The Path to Maintaining HR Compliance

It starts with the hiring process

Starting a business can be difficult. Growing one is even harder. You may have a great product that effectively solves a problem or clearly addresses a need. And in addition to being backed by a committed management team, you may have secured initial funding and made the right investments in your infrastructure. You may also be working hard and putting everything you have into establishing your brand and building market share. Indeed, your path to success may look promising, but there is one area of business that cannot be overlooked—ever. And that is HR compliance-designed to ensure your organization effectively adheres to a range of regulations and requirements that cover multiple aspects related to how you hire, treat and compensate your employees. Whether your company is big or small, a startup or mature, maintaining compliance in HR is critical to success. A firm understanding of current HR regulations and requirements will allow you to focus on recruiting and retaining the talent you need, while guarding against mistakes that may lead to turnover and litigation.

The good news is, you can take steps to prepare for HR matters that may come your way. Through TriNet’s end-to-end HR Compliance Survival Guide, we’ve summarized some of the key considerations you’ll want to address in order to build an effective HR compliance process and help mitigate risk. It all starts with the hiring process, which begins before you write the job description and continues until the onboarding experience is complete. Consider these eight key areas:

1. Recruiting - The Equal Employment Opportunity Commission (EEOC) prohibits job postings that discriminate against any protected class through language in the posting itself that encourages a particular type of candidate to apply or discourages another to the detriment of a candidate in a protected class. The EEOC also prohibits recruiting using other methods in a discriminatory fashion. For example, a word-of-mouth announcement of a job opening through a particular ethnic community may prevent others who are not in that community from even applying. All recruiting should be conducted in a manner that encourages diversity and inclusion. Keeping records of where jobs are posted and a list of applicants is a good step to protecting yourself in case of an EEOC claim or lawsuit. Many state and local laws have similar, or more expansive, protections against discrimination in recruiting and hiring.

2. Interviewing - A compliant interview process will include questions that are used consistently for all candidates. Questions should be about past work experience and skills and not include questions about age, religion, marital status, or other protected class issues, or about personal finances. The “Ban the Box” movement has led many states and cities to prohibit asking an applicant about their criminal background at various stages of the hiring process, starting from the application, unless otherwise authorized by law.

3. Employee Status - One of the biggest challenges for HR managers is placing employees in the right status. Startups, where employees may wear multiple hats and work long hours, are particularly exposed. Employee exempt status is firmly based on specific criteria set forth by the Fair Labor Standards Act (FLSA) and state and local laws.

4. Wages - Wages are another complex area. Every job should have a wage range that is based on skills and experience, regardless of age, gender or any other protected factor. The job should pay the same to anyone with similar credentials. If your compensation policy is tied to the role and the required experience and skills―and not the gender or other protected status of the candidate—you’re in good shape. You should also be aware of many state and local pay equity laws that both require equal pay for all similarly situated employees and also often ban the use of a candidate’s salary history to determine current compensation.

5. Benefits - Benefits are an increasingly important factor in attracting talent. When you’re recruiting, you have to consider what benefits are required in addition to what is desirable. Since the Affordable Care Act (ACA) was enacted in 2010, certain large employers have been required to offer medical plan options to their full-time employees or potentially pay a penalty. There have been many changes since the ACA was enacted. Keeping track of these federal requirements is a critical task for HR managers and one that can cost your company dearly if mismanaged. Many states are now requiring employers of a certain size to offer their employees a vehicle to save dollars for retirement. In addition to knowing the rules for every state in which your company has employees, you need a solution to administer the plans.

6. Paid Leave - Paid sick leave or paid family/medical leave is a major benefit for employees, but the rules and requirements are inconsistent between each jurisdiction with such laws. From a compliance perspective, you need to know the state or local policy for every location your company operates. It can be mind-numbing to keep track, especially as more states and localities join the call for mandatory paid leave. Add to that the federal Family Medical Leave Act (FMLA) and your own company paid sick/family/medical leave policy.

7. Multi-state Considerations - For many of the issues mentioned above, complexity grows with the business. A company with 40 employees in four states, or a national firm with businesses in all 50 states must know the nuances of wages, healthcare, FMLA and leave of absence, 401k, and mandatory training requirements for every person in every location. To complicate things, rules continually evolve with changes in regulations. As a result, your benefits offerings and training must be revisited on a periodic basis.

8. Discrimination and Harassment - There are some serious issues in the workplace that can not only lead to legal action but could damage morale and your company’s reputation. These issues come with related costs of having your HR team and others taking time to handle these complaints and claims instead of managing day-to-day priorities. The first step to avoiding this scenario is understanding what the most common issues are, how to spot them, and how to properly handle them.

Download the full HR Compliance Survival eGuide, to understand the key considerations to be aware of as you contemplate developing an appropriate action plan for your compliance and risk related HR programs. Building a relevant product or service that resonates with your target customer group will certainly be the key to your organization’s success. But you’ll also need to attract, support and retain the right employees to assist and team up with you in pursuing your goals. From hiring and onboarding, to delivering and providing access to the right benefits and compensation programs, your commitment to supporting an effective HR compliance program will round out your strategy for success.