How HR can keep pace with regulatory change
Ensuring compliance throughout all human resource management systems
Human Resource (HR) teams that include HR professionals within HR departments balance a variety of priorities in their day to day tasks, including monitoring work hours, processing payroll, managing benefits packages, and disseminating policies and company updates through communication streams and employee handbooks. Of the many responsibilities that HR teams hold, maintaining compliance with various regulatory changes is one of the most critical.
According to a study from 2018 to 2020, fines and penalties for non-compliance increased 92%. Thus, regulatory audits can be expected to continue rising, encouraging employers to follow regulatory rules. As a result, HR compliance is more important than ever with HR leaders needing to be attuned to regulatory changes, labor laws, employment law, federal policy mandates (including the Fair Labor Standards Act, Affordable Care Act, or the Americans with Disabilities Act), and any requirements related to healthcare or benefits.
In order to ensure a positive work environment while also following regulations, organizations must prioritize compliance at every level within their business. Valuable information related to HR changes is pertinent to every employee, so developing frameworks and utilizing technology to share information is a step in the right direction. With a robust software system, your organization can disseminate important information to employees, hold pertinent data and documents, and have a paper trail for any reporting required by regulatory agencies.
Small business HR teams have had to shift a lot in the last several years. Most notably, the spread of the coronavirus and the experience of the pandemic initiated many adjustments with the rise of remote work. As the work economy continues to change, it is important your human resource department continues to be flexible. This article will provide ideas, HR resources, and general strategies for businesses to keep pace with regulatory changes at all levels.
Managing change and taking action
A concept to keep in mind for your organization as you adjust to new laws related to data privacy, pay equity, or minimum wage is compliance agility. The concept refers to the idea of being more proactive (and less reactive) in compliance approaches so that your organization can anticipate where compliance trends are going. Moreover, compliance agility involves going beyond the standard regulatory expectation and going above and beyond for the sake of a positive employee experience. This way, when new regulations come into place, these organizations have already shifted and can continue to anticipate future HR trends, changes, or laws to come.
Common issues that human resources professionals face
- Compliance landscaping. Compliance landscaping refers to the challenges that businesses may face when they operate in different industries, sectors, or locations. Specifically for companies that expand and grow, it can be challenging to keep up-to-date with every regulation for which the business operates. Compliance can include licensing requirements, business registration needs, and specific labor laws in certain localities. It can be difficult for smaller HR teams to track such laws and regulations. Thus, businesses may need more time to interpret and track various regulation requirements to maintain good standing. Having a diverse HR team with various expert areas can help combat this common challenge.
- Inconsistent frequency of compliance tracking. Sometimes, businesses assume that compliance monitoring is something that happens annually or is a one-time experience. Instead, compliance monitoring and evaluation should occur on a regular basis to ensure leaders are informed of their current company standing and have the data, reports, and information required to prove this. Seminars, workshops, or webinars can help HR teams build out digital systems that can help maintain a regular approach to compliance tracking.
- Inconsistent interpretations of regulations. Understanding statutory requirements can be tricky for HR professionals that don’t have as much legal training. Thus, having additional consultants or legal support can help businesses interpret what is required of them. Additionally, implementing HR software can be a helpful strategy to make sure you automatically have the required documentation for each state or locality that you work within. This is especially true for new labor laws that include parameters for employers to follow. Another aspect of this is making sure you are following all parts of any legislation that may impact the day-to-day operations of your business.
- Compliance ownership. A common question that HR teams face is around who is responsible for ensuring the compliance of all regulatory demands. There can be increased ambiguity when working on a team, and when there is a lack of leadership there may be certain aspects of compliance that are missed. To mitigate the risks of missing important indicators of compliance, implement regular internal and external audits and consider tracking key performance indicators that you know you will need to gather data for or report on. Moreover, your team structure should delegate internal audits accordingly so there is a clear chain of command for overseeing the audit process. Regular reports to business leadership should take place as well.
- Compliance reporting. Reporting requirements shift depending on where business operations take place. For example, certain reports may need to be filed at varying frequencies, depending on the location. If these processes are manual (and not automated) it could be easy to miss a filing and then be fined for missing the deadline. Professional associations can help their members to understand the reporting processes for their specific industry (and who might be responsible for completing such reporting). Again, implementing a software system can help HR teams submit required filings or reports in minutes. Manual reporting can be both costly and time consuming for HR teams, especially when their focus could be on other key parts of compliance.
Keeping on top of compliance
Managing compliance is an important aspect of business operations. Compliance ensures that your operations can continue, that you are following regulations issued from significant entities (like the Department of Labor), and that you will have few issues with retention of employees. Compliance can cover areas of compensation, work schedules, benefits, and other aspects of HR management. As part of a comprehensive HR compliance plan, you can also include ways that you are managing compliance checks and the frequency in which these occur. You can even include when federal agencies or state regulatory bodies may inquire about the records of your business. The goal is to stay prepared so that when an external audit happens, your business is ready.
Staying ahead of the game is a challenge, but it will be worth it if you can begin to anticipate regulatory changes ahead of time. When you have a compliance system in place, you will be able to proactively initiate changes at your company, knowing that you have the resources and systems to do so effectively. If you are unsure about implementing this internally, you can always consider external support or outsourcing your compliance department to ensure you have the oversight you need to deliver on your bottom line while following all compliance and regulatory requirements.
Are you ready to support your organization with a more robust system for ongoing compliance needs? Are you seeking templates for compliance reviews and audits? Are you ready to ensure that your HR management team has everything it needs to promote compliance agility at your business?
Heartland is ready to help.
Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us