regulations fall under the jurisdiction of the Department of Labor, and address fair and equal treatment of current and prospective employees regardless of their sex, race, ethnicity, physical ability, or age. That roster of considerations serves to underline just how important human resources compliance can truly be to an organization.
The laws governing HR compliance do more than just keep business running smoothly; they help make the American workplace open and accessible to every worker. Viewed from that angle, establishing and enforcing an environment that puts an emphasis on compliance is all the more impressive a responsibility.
We can help. Find out how Ascentis' HR software can help your business manage compliance.