HR Compliance Checklist


HR Compliance Checklist to Reduce Your Risk

Numerous organizations lose millions of dollars each year for unknowingly violating one or more of the HR compliance laws governing employees, employment decisions, and benefits. The list of possible offenses contains complex laws, rules, and regulations that are constantly changing.

To reduce losses, it’s important to understand the techniques that help you maintain legal compliance, avoid fines/penalties, and limit attorney fees. This starts with understanding the laws and compliance regulations that apply to your organization.

Which HR Compliance Laws Apply to You? 

The HR compliance laws and regulations that apply to each organization are based primarily on four things: 

1) The number of employees on your payroll  

2) The states in which you and your employees conduct business

3) The type of business

4) Whether or not you conduct business with the government.

Even organizations with only one employee must comply with federal and state laws and regulations.

Federal Laws

When an organization hits 15 employees, they must comply with Title VII of the Civil Rights Act (CRA), Pregnancy Discrimination Act (PDA), Americans with Disabilities Act (ADA) and the related ADA Amendments Act (ADAAA), Genetic Information Nondiscrimination Act (GINA), and Fair Credit Reporting Act (FCRA).

When you hit 20 employees, the Age Discrimination in Employment Act (ADEA) and Consolidated Omnibus Budget Reconciliation Act (COBRA) apply. At 50 employees, the Family & Medical Leave Act (FMLA) comes into play, and at 100 employees, EEO-1 reporting requirements and Worker Adjustment & Retraining Notification Act (WARN) also apply. 

State Laws

Each state has established ever-evolving HR compliance laws and regulations for employment practices. Organizations must comply with these laws while keeping an eye on how they intersect with federal requirements, as employees are entitled to whichever is greater. As a result, differences can be found in length and frequency of required breaks, final paycheck payout rules, new hire reporting, and many other employment practices.

Working with the Government 

The scope of a government contract and the number of employees in your organization determines whether or not you must comply with federal contractor laws and requirements such as Affirmative Action or VETS 100 Reporting. 

Generally, anyone with 50 or more employees and annual government contracts in excess of $50,000 will need an affirmative action plan and need to comply with other federal contractor laws, rules, and regulations.

OSHA and Other Safety Laws

Compliance regulations also cover the safety of your employees. Organizations with 10 or more employees must meet OSHA regulations unless they are subject to other federal statutes, they have exempt status, or they meet low-hazard requirements.

Exempt organizations include churches, federal and state governments, political subdivisions of governments, and those who are self-employed.

Low-hazard industries include retail, finance, service, real estate, and insurance. Keep in mind that states can create their own OSHA compliance laws as long as they meet federal standards.

Legal Compliance

Preparing for Compliance Audits

Federal regulations allow multiple agencies to complete HR compliance audits to ensure organizations meet requirements. The agency involved and the nature of these audits depends on which regulations are under investigation.

Compliance audits can originate from any of the following agencies:

  • IRS
  • DOL
  • OSHA
  • INS
  • EEOC
  • NLRB
  • SSA

Federal and state courts can also start an audit on an organization. Non-compliance can result in extensive penalties and fines.

Creating Compliant Employment Practices

HR compliance is important, but it can be tricky if you aren’t sure where to start. The following techniques will help you create legally compliant employment practices and a healthy work environment.

Understand Your Legal Compliance Requirements – It’s important to understand what HR compliance laws and regulations apply to your organization. If you aren’t sure about your compliance requirements, check it out. Also, make sure you keep up with new and updated laws so you can actively implement the steps needed to ensure compliance. 

HR Service, Inc. can help you stay current with important changes that can affect your organization. Clients, receive a monthly legal update along with due date reminders, so you can maintain HR compliance throughout the year . You also get access to HR bulletins so you can keep up with best practices.

Review Current Organization Practices – Once you are familiar with the applicable laws, evaluate your organization’s current practices to identify risks, inconsistencies and challenges. A useful technique is to hire an independent third party who specializes in employment laws and have them conduct a compliance audit. 

HR Service, Inc. provides a useful HR compliance audit to help you check your current practices and look for gaps that can cause you trouble. This is a great first step to creating an effective plan of action.

Align Practices to Comply – Once you have established areas for improvement, proactively take the needed steps to eliminate risk, follow requirements, and build effective people practices and overall HR infrastructure that ensure compliance. This may require new policies, changing existing practices, or training supervisors.  

Establish & Follow Consistent Practices, Procedures and Guidelines – Consistency in HR compliance is essential to a thriving business. Make sure you are consistent in how compliance is met and how employees are treated.

