How to achieve HR compliance

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Human Resources (HR) compliance hs not been this important in almost a decade. Complaints, charges and litigation actions are increasing at an alarming rate. 

The complexity around compliance is also increasing. Domestic labor laws, international privacy regulations, and public scrutiny all bear down on HR compliance.

Unsurprisingly, this has many organizational leaders feeling like HR compliance is an overwhelming challenge. 

But there’s a positive side to this story. 

In a 2023 survey of 1,000+ HR leaders, Sage found that 91% were excited about the future. More than half (57%) said they “greatly enjoyed” working in the role. 

(In fairness, 95% also said it was too much work – we’ll get to that!)

The reality might be that success doesn’t require super-human efforts and endless patience. Rather, it’s about rethinking the tools, techniques and relationships that are necessary to achieve HR compliance in a changed world.

Table of Contents

What is HR compliance?

HR compliance is the process of ensuring your organization’s policies, procedures, and actions adhere to labor laws and applicable regulations. This means bringing both the HR policies and the organization at large in line with federal, state, and local laws governing employee rights and safety. 

The laws we’re referring to cover everything from wages to working hours, health and safety requirements, and anti-discrimination policies.

Why is it important?

HR compliance is essential for many of the same reasons as broader workforce compliance and regulatory compliance. Non-compliance can have severe consequences, including hefty fines, lawsuits, and even criminal charges in extreme cases. 

Beyond legal penalties, non-compliance can result in poor employee morale, high turnover rates, and a tarnished company reputation that makes talent attraction tricky.

This isn’t just a theoretical discussion. Charges for discrimination and violating labor laws have risen sharply for two consecutive years, per US Equal Employment Opportunity Commission (EEOC) data. 

There are also very real impacts on employee health and safety.

The latest Bureau of Labor Statistics data shows that non-fatal injuries increased 7.5% in 2022. Fatal injuries increased by 5.7%, reaching a level that hasn’t been seen in over a decade.

HR compliance is not solely responsible for all these outcomes. However, as the organization’s champions of compliance training, policy, and people management, decisions made within the HR department impact everyone, either directly or indirectly.

Key HR compliance regulations in the US

Labor laws

• Fair Labor Standards Act (FLSA): Covers minimum wage, overtime pay, child labor, and recordkeeping requirements. Read more about FLSA.
• Family and Medical Leave Act (FMLA): Mandates job protection and leave for employees due to their own serious health condition or to care for a family member.
• Equal Employment Opportunity (EEO): Prohibits discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information.

Health and safety laws

• Occupational Safety and Health Act (OSHA): Ensures safe and healthful working conditions for employees.

Wage and hour laws

• Minimum wage: Sets the minimum hourly wage for employees.
• Overtime pay: Requires time-and-a-half pay for hours worked beyond the standard workweek.
• Employee classification: Determines whether employees are exempt or non-exempt from overtime pay.

Anti-discrimination and harassment laws

• Title VII of the Civil Rights Act: Prohibits discrimination based on race, color, religion, sex, or national origin.
• Americans with Disabilities Act (ADA): Requires reasonable accommodations for employees with disabilities.
• Age Discrimination in Employment Act (ADEA): Prohibits discrimination based on age for individuals over 40.

Leave laws

• Paid sick leave: Varies by state and local laws, requiring employers to provide paid time off for illness.
• Family leave: Includes FMLA and state-specific family leave laws.

Privacy laws

• Health Insurance Portability and Accountability Act (HIPAA): Protects the privacy and security of individuals’ health information.
• California Consumer Privacy Act (CCPA): Grants California residents certain rights regarding their personal data.
• General Data Protection Regulation (GDPR): Applies to companies processing personal data of EU residents, regardless of location.

HR compliance best practices

Maintain detailed, up-to-date records

Accurate recordkeeping is essential for demonstrating compliance. Keep up-to-date employee files, including job descriptions, performance reviews, and disciplinary records.

Don’t forget about data privacy here. Implement appropriate security measures to prevent data breaches and safeguard sensitive employee information.

Offer regular compliance training

Provide ongoing training to employees and managers on relevant compliance topics. Don’t wait until the rules change; regular refreshers remind everyone of their responsibilities and minimize the risk of violations.

Read more: Compliance training guide for modern workplaces.

Leading by example

“HR compliance” can sometimes take a second meaning. It also applies to HR’s own policies and actions, both as a department within the organization and in interactions with prospective employees.

In simple terms, this means HR has a responsibility to lead by example. 

