HR Compliance Checklist: Everything You Need to Know
HR compliance is a vital component of every organization or business. But staying compliant is a challenge. Looking to simplify this critical process? An HR Compliance Checklist will help you. Read on to see what you need for your company’s compliance.
What is HR’s Role in Compliance?
HR compliance refers to the process of aligning your employment and work practices to the relevant laws and regulations in your country, state, or locality. Human resource specialists guide the business to reach its objectives while making sure it adheres to applicable laws. Compliance affects the business’s reputation, which makes HR best suited to head this initiative. So where do you start?
Hiring Process
HR compliance spans from creating to enforcing the necessary policies to guarantee alignment. You must check with the relevant government agencies for applicable regulations. The first step in HR compliance starts with hiring procedures. Every company must ensure that there is fair employment.
In the US, this is complying with the Fair Labor Standards Act (FLSA). This regulates the standards on the federal minimum wage, working hours, recordkeeping, and child labor laws or employment standards. HR compliance in recruiting and hiring means equal pay for equal work.
At the very start of HR processes, you must establish clear sexual harassment policies to safeguard the company, its employees, independent contractors, and applicants. Make sure that sexual harassment, or any form of harassment, is prohibited.
Non-Discriminatory Hiring
There are several anti-discrimination laws enforced at the federal level. To maintain compliance with employment law, familiarize yourself with the following:
- Equal Employment Opportunity Commission (EEOC)
- Americans with Disabilities Act (ADA)
- Age Discrimination in Employment Act (ADEA)
- Genetic Information Nondiscrimination Act (GINA)
- Title VII of the Civil Rights Act of 1964
Everyone deserves equal opportunities. Compliance must help establish a company that is free of age discrimination, religious discrimination, and sex discrimination (including gender identity and sexual orientation), among others.
In addition, HR must establish compliant processes for recruiting and interviewing. Align the interview processes with the actual job description, not acquiring the personal beliefs of the candidates. Ensure that the process is compliant with employment laws on how the candidate’s references are checked.
Onboarding Process
The next step is complying with onboarding regulations. The activities include:
- Completed and signed I-9 and tax forms from the new employees prior to work
- Written consent from the employee, if you a credit check as background screening
- Complying with data privacy laws and data security best practices
- Keeping the employee handbook up-to-date
Form I-9
This form is used to verify the identity of new employees and whether they are authorized to work in the United States. Your highest priority is compliance with the most recent requirements for employment verification and immigration reform. Immigration is the most pressing issue with HR compliance.
Daily Operations
Your goal in daily operations is achieving superior performance, designing employee development plans, and retaining employees according to regulation. What does HR compliance look like on a daily basis? Here are common daily operations you must establish:
- Managers who understand HR compliance
- Time-tracking system for work rendered, for onsite and remote employees
- Legal employee wages
- Overtime pay to non-exempt employees
- State and local shift scheduling laws
- Final paycheck and unused PTO
- FMLA, COVID leave, and PTO
There are technologies, like an automated timekeeping system, that help you manage attendance, leaves, and compliant shift schedules. These HR technologies have compliance modules, making compliance easier. Some examples are BerniePortal Compliance, SAI 360, and IntelliHR.
Whether you use these technologies or not, the data privacy laws control how you protect the private or personal documents of your employees.
Management Training
Having competent managers in HR compliance is your most significant asset. You must offer management training focusing on compliance since they are your front liners in upholding standards and guidelines for the workplace.
Here are some critical competencies that your managers need to have:
- Practicing compliant recruiting and interviewing behaviors and processes
- Conducting fair performance appraisals
- Dealing with diversity and harassment issues
- Managing difficult employees and dismissal
Working Time
You need to establish a system to monitor an employee’s time spent performing duties. This can refer to work conducted onsite or offsite.
There are two types of workers you need to note regarding compliance: exempt and nonexempt employees. FLSA defines exempt employees as workers who are exempt from the minimum wage and overtime pay provisions. They are paid by salary rather than by the hour. These are from professional, executive, administrative, and computer-related fields.
Nonexempt workers are entitled to at least minimum wage for all hours worked up to 40 in a workweek with the applicable overtime rate for hours beyond 40. They are those who earn less than $684 a week.
Equal Employment Opportunities: Affirmative Action
The goal of affirmative action is to ensure equal employment opportunity and fair compensation for all applicants. According to the FLSA, “If a company has at least 50 employees and a single contract of $50,000 or more, then it must also develop an Affirmative Action Program”.
The Equal Pay Act should also inform your policies. This protects against wage discrimination based on sex. Take time to review the specific requirements of the disabilities act to ensure that you provide equal opportunities during recruitment, hiring, pay, training, and others.
Unemployment Benefits
You must always check the most updated federal laws, on unemployment benefits. Dismissals due to performance reasons receive benefits. There are employees who are not eligible for these benefits:
- Dismissed during the probationary period (around 90 days)
- Dismissed for conduct reasons or leave without cause
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The Employee Handbook: Policies and Procedures
You can alleviate the challenges in HR compliance by compiling an employee handbook, which contains the company’s policies and procedures. This is a fundamental document for your business. All of the company’s processes must comply with rules. Review this to ensure it is up-to-date with state and federal employment laws.
