The Importance of HR Compliance and the Steps to Take to Avoid Fines

The Human Resources department in an organization is one of the most important because of the many duties HR staff has. Not only do they have to look for the best talent, interview, hire, onboard, and so on, but most importantly, they are responsible for handling compliance. In other words, it is the HR department's responsibility to implement all legislative rules and regulations that govern the relationship between employers and employees. This means that they have to stay on top of all federal, state, provincial, and municipal laws to ensure that there are fairness and equality in the workplace. It is up to the HR staff to understand and be able to navigate all the laws to ensure their organization avoids any fines or penalties, and protects its reputation.

There are four main areas in which the HR department must stay compliant:

Pay Compliance

The Fair Labor Standards Act (FLSA) governs pay and overtime. While each state has different minimum wage requirements and overtime pay regulations, your HR staff must be aware and familiar with the laws in their area so that they can be certain that they are paying their employees appropriately for time worked.

Equal Opportunity Compliance

Federal Civil Rights laws govern the hiring, firing and terms and conditions of employment. Therefore, when a company hires or terminates an employee, they must ensure they are in compliance with federal and state laws. To summarize, these laws are against the consideration of race, gender, age, disability or other protected status. Sometimes, hiring managers can be out of compliance without even realizing it. Check out our blog 4 Unusual Questions You Should Not Ask During an Interview to see how you could be breaking these rules unknowingly.

Health Care & Medical Leave Compliance

It is important for employers to understand their responsibilities when it comes to offering employees health care and the penalties they might face if they are not in compliance. The Family and Medical Leave Act grants certain employees the right to take up to twelve weeks of unpaid leave each year in specific circumstances including the birth of a new baby, for placement with the employee of a child for adoption or foster care, to care for an immediate family member with a health condition, and to take medical leave when the employee is unable to work due to a serious health condition.

How can you ensure that your organization stays compliant? The following are basics steps that should be taken in order to achieve the above goals:

Have an Employee Handbook & Update It Frequently

Every company should have a handbook that has detailed procedures and regulations available for employees at all times. In fact, most companies ask their new hires to read over the entire handbook and provide a signature as proof that they have read it. The handbook should be used as a communications tool that clearly states the organization’s policies and procedures to stay compliant.

Educate and Train Your Employees and Managers

Aside from having your employees read the Employee Handbook thoroughly, you should also implement education and training programs. Make sure to keep track of attendance, which may serve as evidence in case of future audits. Additionally, you should train managers on how to avoid and handle situations involving harassment and discrimination. Harassment and discrimination training helps reduce the risk of lawsuits, potentially saving businesses substantial investments of time and money.

Verify Employment Status

This is a crucial step in the hiring process. Make sure to verify the employment status of all potential hires to ensure that they are legally residing in the United States. This may be done via an I-9 or the Employee Eligibility Verification Form. When confirming eligibility, employers may only request forms of documentation that are specified on the I-9; asking for other documents may subject the employer to liability for discrimination. Businesses must keep the I-9 on file for either three years after the date the employee was hired or one year after his or her employment ended, whichever is later. This form, along with any other records that contain confidential employee information, should be stored in a secure location where they can only be accessed by those with a compelling reason for doing so.

Organizations that are not in compliance with the HR laws can face significant fines and penalties resulting in hundreds, if not thousands, of dollars lost. HR laws and regulations are constantly changing and it can be difficult to keep up with them since the HR department has other important responsibilities to tend to. Regardless, compliance should not be left on the back burner. A good thing to do is to make reminders on your calendar to go over HR laws and make note of any changes at least once a quarter.

It is important to know that Dominion clients are able to access HR Helpline’s services found at the bottom of Dominion’s website titled “HR Resource Center” under Dominion’s Quick Links, at no additional cost. Dominion also aids in remaining compliant when it comes to ACA reporting and Tax Filing. If you’re interested in learning more or have questions, click below!

For more information about rules and regulations and where your company falls, please refer to the IRS website and the Department of Labor website.