• Review hiring policies to identify potential discrimination pitfalls or biases
• Ensure employees are correctly classified, as misclassification is a serious compliance risk
• Audit HR technology for compliance and security risks
• Train managers and leaders on the rules around interfering with employees’ rights to organize and collectively bargain
• Stay updated with employee benefit requirements based on the organization’s size and evolving regulations

Staying updated with labor laws and regulations

HR compliance regulations evolve over time. For example, Oregon, Nevada and the District of Columbia introduced changes to minimum wage laws in July 2024. Healthcare workers in California also received a much-anticipated pay increase in October.

Many states have also expanded their family leave policies and employer contribution requirements.

The US EEOC, Department of Labor, and OSHA are reliable sources for proposed and upcoming changes. All three publish newsletters which you can subscribe to for updates:

Developing compliance-specific HR policies

Create comprehensive policies that address key compliance areas, such as:

• Anti-discrimination and harassment
• Equal pay
• Leave and benefits
• Data privacy

Update the policies regularly to reflect changes in laws and regulations. Communicate these changes with employees – but be aware that people might lose interest in frequent HR policy updates. 

It’s helpful to focus on how the policy changes affect employees and establish a communication frequency that doesn’t cause fatigue.

Leveraging technology for HR compliance

HR software is a fast-growing industry with dozens of trusted tools that can help with:

• Monitoring regulatory changes
• Identifying HR compliance issues
• Updating, publishing and storing HR policies
• Maintaining compliant employee data records
• Proving compliance through data and reporting
• Automating time-consuming admin

Prioritizing productivity tools that plug into your HR software (or vice versa, choosing a tool that integrates with existing tech) can streamline other areas of your work.

For example, Time Doctor makes it easy to accurately track employee activity, identify potentially non-compliant behavior (like mouse jigglers or suspicious websites), and manage workloads to prevent a compliance breach. 

Empowering compliance champions

HR compliance is not solely an HR challenge. Everyone in the organization has a role to play.

Identifying and training ‘compliance champions’ in various departments will lighten your load and strengthen compliance at the same time.

Provide them with the resources and authority to address compliance issues. Check-in regularly, and work with them to promote a culture of compliance.

HR compliance checklist: 40 essential items to achieve compliance in HR 

Recruiting and interviewing practices

1. Avoid discriminatory or preferential language in job descriptions, advertisements, and interview questions
2. Standardize hiring and interviewing procedures for all applicants to ensure fairness and consistency
3. Document interview questions and responses to maintain an objective record
4. Verify the eligibility to work for all new hires using the I-9 form

Onboarding procedures and company policies

5. Develop and maintain comprehensive company policies covering topics like discrimination, harassment, equal employment opportunity, leave, and data privacy
6. Provide all employees with a clear and accessible employee handbook outlining company policies, procedures, and expectations
7. Conduct thorough onboarding training for new hires, including an overview of company policies, benefits, and HR compliance procedures
8. Collect signed acknowledgments from new hires confirming receipt and review of the employee handbook
9. Communicate any policy changes to all employees through clear and timely communication channels

Employee records

10. Maintain accurate and up-to-date employee records, including contact information, emergency contacts, job descriptions, performance evaluations, and training records
11. Implement data security measures to protect sensitive employee information in accordance with data privacy regulations (e.g. HIPAA and GDPR)
12. Establish a record retention policy for storing and disposing of employee records according to legal requirements

Wage and hour compliance

13. Classify employees correctly as exempt or non-exempt from overtime pay based on job duties and salary level
14. Track employee hours accurately using a timekeeping system
15. Pay minimum wage and overtime pay according to federal and state laws
16. Provide employees with clear paystubs detailing wages, deductions, and hours worked

Leave policies

17. Develop compliant leave policies, including paid sick leave, family leave, and medical leave as required by law (e.g. FMLA)
18. Track employee leave requests and balances to ensure compliance with legal requirements
19. Provide employees with clear procedures for requesting and taking leave 

Benefits administration

20. Offer and administer employee benefits such as health insurance, retirement plans, and life insurance in compliance with regulations (e.g., ERISA, ACA)
21. Provide accurate and timely information about benefits to employees
22. Maintain proper records of employee elections and contributions to benefit plans
23. Distribute required tax forms (e.g., W-2, 1099) to employees accurately and on time

Workplace safety

24. Implement safety protocols to prevent workplace accidents and injuries
25. Provide employee training on safety procedures and hazard recognition (as required by OSHA)
26. Maintain proper records of work-related injuries and illnesses
27. Post relevant safety information for employees

