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The Complete Guide to HR Compliance in 2023

HR compliance refers to the policies and procedures that your organization has in place to comply with state, federal, and local legal requirements. Since non-compliance with these regulations can result in significant fines and other repercussions, it’s important that all of your departments are involved — not just your human resources team.

By setting out clear expectations and following a consistent workflow, you can reduce the risk of HR compliance issues at every level of your organization.

Here’s what employers need to know about HR compliance, including four common compliance issues and what you can do to resolve them.

What Is HR Compliance?

HR compliance covers a broad range of workplace practices that affect nearly every aspect of your organization, from hiring policies to workplace safety. In short, it refers to all of the tools and methods you use, such as compliance training, recordkeeping, and HR compliance checklists, to meet your regulatory and legal requirements.

HR compliance isn’t just about employment law, although that’s a big part of it. You may also need to consider industry regulations, union contracts, and other applicable laws. Since laws change often, you’ll need to ensure that company policies, such as your parental leave policy or employee benefits packages, are updated often.

Here are just a few of the regulations to consider:

Other labor laws that may apply include the Equal Pay Act (EPA), Title VII of the Civil Rights Act, and the Age Discrimination in Employment Act (ADEA).

4 Common HR Compliance Issues

Because HR compliance spans many areas of business, and because labor laws may change over time and can vary from state to state, it can be hard for small businesses and other organizations to stay on top of their legal and regulatory obligations.

While HR professionals may have years of training and experience, your HR policies need to be followed by everyone on your team, even new employees.

Let’s take a look at four areas of business with frequent HR compliance issues.

The Hiring Process

Employers need to abide by a range of laws during the recruiting and hiring process. Anti-discrimination laws prohibit employers from using discriminatory language in job postings, such as a request for candidates of a specific age, race, or gender.

Your HR team must avoid asking prohibited questions in interviews, such as inquiring about their sexual orientation or marital status. Even background checks can be a gray area, according to the Equal Employment Opportunity Commission (EEOC).

Health Insurance Coverage

HR compliance: doctor writing on a piece of paper while holding a thermometer

The Affordable Care Act (ACA) requires employers with at least 50 employees to offer health insurance to full-time workers, although they aren’t required to accept it.

The ACA sets out minimum health insurance coverage and affordability requirements, and requires employers to report this information to the IRS. Organizations that don’t honor the mandate face a penalty for each employee who isn’t covered.

Employee Leave

Employees who qualify for FMLA leave can’t be terminated while on leave, and have the right to return to work in the same job or an equivalent position.

Your HR department is responsible for approving or denying leave of absence requests, tracking FMLA leave, and even designating it retroactively if an employee wasn’t aware that their medical condition qualified them for a leave of absence.

Misclassified Workers

New hires need to fill out the appropriate paperwork during the onboarding process — such as a W-4 form for employees and a W-9 form for independent contractors. Since an employer has fewer obligations when hiring an independent contractor, it can be tempting for employers to choose the easier option.

But there are steep penalties for misclassifying workers: If your company dictates a worker’s schedule or place of employment, they’re most likely an employee.

How to Improve HR Compliance at Your Organization

It isn’t practical for your HR manager to take responsibility for all aspects of compliance. Everyone from your hiring team to your payroll department has a role to play. Here are four steps you can follow to improve HR compliance at your organization:

1. Research Applicable Laws

Employment law can be complicated, but that’s no defense if your company gets fined for non-compliance. Start by researching state, local, and federal laws, and determine which regulations apply to you. If necessary, get advice from legal counsel.

But don’t stop there: Since regulations may change from year to year, stay informed about upcoming laws so you can prepare before they come into force. For example, New York’s Paid Family Leave Program expanded its coverage in 2023.

2. Document HR Compliance Policies

Next, document all of your policies in writing, from your parental leave policies to your dress code. By standardizing policies across your organization, you can ensure that they’re applied consistently and comply with applicable laws.

Some laws have workplace posting requirements, such as anti-discrimination or sexual harassment posters. Others can be outlined in your employee handbook.

Include templates for job listings, performance reviews, and other HR paperwork so you don’t have to review these documents for compliance each time.

3. Train Employees Appropriately

New employees can’t be expected to know every regulation they need to adhere to in their new role. Provide employees with training on how to use your HR management software, as well as on the regulations themselves.

What are your workplace safety standards? Is your organization HIPAA-compliant? What are your responsibilities regarding COBRA coverage?

HR leaders may need additional training in leave management and other aspects of human resource management to meet your compliance obligations.

4. Automate Compliance Tasks

Finally, make use of HR automation to streamline your compliance tasks. By digitizing paperwork, you can save time and reduce the risk of human error. Automation works best with repetitive tasks like data entry, but you can also use it to send reminders to employees about tasks they need to complete.

By creating standardized workflows and compliance checklists for every aspect of your operations, you’ll reduce the risk of compliance gaps. Plus, you can use reporting tools to identify recurring compliance issues.

Streamline HR Compliance With Automation

Entrepreneur using a tablet while holding a cup of coffee

HR compliance is an ongoing process that involves learning about applicable labor laws and staying up-to-date with new requirements. Common HR compliance issues include employee misclassification and discrimination in the hiring process.

Creating a compliance checklist and implementing HR automation can help you develop a culture of compliance at your organization.

Pulpstream is a cloud-based platform that allows HR teams to create custom workflows without having to learn how to code. Whether you need to comply with FMLA, OSHA, or another set of employment laws, Pulpstream’s no-code rules engine can help you stay up to date and reduce compliance risk.

Request a 30-minute demo today to learn more!