Human Resource Compliance
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Dozens of state and federal regulations exist that indicate how companies of all sizes treat current employees and new hires. Since these regulations are usually complex at best, many employers find it hard to understand how these laws impact them or their businesses. As a result, employers often violate these regulations – mostly without their knowledge.
From the first time you interview a candidate until their last day of employment, state and federal regulations govern nearly every aspect of the employee/employer relationship. Non-compliance is not usually a result of a manager or owner engaging in risky behavior or negligence. Most of the time, it’s due to them not having a full enough understanding or awareness of certain laws.
The most common human resource compliance mistakes companies make:
- Compensation – A company that works their hourly, non-exempt employees nearly 50 hours each week, but only pays them for 40 hours. A rival business also works their employees 50 hours each week, and though they’re paid for 50 hours, it’s only the regular straight time rate rather than factoring in overtime pay.
Result: FLSA Violation. “Wage & Hour” charges can be filed, which leads to audits of complete payroll records. Both employers above can be found to be non-compliant. One would be required to pay two years of back wages and the other for three years of back wages due to the violations being committed intentionally.
- Family Medical Leave – A mid-sized company that employs over 50 people rejects a request to give unpaid leave to someone who requests time to care for a parent that is ill. The employee in this example has been with the company for five years and has worked more than 1,250 hours in the last twelve months.
Result: FMLA Violation. A complaint is filed with the Department of Labor, which can lead to an investigation and sanctions, as well as an employee lawsuit that costs the company thousands of dollars.
- Unemployment – A small business terminates an employee for misconduct on the job. However, when the employee was hired, they were never supplied with an employee handbook and didn’t sign the document that states they acknowledge the company’s policies and procedures. Additionally, the company failed to maintain thorough documentation of the employee’s misdeeds, so there is no written history to justify the termination.
Result: An avoidable and expensive unemployment claim. The company in this example cannot prove the misconduct due to lack of documentation and cannot show that the employee in question was aware of company policies.
- Discrimination – The owner of a construction company continually passes over a time-tested and capable woman for promotion.
Result: An Equal Employment Opportunity charge and Title VII violation. The following investigation reveals that the owner has a history of only promoting males, yet has no justifiable business reason for the lack of promoting the woman. The company could be forced to pay a large settlement to avoid a lawsuit that has the potential to be very costly and damaging to their reputation.
This list really only scratches the surface and it is very difficult for companies to stay on top of every regulation and law that relate to employment issues. So, how do businesses ensure that they are practicing sound human resource compliance?