What is HR Compliance?
Human resource compliance is the practice of ensuring an organization is implementing and following all applicable labor and employment laws, regulations, and guidelines. As such, it covers a broad spectrum of topics and policies, which can vary by jurisdiction, for example paying employees different minimum wage rates across multiple states, accommodating employee medical leave, or even complying with union rules. HR teams have an exceptionally challenging job – they must stay on top of it all.
This guide is designed to help you create a solid foundation for your compliance strategy by providing you with an overview of HR compliance, key areas of focus and insights for employers, and even an HR compliance checklist. Managing HR compliance is a daunting task, but ComplianceHR’s trusted solutions can streamline the process for your organization.
What Is Compliance in HR?
Human resource compliance, or HR compliance, ensures an organization follows all applicable federal, state, and local labor and employment laws. Further, HR compliance spans the entire employee lifecycle and requires up-to-date policies for all jurisdictions in which an organization operates. Often, Compliance is broken down into the following types of laws and regulations:
- Statutory Compliance: All applicable federal, state, and local government legislation
- Regulatory Compliance: Rules set by governing bodies, such as the Department of Labor (DOL), the Federal Trade Commission (FTC), and the Occupational Safety and Health Administration (OSHA). Additionally, this includes industry-specific regulations, especially in fields like Human Resources, Finance & Insurance, Consumer Goods, Healthcare, and Energy & Industry.
- Contractual Compliance: The terms stated in contracts, especially employee contracts
- Union Law Compliance: Organizations that employ union workers must comply with all union-specific terms and policies
What Are the Ultimate Goals of Being Compliant?
HR compliance ensures your business meets critical objectives, contributing to a well-functioning workplace. Therefore, some key benefits of maintaining HR compliance include:
- Reducing the Risk of Fines and Fees: Non-compliance can lead to hefty penalties, legal fees, and lawsuits that could damage an organization’s reputation. Maintaining HR compliance helps avoid these unnecessary risks.
- Increasing Employee and Organizational Growth and Accountability: Strong compliance promotes transparency and accountability, sets clear expectations, and creates a productive workforce.
- Avoiding the Unnecessary Risk of Lawsuits by Disgruntled Employees: Compliance reduces the chances of disputes escalating to lawsuits, or even class actions, by ensuring fair treatment and consistent policies.
- Increasing Employee Satisfaction for a Positive Work Environment: Compliant practices ensure employees feel valued and respected, which can drive higher job satisfaction and retention rates.
- Protecting the Organization and Employees Alike: Compliance safeguards employers and employees by defining clear rights and responsibilities.
Key Focus Areas for Employers: Managing HR Compliance and Employment Law Changes
HR compliance requires constant attention to several critical areas. Employers must focus on these objectives to stay compliant with ever-changing laws and regulations:
- Accurate, Up-to-Date Employee Handbooks: Employee handbooks must reflect current laws and company policies. Regular updates help prevent misunderstandings and ensure employees are aware of their rights.
- Proper Employee Overtime Classifications: Misclassifying employees can result in substantial legal consequences. Notably, correct classifications help prevent wage and hour disputes.
- Access to Legally Compliant and Accurate Information: Employers must have reliable access to current employment laws to stay compliant. Therefore, timely updates can prevent inadvertent violations.
- Updated Employee Onboarding Documents: New hires should receive up-to-date and legally compliant onboarding documents. This step sets the right expectations at the beginning of the employment relationship.
- Accurate Employee Leave Processes: Compliant leave management ensures local, state, and federal policies are followed. Since leave laws can overlap and change across jurisdictions, using proper, jurisdictionally-specific forms can help support compliance for leave requests.
- Correct Independent Contractor Classifications: Independent contractor laws and classifications can vary immensely state-to-state. Misclassifying contractors as employees can lead to severe penalties and fines. However, running an independent contractor audit with local and federal tests and requirements can help ensure proper classification.
How Do You Ensure HR Compliance?
Some HR compliance best practices to implement include:
- Implementing HR Software: HR compliance software and technology solutions, like ComplianceHR’s Navigator Suite, streamline and simplify critical compliance processes and tasks. Covering topics like employee overtime, independent contractor classification, employee handbooks, onboarding, and leave, these solutions provide automated legal updates and access to legally accurate information.
- Staying Up to Date With Law Changes: Keeping up to date with accurate and current information ensures your company is always compliant on the latest labor and employment law updates. Avoid sourcing information from search engines, like Google, Bing, and Yahoo, where the information could be outdated. Additionally, avoid using AI engines to generate compliance information and summaries of policies, as the data sources are unknown and they may not be accurate for your organization. Instead use a trusted, legally accurate resource to inform your HR team and compliance strategy.
- Tracking Policies Related to the Company: Regularly reviewing labor and employment law policies for updates or changes and accordingly updating company policies will help prevent outdated policies from becoming legal liabilities. Additionally, some industries and employee types have policies that may not be required by the state, but they are required by a union or agency. Therefore, having a quality source of information for legal updates is critical.
- Auditing Your Employee Positions’ Overtime and Independent Contractor Classifications: Regular audits using local, state, and federal requirements and tests ensure positions are classified correctly under current labor laws. Not only does proper classification prevent wage disputes and agency audits, but it also protects organizations from highly visible, expensive lawsuits.
