Human Resources compliance best practices

Human Resources managers play a critical role in the overall success of an organization, particularly as it pertains to corporate compliance.

December 29, 2020

Article highlights

Human Resources managers play a critical role in the overall success of an organization. Just like the hub at the center of a wheel, HR managers keep business activities in motion from the moment they recruit and hire the right people to their ongoing efforts to retain top talent.

Getting the right players in place puts the organization on the path to achieving its mission, vision, and goals.

Layered into the “people equation” is the key role HR plays in an organization’s corporate compliance efforts. HR managers must understand and stay abreast of various federal and state laws, rules, and regulations.

By navigating the complexities of the requirements, HR compliance helps mitigate an organization’s risk and avoid penalties, fines, scandals, and more, all of which erode consumer trust and damage reputations.

But too often, human resources compliance gets overlooked, relegating compliance tasks to legal departments or compliance committees. Of course, compliance must take a holistic approach and involve key players from several areas within the organization. But HR managers should be at the top of the list.

Why? Because effective compliance starts with people, policies, training, and communication – all of which the HR department is directly responsible for.

The role of HR in compliance

The role of HR is one of utmost importance. With all that’s at stake, there is no way for a compliance program to be successful without the functions of HR.

What is HR compliance?

With HR at the center of organizational success and critical to compliance efforts, you might be wondering, “What is HR compliance?”

Simply put, human resources compliance is the process of defining and implementing the policies, procedures, and training to ensure employees understand, acknowledge, and comply with all applicable laws and regulations.

As mentioned above, HR compliance mostly applies to employment laws, such as medical leave, equal employment, and anti-discrimination.

But HR compliance doesn’t stop there. Because most compliance regulations revolve around people and their behaviors, HR really touches on all aspects of compliance.

Why HR is crucial in corporate compliance

As the front line of defense, HR managers tackle compliance in the company’s efforts to treat employees fairly, adhere to federal laws, and mitigate risk.

Typically, HR is the one department with oversight of and contact with all employees at every level of the organization.

Human resources hires employees, regularly communicates with them, and trains them. And most importantly, HR plays a critical role in creating culture of accountability, which serves as the crux of compliance. Therefore, because HR wields tremendous influence on compliance, it serves as a critical function in corporate compliance efforts.

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Common HR compliance issues

Compliance management in HR generally falls into three common buckets, described below.

1. Employment laws: These federal laws and regulations specifically apply to Human Resources. They include Family and Medical Leave Act (FMLA), wage and hour laws (Fair Labor Standards Act), anti-discrimination laws (Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act, Age Discrimination in Employment Act (ADEA), and anti-harassment laws.

2. Employee health and safety (OSHA): Traditionally, this covers workplace hazards and safety. More recently, HR plays a much deeper role in employee health and wellness initiatives as research continues to show how healthy employees are more productive, have fewer missed days, and reduce benefits costs.

3. Hiring and firing processes: This now includes a greater focus on immigration laws, labor relations and unions (not technically a regulation, but it can lead to significant legal costs down the road. Plus, HR must properly let costly employees go in a way that doesn’t invite lawsuits or problems.

Clearly, HR compliance plays a pivotal role in identifying issues and is at the center of an organization’s success.

How to implement HR compliance best practices

Where can HR managers directly influence their company’s compliance efforts? Take a look at these HR compliance best practices.

Hire the right people

When it comes to the hiring process itself, HR must follow multiple laws and regulations. For instance, the Fair Labor Standards Act ensures that the company provides the minimum wage and meets overtime requirements when hiring employees.

The Americans With Disabilities Act protects workers with disabilities from being discriminated against in the hiring process, including boundaries around the questions employers can ask candidates during the interview process. And the Age Discrimination in Employment Act protects older workers (40 years or older) from being discriminated against due to their age.

Having a solid, compliant hiring process serves as one of the most important functions for HR compliance. HR managers must balance the staffing needs of the company with federal regulations regarding fair treatment.

