HR Legal Compliance Overview
HR legal compliance refers to the adherence to various local, state, and federal employment laws, regulations, and guidelines that ensure fair and safe practices in the workplace. This encompasses a wide range of issues, including but not limited to employee rights, workplace safety standards, discrimination laws, wage and hour laws, family and medical leave requirements, and termination procedures.
Businesses of all sizes, from multinational corporations to small startups, need to adhere to HR legal compliance because it helps create a fair and equitable workplace, protects the business from potential legal disputes, and improves overall organizational efficiency and morale. Moreover, it is important for enhancing workplace safety and for maintaining a positive employer brand. Complying with employment laws and regulations promotes a culture of respect and inclusiveness within the organization.
Failure to comply with HR legal compliance can lead to serious implications for businesses in 2023. These consequences may include hefty fines and penalties , legal disputes, negative publicity, loss of customer trust and employee morale, and even damage to the business’s brand reputation. Employers may face costly litigation resulting from lawsuits or government investigations, or they may be required to pay back wages to their employees as a result of wage and hour violations. Moreover, non-compliance can lead to an increase in employee turnover, as dissatisfied employees may seek other job opportunities in order to work for a more compliant organization.
In the ever-changing landscape of HR legal compliance, it is crucial for employers to stay up to date on the latest laws and regulations that affect their employees and their businesses.
Employment Laws You Need to Look Out for
Consideration should also be given to the other major federal employment laws administered by the DOL, the Equal Employment Opportunity Commission (EEOC), the Office of Federal Contract Compliance Programs (OFCCP), the National Labor Relations Board (NLRB) as well as state employment laws.
Federal Requirements
• Fair Labor Standards Act (FLSA) – The FLSA is a 1938 labor law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. To enforce this law the DOL administers and enforces workplace laws, including the:
• Family Medical Leave Act (FMLA) – The FMLA was enacted during the Clinton Administration in 1993. The FMLA requires covered employers to provide employees job-protected and unpaid leave for qualified medical and family reasons, such as maternity leave; paternity leave; adoption leave; foster-care placement; or certain medical conditions of the employee or an employee’s immediate family (spouse, child, and parent).
• Consolidated Omnibus Budget Reconciliation Act (COBRA) – COBRA is a federal law that requires that certain employers with group health plans allow former employees and their qualified dependents to extend their health coverage under the employer’s benefit plan. The COBRA implementation is the responsibility of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA).
• Employee Retirement Income Security Act of 1974 (ERISA) – ERISA is a federal law that establishes minimum standards for pension plans in private industry. Although it does not require any employer to establish a retirement plan, it contains rules that plan administrators must follow.
• Occupational Safety and Health Act (OSHA) – OSHA was created in 1970 and is administered by the Occupational Safety and Health Administration. The goal of the OSHA Act is to promote workplace safety and health. OSHA was authorized to set and enforce standard and regulations along with providing training, outreach, education, and assistance.
• Uniformed Services Employment and Reemployment Rights Act (USERRA) – The USERRA establishes the right of veterans and returning service members to be reemployed in their civilian jobs.
• Immigration Reform and Control Act (IRCA) – IRCA was signed into law in 1986, with the intent to curtail illegal immigration into the U.S. The law contains both provisions designed to enforce against illegal immigration as well as provisions that legalized the status of certain illegal immigrants who entered prior to 1982.
All federal employment laws must also be considered.
State Requirements
Along with federal laws, employers must consider state laws that impact the workplace. Much like federal laws, state employment laws could include:
• Employment at Will
• State Minimum Wage and Overtime
• State Occupational Safety and Health
• State Right-To-Know Regulation
• State Required Leave Laws
• State Credit Check Laws
• State Drug & Alcohol Testing Laws
• State Plant Closing Laws
• State Unemployment Insurance Laws
• State Equal Opportunity Laws
• State Background Check Laws
• Workers Compensation
• Unemployment Insurance
• Subcontractor Bonds/US CIS Form I-9
• Employer Mandated Health Benefits
Managing Employee Paperwork
When hiring new employees, it is critical to keep all required employee documentation in mind. This documentation includes forms required by federal and state law.
I-9 Forms: The Immigration and Customs Enforcement (ICE) Employment Eligibility Verification form I-9 must be completed for all employees, no matter where your company is located. For a newly hired employee, the completed federal I-9 Form must be retained where it is readily available during a site visit or audit. The federal form must be signed by both the employee and employer representative within three business days of the employee’s first day of work. It is advisable to keep the completed I-9s for three years after the date of hire or one year after employment ends, whichever is longer, so that you have a full three years from the end of employment in which to produce the I-9 document if there is ever a challenge.