One of the best techniques to drive and communicate consistency is to document good employment practices in an employee handbook. Equally important is to provide leaders with guidelines on handling important employment practices like interviewing, hiring, orientation, training, performance management, appraisals, corrective actions, pay, terminations and discharges. These practices can be established in your employee and leader handbooks.  

Train Supervisors – What supervisors say and do will either help or hinder your legal compliance and best practices. Because a supervisor represents the company, their actions make them one of the organization’s greatest assets or liabilities regarding employee rights.

Train all supervisors in employment laws and practices that apply to them. Make sure they know how to interview, manage performance, and terminate without creating risk. Equally important, ensure they know how to respond to employee complaints, medical leave, disability, or religious accommodation requests.

Make sure all supervisor training is aligned with your policies and procedures outlined in the employee handbook. Discrepancies can cause issues during audits.    

 Employee Management Plans Based on Job-Related Factors – Every employment decision related to hiring, appraisal, corrective action, training, discharge, pay, records retention, etc., must be based solely on job-related reasons/information. Any implication that decisions are based on sex, age, national origin, religion, color, or any other protected category is a recipe for a lawsuit and a hefty fine. Therefore, ensure all employment decisions are based solely on job-related factors, taking out all implications to areas protected by law. 

HR Service, Inc. can help you develop an effective employee management plan that removes risks associated with protected categories.  

Maintain Accurate Documentation – Be prepared to defend employment actions and decisions by maintaining accurate documentation. Keep files on each employee; record key performance measures and feedback (constructive and corrective/praise). Individuals involved in hiring, pay, disciplinary action, and termination decisions should also document information needed to demonstrate that decisions were job-related and supported by facts, not bias.   

Maintaining documentation includes records of all benefits and HR compliance.

Provide Required Notices – State and federal laws require organizations to post various employee rights. Obtain an all-in-one notice for each state where employees work that covers state and federal requirements. Organizations that offer insurance benefits, like medical insurance, must also comply with ERISA rules by providing employee notices such as:

SPD Wrap

  • Medicare Part D
  • CHIP
  • MHPA
  • Wellness
  • SBCs

HR Service clients have access to a web-based document creation center to create an SPD Wrap and run an all-in-one employee notice to help create and distribute these notices easily.   

Establish a Grievance and Complaint Process – If employees have a place to complain and are given fair consideration, the need to seek outside assistance from attorneys, or compliance organizations is lessened. Equally important is ensuring all complaints are taken seriously, investigated, and acted upon.

Train employees in your process, opening access to supervisors, executives, and HR representatives. Train supervisors to respond to complaints and ensure effective investigations and complaint resolution practices. 

Monitor the Work Environment – Monitor the work environment and keep in touch with employees so you are aware of unsafe and legally risky practices (e.g., harassment). It is best practice to conduct annual employee opinion surveys to keep a pulse on employee attitudes and perceptions. Maintain a safe, positive, risk-free workplace by communicating expectations, training employees and supervisors, and monitoring to ensure compliance. 

Evaluate Disciplinary Actions/Discharges – The two most risky employment practices are corrective actions and discharges. These are the times tempers can flare, and individuals say and do things that can escalate to legal actions. It is a good practice not to allow anyone to fire on the spot.

All employment violations and performance issues should be thoroughly reviewed before an action is taken in anger or spite. Get all sides of the story and know the laws that apply so an informed decision can be made. Consult with experts in handling these risky situations before taking action to minimize risk further. 

Be Respectful, Fair, Honest and Kind – As obvious as it may seem, when a company neglects to be respectful, fair, honest, and kind, employees complain to outside agencies and seek attorneys or revenge.  Treat people with respect and dignity, especially during corrective actions and terminations. 

Align with Experts –There are many possible areas where things can go wrong. Therefore, it is imperative to either have an onsite expert or align yourself with an outside resource that can assist with challenging employee issues, risks, and compliance issues. 

Do the Right Thing – If you think about it, most laws, rules and regulations are not only required but also good practices to help extend respect and dignity. For example, eliminate workplace bias, discrimination, and prejudice, and promote a positive, respectful work environment that rewards performance and results, not skin color, age, or gender. 

Get the Help You Need to Maintain Legal Compliance

HR compliance starts with identifying and addressing risk factors. HR Service, Inc. helps organizations comply with federal and state laws, make good employment decisions, develop and maintain proper documentation, and train leaders. We also provide compliance audits to identify and eliminate risks. 

For help with maintaining your legal compliance, learn more about the consulting projects available from HR Service, Inc.

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