This article on HR compliance was originally published in December 2017 and was updated with new information in May 2024.
Legal compliance is an integral part of human resources and employee management. It’s the foundation of an organization that is a fair, safe, and equitable place to work. Understanding your team’s responsibilities and compliance requirements is essential to protect your employees and your company from risk. It also provides guidance when ethical issues arise.
In this post, we’ll cover the ins and outs of HR compliance and some important employment laws to know. Then, get our HR Compliance Checklist to help you review your processes.
What Is HR Compliance?
HR compliance is the ongoing practice of creating company policies that follow employment and labor laws and regulations. Your team is responsible for maintaining compliant policies and making adjustments when laws change or regulations expand. HR teams also enforce company policies to ensure all employees stay compliant.
Why Is HR Compliance Important?
HR compliance isn’t an optional aspect of operating a business —it’s an absolute necessity. It shapes your company culture and impacts its reputation and the employee experience. Thorough compliance protects your company against legal action and financial liability that can result from noncompliance.
Compliance ensures you’re providing a safe workplace where employees are treated fairly. Many of the laws HR professionals need to follow were put in place to protect workers’ rights. For example, workplace safety regulations protect employees from physical harm. Anti-discrimination laws prevent bias based on protected characteristics like race, gender, or age.
HR compliance helps your company run smoothly by streamlining processes and minimizing errors or fines. Compliant procedures can help you avoid costly mistakes and make adjustments if and when regulations change. HR compliance issues can lead to serious consequences, including fines, loss of licensure, and even prison time.
Fast Facts About HR Compliance
- Violating the Fair Labor Standards Act (FLSA) can incur fines ranging from $1,000 to $10,000 and even imprisonment.
- Pay transparency violations can incur fines ranging from $100 to $250,000, investigations by state agencies, or lawsuits.
- Wage settlements cost businesses $295 million in 2020.
Violating laws isn’t just a financial risk but a reputational one. Infractions can generate negative publicity and damage your brand. HR compliance plays a starring role in establishing your company as a fair, ethical employer.
HR Employment Laws to Know
The Department of Labor (DOL) administers and enforces many federal laws that apply to nearly every business in the U.S. Other agencies that participate in enforcement include the Equal Employment Opportunity Commission (EEOC), the U.S Department of Justice, and the Occupational Health and Safety Administration (OSHA), a division of the DOL. Other regulations vary by industry or geographical location and are typically enforced by the state DOL.
In addition to well-established laws, many businesses are now subject to new rules regarding pay transparency and overtime. Let’s take a look at some of the most well-known laws and a few that have recently emerged.
Prominent Employment Laws
- Title VII of the Civil Rights Act: This law protects employees and job applicants from employment discrimination based on race, color, religion, sex, and national origin. Title VII also protects employees from retaliation by their employer if they raise a discrimination complaint, file a discrimination charge, or participate in a discrimination case as a witness. The law protects employees from discrimination in companies’ hiring practices, employee benefits and compensation, training and apprenticeships, and much more.
- Fair Labor Standards Act (FLSA): The FLSA establishes the minimum wage, overtime pay, recordkeeping requirements, and child labor protections. This law ensures employees are not underpaid and receive overtime pay based on their employment classification. It also requires companies to keep accurate time and pay records and establishes guidelines for youth employment.
- Occupational Safety and Health Act (OSHA): This law requires employees to be protected from hazardous conditions at work, including toxic chemicals, dangerous noise levels, and heat or cold stress. It also established two federal agencies, OSHA and the National Institute for Occupational Safety and Health (NIOSH). OSHA is most relevant in industries like manufacturing and construction, where workers regularly are exposed to potential hazards, but it applies to nearly every business in the private sector.
- Equal Pay Act (EPA): The Equal Pay Act is an amendment to the FLSA that prohibits wage discrimination based on sex. The Lily Ledbetter Fair Pay Act of 2009 established that each unequal paycheck was another violation of the Equal Pay Act, thus increasing the consequences for employers in violation.
- Americans with Disabilities Act (ADA): The ADA protects employees with disabilities from discrimination at work and requires employers to provide reasonable accommodations for those employees. It also establishes accessibility requirements for many public accommodations. The ADA ensures that Americans with disabilities can access the same opportunities and physical spaces as non-disabled persons.
- Affordable Care Act (ACA): The ACA generally applies to companies with 50 or more employees and requires that they offer affordable medical insurance that meets minimum essential coverage standards. Even if it doesn’t apply to your small businesses, you might choose to adhere to the law. In that case, you must also comply with ACA regulations around information disclosure and open enrollment periods.
- Family and Medical Leave Act (FMLA): This law requires that employers provide unpaid leave for their employees for medical and family reasons including the birth of a child, caring for a family member who is seriously ill, or their own recovery from a serious illness. Employees who meet the eligibility requirements can take up to 12 weeks of unpaid leave.
New HR Compliance Rules
- Pay Transparency: Several states have introduced pay transparency laws that require employers to disclose wages and hourly rates, or a pay range, in job descriptions. Even if your business is not currently subject to these laws, you could be soon. More than one-quarter of U.S. employees are now protected by wage transparency laws. That number is expected to climb to 50% in the next few years.
- New FLSA requirements: The DOL introduced salary threshold increases for overtime consideration. The new threshold of $43,888 is effective on July 1, 2024, and will increase again on January 1, 2025, to $58,656. Beginning in 2027, this threshold will increase every three years.
Your Ultimate HR Compliance Checklist
As we mentioned, compliance is an ongoing process and a constant consideration in an effective HR strategy. Work with your legal department to regularly review your policies and ensure they’re compliant with all applicable laws. This will also give you the opportunity to stay ahead of new laws that might affect your company.
We’re making it easier for your team to stay on top of these regular compliance audits with the HR Compliance Checklist. We’re covering a variety of areas where compliance is especially essential:
- Recruiting and Hiring
- Compensation and Benefits
- Performance Management
- Termination and Offboarding
Keep your employees and your company protected and strengthen fairness and equity in the workplace. Download ClearCompany’s HR Compliance Checklist to kick off your process audits.
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