Training and development

28. Provide regular training to employees on HR compliance topics such as anti-discrimination, anti-harassment, and data privacy
29. Train managers on their extended and specific responsibilities 
30. Document training completion to demonstrate compliance with regulations
31. Update training content to reflect changes in laws and regulations
32. Train yourself; review and update HR compliance policies to account for changes in regulations

Harassment and discrimination

33. Develop and implement a clear and comprehensive anti-harassment policy
34. Provide clear procedures for reporting harassment and investigate all allegations promptly and thoroughly
35. Take appropriate corrective action to address any instances of harassment

Unionized workforces

36. Familiarize yourself with the National Labor Relations Act (NLRA) and employer obligations regarding unionization
37. Maintain a neutral stance on unionization efforts and avoid interfering with employee rights to organize

Termination

38. Ensure all terminations are documented, including reasons for dismissal and any disciplinary actions taken
39. Deliver final paychecks and inform employees about the status of any applicable benefits
40. Conduct exit interviews to identify potential areas of non-compliance or employee concerns, and document responses for improvement

Three strategies to streamline HR compliance

HR compliance is complex. Looking at the list above, you can be forgiven for breaking out in a cold sweat at the thought of managing all 40 elements. 

However, with the right strategies and tools, you can reduce both effort and risk. 

Here are three ways to simplify your HR compliance management.

Seek legal counsel for complex regulations

HR regulations are nuanced. They vary depending on your location, industry, and the size of your organization. 

Seeking legal counsel is crucial to staying compliant, especially as laws and regulations seem to be evolving rapidly. 

For example, navigating multi-state compliance or understanding new labor laws requires specialized legal knowledge. The same goes for GDPR compliance, HIPAA compliance, SOC 2 audits and terminating employees.

Engaging with HR-focused legal counsel ensures your policies and practices are up to date with all relevant regulations. Legal experts can also assist in drafting compliant employment contracts, developing HR compliance policies, and advising on industry-specific requirements.

Leverage technology to stay ahead of compliance risks

Technology has revolutionized HR compliance, enabling leaders to manage the complexity without getting overwhelmed. 

Two essential types of technology to consider are HR software and workforce analytics software:

• A dedicated HR management system (HRMS) helps manage critical compliance tasks like tracking employee leave, managing employee records, automating payroll, and ensuring accurate reporting. Many HR software platforms can also automate compliance audits and alert HR leaders to changes in regulations, ensuring nothing falls through the cracks.
• Complementary tools like workforce analytics can significantly enhance compliance efforts. For example, Time Doctor’s accurate tracking reduces the risk of wage and hour law compliance breaches. The insights from workforce analytics can also help HR leaders identify patterns of overtime, absenteeism, or inefficiencies that may signal potential compliance risks. This data-driven approach reduces human error and helps your organization stay aligned with legal requirements.

The key to success is selecting and configuring software that fits your requirements and supports business goals. Time Doctor is flexible and user-friendly, and has 60+ platform integrations to ensure workforce analytics slots seamlessly into your existing workflows.

Empower HR champions within your organization

With legal experts lending a hand on HR compliance policy, and technology reducing the workload of HR compliance practices, you can focus on the people aspect of achieving HR compliance. 

Compliance champions are some of your best allies. 

They are advocates for compliance, ensuring that policies are not only understood but adhered to. They are liaisons between employees and the HR department, promoting awareness of policies and encouraging a culture of accountability. And they are an effective early warning system, feeding back potential compliance risks that you might not catch.

To empower HR champions:

• Provide regular compliance training so they are knowledgeable about the latest HR laws and best practices
• Encourage them to monitor adherence to compliance policies within their teams and departments
• Foster open communication, enabling employees to ask questions or raise concerns related to HR compliance without fear of retaliation

With dedicated champions promoting a culture of compliance, your organization can reduce the risk of violations and ensure employees are aligned with HR compliance best practices.

HR compliance in a changing world

Achieving and maintaining HR compliance is an ongoing responsibility that requires vigilance, organization, and the right strategies. 

It’s increasingly complex in a borderless business world. But there are also more tools than ever before to lighten your load.

Success for HR managers and organizational leaders depends on leveraging the right support and expertise to stay ahead of compliance challenges. 

It’s time to evolve your approach

Using data-driven workday insights, automations built into HR software, and third-party resources like government agency newsletters to legal counsel, you can navigate today’s compliance challenges and ensure you’re prepared for tomorrow.

Liam Martin is a serial entrepreneur, co-founder of Time Doctor, Staff.com, and the Running Remote Conference, and author of the Wall Street Journal bestseller, “Running Remote.” He advocates for remote work and helps businesses optimize their remote teams.