- Using an HR Compliance Checklist: To ensure the above best practices are followed, creating and using a checklist can help standardize HR compliance strategies and processes, while ensuring all compliance components are considered.
HR Compliance Checklist
Get started creating your HR Compliance Checklist with our template below. Please be mindful that this resource is a guide. So, additional policies will likely be needed, and not all aspects of this checklist may apply to your organization. Therefore, we recommend you modify this checklist to fit your organization’s HR compliance needs.
Employment Law Compliance Topics, Policies, and Information
- Consider including federal, state, and local policies and information covering important HR compliance topics, such as:
- At-Will Employment
- Equal Employment Opportunity Information
- Harassment Prevention Policies & Processes
- Disability, Religious, Pregnancy and Other Accommodation Information
- Remote Work Expectations and Policies
- Standards of Employee Conduct
- Workplace Treatment Policies (Bullying, Violence, Relationships, etc.)
- Drug, Alcohol, Smoking, and Weapons Laws and Policies
- Pay and Benefits Overview
- Work Schedules, Timekeeping, and Safe Harbor Policies
- Overtime Laws and Processes
- Proper Classification of Exempt and Nonexempt Employees
- Meal and Rest Breaks Policies
- Required Posters and Employee Notices
- Employee Leave Obligations, Notices, and Other Information
- Examples of employee leaves to consider: FMLA, sick leave, bereavement leave, jury duty, military leave, and paid time off
- Holiday and Vacation Policies and Notice Requirements
- Workplace Safety and Security Policies
- Worker’s Compensation Coverage, and Work-Related Injuries Protocols
- Employee Records and Data Policies and Protocols
- Acknowledgement and Receipt of Employee Handbook Policies
Employee Handbook Best Practices
- Create a Process or Schedule to Maintain an Up-to-Date, Accurate Employee Handbook
- Depending on the size, industry, and location(s) of your organization, you may need to make updates more often
- Ensure Employee Handbook Information is Legally Accurate and Meeting All Legal Requirements
- Include Company Culture Information
- Welcome message from founder, CEO, or HR
- Purpose of the employee handbook
- Company history, values, purpose, and vision information
Hiring, Onboarding, Training and Termination
- Ensure HR and Hiring Teams Have Access to Important Documents, Such As:
- Employment Applications With Federal and State Requirements and Language
- State and Federally Compliant Offer Letters
- Non-Disclosure Agreements
- Form I-9
- Letter of Termination or Notice of Separation
- Updated Employee Handbook
- Conduct lawful background checks.
- Provide Regular Compliance Training
- Follow Lawful Termination Procedures
- Ensure Consistency with Performance and Disciplinary Processes
- Maintain a Compliant and Organized Database of Employment Records
Employee Classification, Benefits, and Compensation
- Perform Regular Audits of Employee Positions’ Overtime Classifications
- Consider each positions duties, rate of pay or salary, and other local, state, and federal and policy requirements
- Ensure compliance with all applicable wage and hour laws
- Implement Proper Payroll and Tax Withholding Practices
- Perform Regular Audits of Independent Contractor Classifications
- Consider local, state, and federal tests, laws, and policies in addition to agency requirements
- Verify Proper Tax Forms, Like 1099-NEC and W-9, Are Filed and Available for Independent Contractors
How Can ComplianceHR Streamline Your HR Compliance?
Navigating employee and labor regulations can feel like a minefield. Even if you’re compliant now, new laws are constantly being added. Keeping up with the changes is a challenge on top of your HR team’s everyday responsibilities, and even the smallest lapses can be disruptive and costly.
Whether you are in human resources, legal, or in any recruitment position, there’s significant pressure to get it right. This is why we’ve created Navigator Suite, a revolutionary on-demand software that guides you through common compliance issues throughout the employee lifecycle.
Regardless of your company’s size, industry, or location, Navigator Suite provides solutions that are right for you. We constantly update our tools in real time, so you can trust that the information and results provided are accurate and up-to-date.
Ensure Accurate and Legal HR Compliance Reporting with ComplianceHR
HR compliance is essential for fostering a fair, safe, and legally sound workplace. Staying compliant reduces legal risks, enhances employee satisfaction, and protects the organization. Businesses that want to ensure compliance should leverage best practices, such as using ComplianceHR’s Navigator Suite for up-to-date information applicable to their operations.
ComplianceHR offers a unique on-demand suite of compliance applications. We help employers with ever-changing requirements, including employee handbooks, minimum wage, and more. Our solutions suit employers of all industries, sizes, and locations.
Not a ComplianceHR client? Sign up for a quick intro call and product demo guided by one of our compliance experts. Eligible sign-ups can receive a free trial to explore the Navigator Suite applications, which are powered by data directly from Littler, the world’s largest employment law firm. Experience how our solutions can transform your compliance practices.
Disclaimer
This article should be a starting point for educating Human Resources and Legal professionals on certain aspects of employers’ legal obligations. It is not a comprehensive resource or a complete explanation of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ComplianceHR is not rendering legal or tax advice, or other professional services. The contents are for general informational purposes only. We urge you to consult your attorney concerning any particular situation and any specific legal questions you may have.
