How HR Departments Can Handle New Compliance Requirements
HR departments play a critical role in ensuring that their companies comply with all applicable federal, state, and local laws and regulations. This can be a challenging task, especially given the ever-changing regulatory landscape.
“The function of human resources (HR) has undergone significant changes and growth over the past few years,” writes Cailin Potami in Business News Daily. “HR’s constantly expanding functions include recruiting top talent, shaping a company’s culture, building better leaders, and maintaining legal and effective company policies.”
When new compliance requirements are instituted, HR departments must ensure that their companies comply as quickly as possible.
HR leaders have the mandate of rewriting employee handbooks, adjusting workplace rules, and making sure that company practices address everything from drug testing to workplace harassment to pay transparency.
The importance of compliance to HR cannot be underestimated.
“Noncompliance opens a company to charges, lawsuits, trials, and other potentially expensive procedures and payouts,” Roger Quillen, chairman emeritus with the law firm Fisher Phillips in Atlanta, told SHRM. “Noncompliance may also open the door to union organizing. A strong compliance program demonstrates to workers that their employer cares about them and chooses to play by the rules. It fosters a culture of trust and can boost recruiting, retention, and employee satisfaction.”
Compliance Requirements Apply to Companies with Remote Workers
Some HR leaders may think, “Hey, I don’t do business in California, so why should I care about their workplace laws and regulations?”.
Even if a company is not physically located in a particular state or locality, it may still be subject to the compliance requirements of that state or locality if it has remote workers in that area.
This is because many laws apply to employers based on the location of their employees, not the location of the employer's headquarters.
For example, a Texas-based company with remote workers in California would need to comply with California's wage and hour laws, even though the company itself is not located in California. This is because California law applies to all employers who have employees working in California, regardless of the employer's location.
Rewriting vs. Editing Employee Handbooks
One of the most important steps that HR departments can take to ensure compliance with new requirements is to review and update their employee handbooks.
Employee handbooks should be written in a clear and concise manner, and they should be updated regularly to reflect any changes in the law.
When should a company rewrite its handbook vs. a simple edit? Here’s the rule of thumb for shredding your employee handbook and starting from scratch and using a bit of old “whiteout” to make changes:
- Rewrite: If the company has undergone significant changes, such as a merger or acquisition, or if there have been major changes to the law, it may be necessary to rewrite the employee handbook.
- Edit: If the company needs to update its handbook to reflect minor changes to the law or to add new policies, it may be sufficient to edit the handbook.
“This document is not intended to be overly rigid or static. Rather, the employee handbook is a living document that should be amended and updated as necessary,” advises Christine Organ and Cassie Bottorff in Forbes.
Employment laws and regulations are constantly changing, so it is important for companies to review their employee handbooks regularly to ensure that they are up to date. Additionally, companies should review their handbooks whenever they implement new policies or procedures.
Re-evaluating Rules Pertaining to Specific Compliance Requirements
HR departments should also re-evaluate their rules and procedures pertaining to specific compliance requirements that are being passed. This includes workplace harassment, leave benefits, drug testing, pay transparency, and salary range disclosures.
Here is a quick look at some of the hot topics:
- Workplace Harassment: New laws and regulations on workplace harassment are being passed continuously. For example, some states have passed laws that require employers to provide training on workplace harassment to all employees. HR departments should review their workplace harassment policies and procedures to ensure that they comply with all applicable laws and regulations.
- Leave Benefits: New laws and regulations are also being passed on leave benefits, such as paid family leave and sick leave. HR departments should review their leave policies to ensure that they comply with all applicable laws and regulations.
- Drug Testing: New laws and regulations on drug testing are also being passed. For example, some states have passed laws that restrict employers' ability to drug test employees. HR departments should review their drug testing policies to ensure that they comply with all applicable laws and regulations.
- Pay Transparency and Salary Range Disclosures: Pay transparency and salary range disclosure laws are becoming increasingly common. These laws require employers to disclose salary ranges to job applicants and employees. HR departments should review their pay policies and practices to ensure that they comply with all applicable laws and regulations.
“Perhaps most notable, however, is the preponderance of laws mandating salary range disclosures in job listings. California, Colorado, Maryland, Connecticut, Washington state, Rhode Island, Nevada, New York City, Cincinnati, and Toledo, Ohio, have laws requiring employers to provide salary data upfront,” notes Potami. “As this requirement becomes more commonplace, more HR departments will move toward increased transparency around compensation.”
Economic, Legal, and Brand Identity Consequences of Non-Compliance
If a company's rules and procedures are not kept up to date with the latest compliance requirements, the company could face several negative consequences, including:
- Economic Consequences: Companies that are found to be in non-compliance with employment laws and regulations can be fined or even sued.
- Legal Consequences: In addition to fines, companies that are found to be in non-compliance with employment laws and regulations could also face criminal charges.
- Brand Identity Consequences: Companies that are found to be in non-compliance with employment laws and regulations could also suffer damage to their brand identity. Employees and customers may be less likely to want to work for or do business with a company that is not in compliance with the law.
For example, in the news is a jury finding actor Robert De Niro’s company liable in a gender discrimination lawsuit filed by a former assistant with a $1.2 million+ payout to the ex-employee.
HR departments need to be proactive in handling new compliance requirements. This means staying up to date on all applicable laws and regulations and reviewing and updating company policies and procedures on a regular basis.
By doing so, HR departments can help to protect their companies from legal and economic consequences and maintain a positive brand identity.