Companies are responsible for complying with federal, state, international, and local business laws. Otherwise, they risk a tainted reputation, business disruption, productivity loss, and legal battles that can cost a fortune.
While HR compliance seems as simple as following set labor or business laws, it is never easy. There are many policies to comply with, and at times, they keep changing. Perhaps, that’s why businesses lose close to $15 million of revenue to non-compliance.
GO Admin Solutions, a boutique firm providing administrative support to small and big businesses, has evaluated HR compliance to help new enterprises to watch out for pitfalls that could lead to unwarranted liabilities.
What is HR Compliance?
HR regulatory compliance ensures that a business observes specific federal, international, state, and local regulations. Compliance helps companies to preserve their image, avoid the costly liabilities associated with non-compliance, and enhance employee engagement.
HR compliance involves proper record keeping, data privacy, staff training, formulating policies, and enforcing compliance. Primarily, when enforcing compliance, HRs focus on standard business processes like:
- Employee Safety
- Hiring, Termination, and Discipline
- Payroll, Wage, and Status
- Employee Benefits
- Employee Relations
What is HR’S Role in Compliance?
HRs play several roles in compliance, including understanding the regulations within their business boundaries, formulating in-house policies to enhance compliance, and ensuring their business operates within the set compliance limits.
The HRs focus on three primary areas when enforcing business or labor law compliance. They include the following:
Employment Laws and Regulations
There are several laws and regulations governing the employment relationship. These include federal, state, and local statutes and common law principles. An experienced HR consultant can help you understand the law and regulations surrounding employment issues.
Hiring the best candidates requires a strategic approach. To attract top talent, recruiters must ensure they can identify the skills needed to succeed at their organization. Understanding what motivates and demotivates each candidate and being able to communicate effectively with them during the interview process.
General Business Compliance
Apart from data and safety protection, human resource managers have a mandate to ensure a business’ compliance with general rules like; tax filings, environmental impact, legal quality standards, wage laws, social responsibility, workplace discrimination, and affordable care act filings.
Common Legal Compliance Issues HR Departments Face
With so many rules, regulations, and policies set by local, state, federal, and international authorities, HR regulatory compliance is not an easy feat. Companies need a dedicated team to avoid liabilities and watch out for common compliance issues that could lead to non-compliance.
Some of the typical HR compliance management issues that make businesses highly vulnerable to liabilities include:
Fair Labor Standards ACT
Many non-compliance legal battles revolve around the Fair Labor Standards ACT because the act comprises multiple regulations regarding overtime pay, child labor, minimum wage, and exempt/non-exempt employees. With the numerous policies under this act, it is easier to skip some, exposing your business to liability unknowingly.
The discrimination policy prohibits companies from disfavoring workers based on gender, disability, race, age, and nationality. However, companies often find themselves in a hard place complying since decisions made in their best interests can be regarded as discriminatory.
For instance, some employees rely on employee referrals to cut down hiring expenses, an issue that prevents them from attracting diverse people into their company. While employee referrals are done in good faith, some people view them as discriminatory.
Affordable Care Act & Employee Retirement Income Security Act
Complying with the Affordable Care Act (ACA) and Employee Retirement Income Security Act (ERISA) is another great HR compliance challenge. Many human resource departments, more so those with inadequate resources, face challenges in responding to marketplace notices, accurately reporting data to the IRS, complying with affordability rules, and tracking employee eligibility.
Technological advancements like social media have made it hard for many businesses to monitor and prevent workplace harassment because the vice can happen online without the company’s notice.
Learn More About our Legal Compliance Services Today!
With so many international, state, local, and federal regulations, HR compliance is complicated for businesses that lack a dedicated HR department backed by in-house legal and IT experts. The laws keep changing, which could expose your business to unintended liabilities.
Nonetheless, with our boutique accounting and HR Firm, HR regulatory compliance shouldn’t be an issue. We have an in-house team of seasoned experts who work with management teams to handle the problems with payroll, HR compliance management, accounting, and tax planning with utmost professionalism.
Book a free consultation to learn how GO Admin Solutions can help you reduce compliance liabilities.
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