Next, HR is tasked with hiring the right people who will contribute to the company’s compliance culture. As the company gatekeeper, HR recruits and hires people who are likely to be compliant as opposed to candidates with questionable ethics or red flags from previous employers. The HR manager plays a crucial role in setting the hiring standards, particularly in high-liability industries or roles.

Finally, HR’s onboarding process for people they do hire marks a key step in compliance that shouldn’t be overlooked. This process outlines the expectations, processes, and culture the organization wants to convey to new employees.

This recruiting/hiring/onboarding process sets the tone for an employee’s career with the company. Plus, it exerts a major influence on the overall culture of the company, which is a key contributor to the company’s compliance.

Keep your employee handbook and policies up to date

For all intents and purposes, think of the employee handbook and individual policies as the same. While some companies use a single handbook with the main policy information, others use individual policies. Regardless of which approach companies take, the HR department typically has a hand in both employee handbooks and policies.

Don’t make the mistake of creating policies and procedures once and then never returning to them again. They are living documents that should grow and adapt with the constantly changing regulatory landscape as well as the changing needs of the company. While the core policy elements might stay the same, their details need to adapt to continue to protect the company and maintain compliance.

Bottom line: Regular policy reviews, revisions, approvals, and dissemination should be a key part of business operations, as they play a crucial role in HR compliance.

Foster two-way communication

Human resources should be regularly and consistently communicating all these expectations, changes, and policies to employees. To keep the business out of danger, employees need to understand not only why these company policies are important, but also how those changes impact their day-to-day jobs.

This, in turn, increases the value and importance in the eyes of the employees as they hear about compliance issues regularly by leadership. Clear, consistent communication helps increase employee buy-in on the importance of HR compliance and foster accountability from top to bottom.

But beyond that, HR managers need to have communication mechanisms in place where employees can express concerns to leadership.

This might be something formal, such a whistleblower hotline. But it could also be an openness of HR to listen to individual employee concerns about issues like workplace safety, how certain processes are “actually” being put into practice, or other issues they are seeing that need to be addressed.

This commitment to two-way communication demonstrates openness, transparency, and accountability—the very values at the heart of HR compliance.

Conduct regular compliance training

While you might regularly hold employee training sessions, the key to their effectiveness lies in training to your policies, especially when dealing with compliance issues. The training you conduct – whether it’s sexual harassment, diversity training or something else – should directly reference and reinforce your policies. They need to work hand in hand so employees get the foundation provided in the policies and the practical steps provided in the training.

Furthermore, you want to take a proactive approach to these trainings to prevent problems in the first place. Rather than wait until an issue pops up, conduct ongoing training to reflect policy changes and reinforce HR compliance messaging.

Keep in mind that, with most of these issues, you do not need offer major, in-person classroom training. Instead, short, online training can actually be just as effective in keeping these HR compliance issues at the forefront of employees’ thinking.


Perform regular HR and compliance audits

When it comes to understanding where your HR compliance efforts stand, it helps to perform HR and compliance audits. Basically, this is where HR teams look at the issues they have direct responsibility for and make sure they are meeting the legal and regulatory requirements. This would cover areas such as HR documentation, hiring processes, HR best practices, employee surveys, and up-to-date manuals, to name a few.

The audit aims to help identify risks and diagnose compliance issues before the turn into problems. But it can also be used through the lens of pinpointing what HR is doing right, which will help reduce costs and boost your efficiency.

To accomplish this, HR professionals must stay current on the laws applicable to them and industry best practices. Plus, they must have the capacity to take the time to do the audit on top of other HR compliance tasks. Learn more about HR compliance best practices across industries by checking out our article here. 

Getting started

While this all sounds good, it also sounds like a lot of work, especially for those who are already wearing so many hats. To make this happen you need a tool built for compliance, such as PowerDMS.

We give you the ability to streamline how you store, manage, distribute, and track all of your crucial compliance information from a single, cloud-based solution. We can help you save time and money by reducing the cost and complexity of more manual or homegrown solution. Human resources compliance is a 21st century problem and PowerDMS is the cutting-edge solution you need to simplify your efforts.

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