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4 examples of common HR compliance problems
Some examples of HR compliance problems are discriminatory language during recruitment, documentation problems, issues with compensation and lack of employee training.
HR is responsible for adhering to various legal requirements set by local, state and federal governments. Some aspects of HR operations are more likely to lead to compliance issues, so HR leaders should learn about potential problem areas before issues occur.
HR leaders should learn about any regulatory and statutory changes and ensure that other HR staff members educate themselves as well. HR leaders should also work closely with legal counsel at their company to ensure that their organization is fully compliant, and they should maintain documentation that demonstrates compliance for U.S. Department of Labor audits.
Learn about some of the most common areas where HR compliance issues can arise.
1. Discriminatory recruitment language
HR leaders must work with hiring managers to avoid potentially discriminatory language when hiring managers are writing job postings. In most cases, employers can't list gender or age requirements. While requiring that applicants be U.S. citizens is illegal, job postings can require that applicants be legally eligible to work in the U.S.
HR staff members and hiring managers must also avoid using certain language during job interviews. Interviewers must avoid questions regarding candidates' personal lives, political affiliations or anything unrelated to the position for which they are being considered. A candidate who shares that they have a disability that requires a reasonable accommodation cannot be removed from consideration for the job because of their disability.
While background checks are increasingly common, the safest route for HR is to hire an external vendor to conduct background checks and to wait to order one until the company has extended a conditional offer of employment to a new hire. In some localities, asking about a candidate's criminal history is illegal.
Additionally, federal law requires employers to report new hires to a designated state agency within 20 days of hire to help the government locate parents who owe child support. Some states may require that companies do so sooner, and failure to report a new employee in a timely manner can trigger fines.
2. Documentation issues
HR must securely store any documents that reveal employees' personal information, such as job applications, resumes and copies of Form W-4 and I-9 forms. Failure to secure these confidential documents could result in a lawsuit.
It is particularly important to store I-9 forms correctly, as the form verifies an employee's eligibility to work in the U.S. and is often needed during a government audit. HR staff should store I-9 forms in a separate file and retain them for a certain period of time after an employee leaves the company. HR staff can use an online government calculator to determine the required length of time for retention.
3. Compensation, benefits and taxes issues
Misclassifying employees can lead to serious penalties. HR must classify employees as exempt or nonexempt and designate independent contractors separately.
Issues can also arise if a company fails to comply with the federal Equal Pay Act. The law mandates equal pay for equal work, regardless of gender.
Additionally, many states require certain practices for payment of final wages. Some states require companies to issue a paycheck on the employee's last day of work instead of waiting until the next pay cycle.
Statutory federal requirements for benefits include Social Security, Medicare and worker's compensation. Companies with 50 or more full-time employees are required by the Affordable Care Act to offer affordable medical benefits.
HR must also ensure that managers are consistent when providing other types of benefits, such as use of company cars and paid time off allowances.
4. Lack of training
The federal government only mandates training for government employees, but many states require employee training on topics such as sexual harassment, workplace bullying, money laundering, data protection and privacy. HR staff members are often in charge of administering training material and confirming that employees have completed the required training.
Companies that fail to administer required training may receive legal penalties.
Lynda Spiegel is a freelance writer and former global HR executive for financial services, telecommunications and SaaS companies.