This handbook should have provisions for the following:
- Equal Employment Opportunity policies
- Work hours and PTO
- Using the company’s resources (personal computers, intranet, and Internet use)
- Dress code, among other things
You must display required employee posters in the workplace. Prepare at least six copies of the required posters according to federal law.
Examples of HR Compliance Issues
Now let’s look at the common examples of compliance issues. This will help you think about how the next components relate to your current practices. Here are the examples:
- Wage and hour laws: The United States has wage laws that protect employees based on federal, state, and local regulations. This includes requirements on how many hours an employee works per day, overtime pay, and weekend pay.
- The Family and Medical Leave Act (FMLA): This covers requirements protecting employees during certain family or medical situations. Employees must have to take unpaid leave without fear of being laid off. The Affordable Care Act (ACA) requires employers to provide nursing mothers with a reasonable break time to express breast milk.
- Workplace safety: Different industries have different requirements for workplace safety. These are regulatory compliance under the Occupational Safety and Health Administration (OSHA) agency. The North American Industry Classification System (NAICS) has comprehensive information on workplace safety requirements.
- Union laws: The National Labor Relations Act ensures that workers are able to organize and negotiate with employers, whether they’re union members or not. When you are working with union members, it is critical to adhere to the relevant union laws. Union’s rules cover wages and hours, and workplace safety, among other things.
- Immigration laws: Familiarize yourself with immigration regulations from the Immigration and Nationality Act (INA) on hiring employees or accepting students from abroad.
- Employee classification: Check state and local employment regulations when you employ people across different locations.
- Data security: Compliance with data security covers how to keep employee data confidential and protected from breaches.
Best Practices in HR Compliance
The following practices outline helpful activities in achieving HR compliance. You may also indicate these on your HR compliance checklist.
1. Sharing the Responsibilities
Compliance needs a team approach. A cross-functional team with representatives from HR, legal, payroll, and other groups should work together to maintain compliance. Hiring a legal consultant or firm is also an option. They should work on the following common issues:
- Pay issues: how is the regular rate of pay computed? How are employee benefits dispensed?
- On- and off-site work: how are work hours computed, including those performed on off-work premises? Are there workplace safety regulations in place?
- Salary deductions for exempt employees: how are these computed during absences or office closures?
- Training: how are employees compensated during training events?
- Break and meal periods: are the company’s policies on break periods aligned with the relevant state or local laws?
- Travel: how are office-related travel compensated
2. Auditing your HR Policies
The next effective practice is conducting regular HR compliance audits. Make time to review your policies against the existing federal, state, and local laws. Arrange an accessible list of the compliance obligations that apply to your company.
This will be the time to train your employees with HR compliance training. Include the Fair Labor Standards Act (FLSA) training, affirmative action plans training, hiring and interview compliance training for hiring managers and new interviewers, and alike.
3. Aligning with Legal Changes
Auditing your HR policies should lead you to note the changes in laws and regulations that apply to your business. This alignment is often completed at the beginning of the year. Also, your HR leaders must acknowledge potential compliance challenges that will arise from these modifications.
4. Monitoring your Implementation
After the audit and alignment, continue your consistent monitoring of activities requiring HR compliance. Keep proper documentation by updating your employee handbook and cascading the necessary information to all your employees. This will also include updating your management training.
The HR Compliance Officer
An HR compliance officer establishes the system on how to ensure HR compliance and tracks compliance in the daily operations of the business. The role ensures that every employee adheres to the established policies and practices of the company. As such, they must hold proficiency in reviewing the relevant employment laws in their locality, so the company meets the necessary obligations.
Rounding Out the HR Compliance Checklist
One of the best ways to keep track of compliance obligations is to create an HR compliance checklist. This checklist will differ depending on the industry, but we’ve laid out the foundations above. Treat the checklist as a compass that should lead you in the right direction. Here are additional items to complete your checklist.
Compliance Deadlines
Keep track of compliance deadlines throughout the year. These include filing W-2s, Affordable Care Act (ACA) reporting, and EEO-1 reporting. Take note of the specific forms to complete in complying with the Health Act standards.
Tax and Payroll
Things to review:
- Employee information and employment status
- Documents required for tax filings
- Double-check the W-2s
Employee Benefits
Things to review:
- Employee coverage plans, along with payroll records
- Provisions of the ACA, the Employer Shared Responsibility (ESR) provision, and the IRS 2022 Employer Health Plan Affordability Threshold
- Healthcare plan requirements and deadlines
Compensation Policies
Things to review:
- Year-end bonuses
- Review updates to wage and hour regulations
- Review updates to wage base and limits
Staff Recruitment and Interview, Onboarding, and Training Processes
Things to review:
- Hiring and recruitment guidelines and processes
- Employee Handbook
- Company training calendar
- Employee leaves
- Business Continuity Plan
Conclusion
As we laid it out, it is clear that compliance is an essential foundation for your company’s whole operation. We hope this gets you started in developing your company’s checklist and on your journey toward compliance.
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