"Importance of HR compliance"

Sometimes it is easy to overlook the importance of human resources and compliance issues.  In fact, human resource departments face significant enforcement and compliance risks.  In addition, the head of human resources is an important partner on compliance.  If a company suffers from weak compliance programs, its human resource department is sure to be a liability for the company.

The Human Resources Chief has significant compliance responsibilities both inside and outside its department.  Within its department, the Human Resources Chief has to ensure compliance with:

1.  The Fair Labor Standards Act which governs minimum wage and overtime pay.  These requirements differ in each state but pose significant risks, especially for those companies that have a large wage-based pool of employees.  Class action suits are regularly brought against fast-food chains, hospitals and other organizations where significant groups of employees are paid hourly wages.  Almost half of all of these class action suits are filed in California where state law is very worker friendly.

2.  Federal Civil Rights laws govern the hiring, firing and terms and conditions of employment.  In general, these laws prohibit consideration of race, gender, age or other “protected” status when making decisions on hiring or firing or setting any other terms or conditions.  Government enforcement at both the federal and state level is aggressive, and private litigation ranging from class actions to individual suits are regularly filed. 

3.  The Family and Medical Leave Act grants certain employees the right to take up to twelve weeks of unpaid leave each year in specific circumstances, and to be reinstated with certain protections after any such leave.

4.  The Uniform Services Employment and Reemployment Rights Act provides protections for employees who are called to active military duty and protects them when returning to work after completing military service.

5.  Management of compensation and benefit programs – HR leaders often have to oversee employee compensation and benefit plans which include Employee Retirement Security Act’s reporting, disclosure and fiduciary requirements.  The Patient Protection and Affordable Care Act has imposed a number of requirements, and in 2014 a number of new requirements will become effective for companies providing employer-sponsored health benefits.

The Human Resources Chief must hire and retain individuals that are knowledgeable about HR specific laws and are able to create appropriate policies and procedures.  Once the policies are established, HR must make sure they are effectively communicated throughout the organization.  Also, the Human Resources Chief has to audit its operations to ensure compliance, and has to make sure he/she communicates regularly with senior management and the chief compliance officer.