W-4 Forms: Employees are required to complete a federal Employee’s Withholding Allowance Certificate (IRS Form W-4) for tax withholding purposes. States and localities often require similarly completed forms. If your state does not require these forms, your HR Department should have its own equivalent form, which collects similar information.
Employee Handbooks: It is a best practice to inform employees of the workplace policies and legal obligations of the employer through an employee handbook. However, if you are going to have such a handbook in place, it is important to make sure that the content complies with both federal and state law. In addition, when you adopt a new handbook, if there are any clear changes from the previous version, it is important to have each employee sign an acknowledgement of having received and read the handbook.
Creating a Comprehensive Anti-Discrimination Policy
To set the stage on discrimination compliance for your employees to follow and the corresponding lawfully compliant process to take should the inevitable dispute arise, you are required to have an antidiscrimination policy in your handbook. Your policy must define what behaviors are discriminatory and prohibit those engaged in discriminatory conduct. In addition, your antidiscrimination policy must describe what an employee must do to complain about discrimination in the workplace. You cannot leave them in the dark with respect to reporting potential discrimination. Failure to provide employees with sufficient information about how to complain of discrimination could provide for vicious liability under Rhode Island’s employment discrimination laws.
Such a policy should extend to contractors and vendors and explain that mutual nondiscrimination is necessary to do business with your employer. It should be unflinchingly clear that discrimination is unlawful and will not be tolerated anywhere in your workplace or on your job sites, and you should tacitly state that you promote diversity and are an equal opportunity employer. Your antidiscrimination policy should also provide some examples of prohibited conduct, such as the failure to reasonably accommodate an employee’s religious observances and practices where such an accommodation would not pose an undue hardship to your business. Further, the policy should explain that your employee’s "while you were engaged in the employer’s business" will be considered in assessing whether any alleged discriminatory acts fall within the ambit of discrimination legislation. Your policy should have contact information for your human resource manager, office manager, general counsel and any additional identifiable contact who may bear allegiance to a particular religion, sex or sexual orientation, and whom your employees may be more likely to report such concerns to, rather than their immediate supervisor or the human resource manager who they fear may have an affinity to the alleged perpetrator.
Pay and Non-Pay Laws
Wage and hour laws are a key focus for the DOL and often times have a larger impact on employers than affirmative workplace safety obligations. For purposes of a compliance checklist, they are addressed here in conjunction with the workplace safety issues for which they are more commonly discussed in conjunction with, due to their overlap as they both are largely governed by the Fair Labor Standards Act. Employers should use the following list and consult with their attorneys and HR experts to ensure that they are meeting their responsibilities to their employees:
Properly classify all employees as exempt or non-exempt. This means correctly advising employees who fall within the coverage of the administrative, executive, professional, highly compensated, computer, or any other available exemption based on their duties and salary. Remember that even those classified as exempt are not really exempt from all wage and hour laws as employers are still obligated to provide required breaks, maintain accurate records of hours of work and other minimum wage laws.
Ensure that all non-exempt employees are paid for all time worked, including donning and doffing, short breaks, and other generally accepted hours of work requirements.
Timekeeping technology must be approved by and compatible with both FMLA and ADA obligations as well as timekeeping and overtime regulations.
Regularly audit wage and hour records for accuracy and consistency.
Conduct self-audits to ensure that employees are timely compensated for all hours worked, including overtime, and to ensure that there is no employee theft of company time through buddy punching or other methods.
Review compensation for employees classified as exempt to ensure that they meet salary level and pay basis tests for exempt status to ensure that they are indeed exempt from overtime obligations.
Provide a clear procedure for non-exempt employees to track all hours of work and allow for employees to notify non-exempt employees whenever their hours of work are incorrect or when they suspect their time logs reflect paid time when they did not actually work.
Health and Safety Regulations
Under the Occupational Safety and Health Act (OSHA), employers are mandated by law to, among other things, provide a safe working environment for their employees and to comply with other health and safety requirements imposed by state and federal law. OSHA establishes basic safety and health standards for private sector and many public sector employers. Some of the requirements are industry-specific.
Employers can better manage their health and safety obligations by identifying potential workplace hazards, breaking down the obligations into manageable duties, and following a safety checklist, such as the one provided through the business.gov website. The employer should monitor compliance by using a designated person to record and evaluate injury data , to provide training on hazard elements and to review and update the action plan quarterly or after major changes. Other issues to monitor include maintaining documentation and inspecting workplace premises, as well as providing safety gear.
