Regardless of the size of your company, HR compliance can be a huge undertaking. While an HR manager or department has countless important responsibilities, maintaining legal compliance may just be at the top of that mighty list.
In short, HR compliance is the process of creating and enforcing internal HR policies—ones that follow labor laws, employment laws and other regulations. Remaining compliant can help your small business prevent employment disputes, litigation, and general mayhem.
Claims of harassment, discrimination, and disability are among the top compliance issues facing small businesses today—but how to even begin navigating a sea of regulations as a small business?
The different types of HR compliance
Businesses in North America must comply with a wide range of HR requirements. While specific regulations may vary depending on state/province/jurisdiction, the most common types of HR compliance for small businesses include the following:
- Wage and hour laws. Wage and hour laws have to do with the payment of wages, employee working hours, establishing standards and protections to ensure fair compensation for work performed (including overtime when applicable), an upper limit to the number of hours an employee can work, adequate meals and rest breaks, and restrictions around hiring minors—to name a few.
- Anti-discrimination laws. Anti-discrimination laws exist to protect employees from discriminatory treatment based on race, color, national origin, religion, sex, age, disability, and in some jurisdictions, sexual orientation, gender identity, and other protected characteristics. In addition to getting familiar with applicable anti-discrimination laws, small businesses would do well to establish policies that promote equal opportunities and non-discriminatory practices throughout the entire employee lifecycle.
- Workplace safety regulations. Workplace safety regulations ensure a safe and healthy work environment for employees. The Occupational Safety and Health Administration (OSHA) in the US, and the Occupational Health and Safety (OHS) Acts and Regulations in Canada both require that small businesses be free of recognized hazards, implement safety programs, conduct regular inspections, train employees on safety protocols, and keep proper records—for starters.
Potential consequences of non-compliance
Non-compliance can have many consequences for small businesses. Potential repercussions include:
- Fines. Non-compliance can lead to financial penalties and fines. In fact, the regulatory agencies or governing bodies responsible for enforcing compliance may even impose monetary sanctions, depending on the severity and duration of the compliance violation.
- Legal action. Non-compliance increases your risk of lawsuits and legal disputes. For instance, non-compliant practices like discrimination, harassment, or failure to meet contractual obligations can lead to legal action initiated by employees, customers, suppliers, or any other affected parties.
- Damage to reputation. Non-compliance with HR laws and regulations can lead to negative publicity, which can spread quickly via social media, online platforms, and word-of-mouth. Being deemed unethical, untrustworthy, or indifferent to employee rights can have a long-term impact on a company’s reputation. In turn, this can lead to a loss of customer trust (a decline in sales), and increased difficulty attracting and retaining talent.
How to ensure HR compliance as a small business
Although maintaining HR compliance can take time and money, it’s worth the effort and the investment alike. The following are a few key steps you can take to tackle HR compliance in your organization:
- Regular HR audits to identify areas of non-compliance. Hiring or consulting an experienced HR pro can help your business immensely. Depending on your specific needs and the size of your budget, you might hire an internal HR manager or employ an in-house HR department. Alternatively, you could outsource your HR functions. No matter how you manage it, be sure to have a qualified professional conduct regular HR audits to ensure that your practices, policies, and documentation are compliant with current laws and regulations, and that all of the above are continually monitored. Of course, taking corrective measures as needed is also a key part of any audit.
- Staying up-to-date on changes to laws and regulations. Knowing and understanding all current laws and regulations as they apply to your business can be really challenging. Consider establishing a relationship with an experienced employment lawyer or legal firm. They can provide guidance, updates, and alerts regarding changes in laws and regulations relevant to your business. It’s also smart to subscribe to newsletters or mailing lists offered by government agencies in order to receive notifications about new developments, and/or join industry associations and trade groups related to your business. You might also utilize HR and compliance software solutions that offer automatic updates on any relevant changes.
- Ongoing training and education of HR staff. Creating compliance policies and procedures is a must, but is not enough on its own. To effectively ensure compliance, it’s necessary to communicate openly with your employees and train them on your policies. Effective and engaging employee training can be conducted either online or in person and can be facilitated by your internal HR team or by an external party. For certain sensitive topics, like anti-harassment and anti-discrimination, it’s best to have an external party such as an employment attorney or consultant conduct a training.
- HR software solutions to streamline compliance tasks. The right HR software solution can facilitate the safe, easy and secure reporting of workplace harassment and other types of complaints. HR software can provide automated alerts, news feeds, and/or regulatory databases to keep you well-informed. PurelyHR is designed to help businesses manage HR and stay compliant in the process: whether you’re managing talent, reviewing time-off policies, or considering disciplinary action, the necessary compliance checks and balances are securely in place. As well, centralized employee data coupled with a handy self-serve option ensure even further streamlining of compliance tasks.
Compliance solutions every small businesses should consider
- Online training modules. Online training modules tend to be more cost-effective than in-person sessions, plus, they can be accessed from anywhere with an internet connection. Employees can access materials at their own pace and at a time that suits them best, thereby reducing scheduling conflicts and disruptions to business as usual. Additionally, online training modules ensure that all employees receive the same standardized training materials, at the same time providing small businesses with records of employee participation and completion of HR compliance training.
- Compliance consulting services. HR compliance consultants possess extensive knowledge of employment laws, regulations, and best practices. It’s their job to stay updated on the latest legal requirements and industry trends, and they can provide reliable guidance tailored to the needs of your business. And believe it or not, hiring HR compliance consulting services can save you money as well—by helping you avoid costly compliance mistakes, legal disputes, and penalties. Additionally, consultants can free up internal resources, allowing your business to focus on core operations.
- HR software platforms with compliance features. HR software platforms which include compliance features can automate various HR processes, at the same time ensuring your adherence to legal requirements. These platforms usually include built-in compliance checks, automated notifications, and reminders to help you stay on top of important compliance deadlines—all of which help reduce the risk of human error. HR software platforms also allow businesses to customize and implement their own HR policies and procedures, and track policy updates.
It’s simple really: HR compliance ensures that employees are treated fairly, consistently, and transparently according to established laws and regulations—and that they are protected against discrimination and harassment.
When employees see that their employer is committed to HR compliance, it fosters a sense of trust and confidence in the organization. In turn, employees are more empowered, more engaged, and more loyal.
Bonus: because committed HR compliance requires that your company champions clarity and skillful management, the result tends to look a lot like higher productivity and smoother operations. A tight ship = a strong business.