Compliance with ever-changing laws can feel like a full-time job for someone working in human resources or managing a small business. But when you have other tasks on your plate, some of the most important things associated with remaining compliant may fall by the wayside.
Businesses are held to strict regulations when it comes to protecting their workforce and adhering with federal, state and local laws. Even if an issue is overlooked by mistake, the company will still face stiff penalties and fines. The best way to ensure HR compliance is to conduct a regular investigation into your own business practices. Review our guide to conducting an investigation into the HR compliance within your organization.
What Encompasses HR Compliance?
Human resources compliance refers to ensuring that all company actions and policies align with federal, state and local labor laws. Examples include the creation and enforcement of workplace policies, protection for workers with disabilities and paying employees accurately.
HR Compliance Risks
Some of the most common risks associated with human resources include:
Job listings that discriminate
Starting from when your business plans to bring on a new hire, it is vital to follow laws that protect against discrimination in the hiring process. Some of these include the Equal Pay Act (EPA), the Fair Labor Standards Act (FLSA), the Civil Rights Act of 1964 (and the Civil Rights Act of 1991), and the Age Discrimination in Employment Act of 1967 (ADEA). Ensure your job descriptions do not include language that discriminates against people based on their age, sex, race, religion or other protected classes.
Poor data security
It is on the company to protect sensitive employee data shared as part of the employment relationship, including date of birth, Social Security number, financial details and tax information. Ensure that your business has an effective system in place to prevent unauthorized access to sensitive information. Additionally, any printed documents should be stored properly. A digital filing cabinet can be an effective solution to the dated practice of keeping hard copies, ensuring that only those who are granted access can view the information stored inside.
Discriminatory interview questions
The aforementioned laws that protect against discrimination in the hiring process also restrict asking questions that may allow for bias and discrimination to impact those involved. For example, interviewers can’t ask questions about the age, gender identity, religious affiliation or marital status of applicants.
Misclassifying employees
Employee misclassification is a problem that impacts the pay, tax requirements and available benefits for members of the workforce. An independent contractor isn’t eligible for benefits and doesn’t have taxes withheld, while an employee can receive company-sponsored benefits and has different tax responsibilities.
Intentional misclassification is a significant issue that can impact your company significantly. If you classify individuals as contractors, you must adhere to the regulations around that classification. For example, a contractor is not required to work in a specific location or during certain hours. Violating those rules could put your business at risk.
Improper documentation
When hiring employees, it’s essential to follow proper processes to ensure their legal status and ability to work in the U.S. Every new employee must complete Form I-9, which attests their authorization to work in the country and proves their identity. Failing to require the completion of this form or perform the necessary review of the identity and citizenship documents can create legal issues for the business.
Discrimination against protected employees
After employees have been hired, they maintain certain rights under federal and state laws. Businesses cannot discriminate based on protected classes, nor can they deny the opportunity for eligible employees to take protected leave.
The Benefits of Investigating Your Business
By performing an internal investigation, you can identify potential HR compliance issues or areas of concern before they become legal risks. Instead of facing an audit from the Department of Labor or a state government agency, you’re only facing your own team members, who can collaborate with you to right the ship. Additionally, you can take immediate action at the first sign of concern, rather than having to go through a formal process that often ends with stiff penalties.
Tips to Conduct a Beneficial Investigation
As you consider how to conduct an investigation within your workplace, follow these tips to improve its outcome:
- Communicate workplace policies clearly: All workplace policies should go through a rigorous review to ensure that they align with all applicable laws and regulations. When this has been completed, make sure every employee has access to the documentation of the policies to keep everyone on the same page.
- Establish who will participate in the investigation: Determine who will take part in conducting the internal investigation. You may want to bring in a third-party investigator to assist with the legal process, as they will be more impartial.
- Ask questions: When performing an investigation, you need to ask questions to get answers. Work with employees across all departments to get an idea of how they are treated by their supervisors when participating in actions that fall under laws and regulations. Learn as much information as you can and make a plan to improve in areas where necessary.
Take Compliance Matters Seriously with WorkforceHub
With the right systems in place, you can protect your business from compliance risks that threaten its success. An HR filing cabinet is one example of a tool built into WorkforceHub, a time and labor platform designed with the needs of today’s small business owner in mind. Plus, you can ensure accurate time data for smoother payroll processing, along with access to records when you need them. Learn more or try it free today.