To achieve safety compliance, an employer must also adopt an injury and illness prevention program under CA Labor Code s.3203 as part of its package of company policies. For larger employers, this requires the assignment of a company representative, who is not the President, to oversee implementation of the company’s safety program. Keep records of quarterly evaluations and any updates to the program in the event of an inspection.
Data Protection & Privacy Laws
Data protection and privacy laws, such as GDPR and CCPA, can have significant implications for HR issues. For example, the GDPR (General Data Protection Regulation) aims to give companies and individuals greater control over personal data. In order to comply with GDPR, businesses in every industry need to improve their management of data security and implement new HR practices. The CCPA (California Consumer Privacy Act) shifts the focus to California employees. Finding protection for personal information stored on corporate servers or accessed via the web is a major challenge for employers.
Companies need to be aware of the privacy and data security laws in countries where they operate and states where their employees reside. This includes regulations related to the collection, storage, and transfer of employee data. Companies are required to notify affected employees of any data breach affecting their personal information, such as name, email, social security number, or credit card number and notify the appropriate regulatory body if necessary.
Employee Training Development
Training programs on legal compliance topics can be effective and simple to conduct. For example, if you have 25 or more employees or will have 25 or more employees working in a particular location in the near future, then you are legally required to have an anti-harassment prevention training program within six months of attaining the 25 or more employee threshold in that location. Many employers choose to conduct training within a 12 month timeframe or may opt to have any new supervisory employees attend a training it has provided in the past 12 months. It is good practice to conduct training on an annual basis even if not legally mandated.
It is important to remember that where you have employees in multiple locations (for example, a sales person located in another state), employees’ remote work locations are factored into the 25 or more employee threshold. In addition, employers should be mindful that when an employee transfers from one work location to another, the transfer can trigger the obligation to have an employee participate in a training program on the non-discrimination policies and procedures or anti-harassment prevention training if it was offered at the former location within the past 12 months. Training that satisfies the requirements is easy to come by, as there are many well thought out, state approved programs available from various sources, both online and in person.
Employers should remember that while the California Fair Employment and Housing Act (FEHA) only requires two hours of training for supervisors (and one hour for non-supervisory employees), the Fair Chance Act, which added Government Code section 12952, specifies a more stringent requirement. Section 12952 requires that employers with five or more employees conduct "an annual one-hour training course for all hiring managers who are responsible for hiring". (See Government Code 12952(2)). Although the law went into effect January 1, 2018 and applies to all employers, the California Department of Fair Employment and Housing (DFEH) is working on a training course which employers can use to satisfy the training requirement. Until the DFEH releases its training course, employers should be careful to customize whatever training on the law they use so that it is specific to California law (in the event they are not already conducting a California compliant training program).
Conducting Regular Compliance Checks
Regular compliance audits are a proactive measure to identify discrepancies and gaps within an organization’s HR policies, practices, and hiring procedures. Whether this is being handled in-house or with the guidance of a legal counsel or outside firm, keeping tabs on labor regulations and compliance measures is imperative to avoid workplace lawsuits. The Fair Labor Standards Act (FLSA) has various wage and overtime requirements, depending on the company’s size, industry, and location, so keeping up with the frequent changes to these regulations is best handled through employing an audit team.
Not all audits need to be conducted as though it were an intense, multi-year investigation; for many companies, a simple audit by way of an in-depth review of current practices is sufficient. For example, it would be beneficial to analyze job descriptions and pay records to ensure compliance with the FLSA and other local, state, or federal laws. To do this, you can make a checklist of each position’s duties and responsibilities to confirm that the classification is appropriately determined as exempt or non-exempt. Then, compare the job specifications to the actual job duties of current employees to see if there are any discrepancies. Lastly, compare the information you determine from your evaluation to the FLSA regulations to ensure that everything is in compliance.
Depending on the size of the company, it might be helpful determining whether to utilize an in-house team or bring in an outside firm to run the audit. Keep in mind that if an attorney was involved to conduct the audit, you may be able to keep the audit details confidential, depending on your state laws.
Keeping Up With Legal Changes
In addition to identifying the applicable laws, it is essential that you keep abreast of changes in employment law in order to develop and maintain a legally compliant workplace. An array of online compliance software and services are available to assist with this. Interior Federal provides access to Aperion, an online library of nearly 300 necessary policies and trainings, as well as alerts that update you on new legislation, regulations, and policies . We encourage you to participate in educational workshops offered by human resources and legal organizations to stay ahead of the trends in the industry. In addition, consult with experienced legal counsel to mitigate your exposure to regulatory fines and lawsuits.