5 Tips to Manage HR Compliance and Avoid Legal Risks

Compared to nurturing company culture or recruiting star employees, HR compliance may be easy to overlook. Yet compliance is one of the most critically important functions human resources professionals provide.

Read on to learn more about compliance and ways you can shore up your internal processes to avoid mistakes and consequences.

What is HR Compliance?

HR compliance includes a wide range of legal responsibilities, all focused on making sure your company obeys federal and state labor laws. It's up to HR professionals to lead the way in compliance training, to ensure that all managers and employees understand their responsibilities and follow the correct procedures.

Types of Examples of HR Compliance Regulations

Compliance regulations vary at federal, state, and local levels. Here are examples of labor laws your company will need to follow:

• Affordable Care Act (ACA)
• Americans With Disabilities Act (ADA)
• Fair Labor Standards Act (FLSA)
• Family Medical Leave Act (FMLA)
• Occupational Safety & Health Administration (OSHA) regulations
• Wrongful discharge or termination laws

Legal Risk and Consequences of Non-Compliance

The consequences of HR compliance errors can be incredibly costly. For example, a study by EY found that PTO and benefits errors cost companies nearly $359,000 per 1,000 employees in 2022 alone.

Here are 5 ways you can ensure compliance at your organization:

1. Invest in HR Compliance Software

If an assumption is the lowest level of knowledge, recalling something we heard may be next. Telling employees about ever-changing regulations is only the first step—and it's not a guarantee they will always follow through.

To help, we recommend investing in HR compliance software. As government and industry regulations evolve, technology can help you streamline and automate compliance processes.

When HR professionals don't have to manage cluttered spreadsheets or chase down updated employee information, they're free to focus on what matters.

Looking for an easier way to manage compliance? Keeping employee records in BambooHR can help. Instead of managing scattered spreadsheets and wasting hours on data entry, BambooHR brings all of your employee data into one centralized, searchable database. You can see everything from payroll information to licensing requirements at a glance, ensuring you're always on top of compliance issues.

Learn more with a free demo.

2. Create HR Compliance Checklists

If you can’t seem to pinpoint why employees don’t follow procedures, the reason might simply be that they don't know how. HR compliance checklists solve this problem by making action items visible and easy to understand.

For example, BambooHR makes it easy for new hires to see what paperwork they need to complete. Your HR team won't have to spend hours chasing signatures, because our software sends automatic reminders until tasks are checked off and approved.

» Learn More: How Electronic Signatures Save Time, Money, and Trees

When your procedures are written down in a way that’s easy to understand and you make them easily accessible for every employee, you create a consistent reminder that removes the opportunity for excuses.

3. Provide Employees with HR Compliance Training

As you consider how to get employees to follow procedures, keep the following in mind: If employees perceive your procedures as unnecessary, or superfluous to their “real” responsibilities, they won’t take them seriously.

Instead, it’s up to you to give your employees a deeper reason to prioritize compliance. According to research by SHRM, even the most well-intentioned managers can open their employers up to major legal risks.

HR professionals can mitigate risks by leading regular training sessions. Make sure managers—and when relevant, individual contributors— know why you have these rules in place and why adhering to them is an important part of their job.

Some recommended employee trainings include:

• Sexual Harassment
• Non-discrimination and anti-retaliation
• Data safety and phishing prevention

4. Meet HR Compliance Goals through Rewards

Almost 50% of employees report that they skip-read or don’t listen to mandatory training. Rewarding compliance training completion can make things more engaging for your employees. For example, do a quick quiz at the end of training and offer a gift card or company swag for everyone who scores 100%, or set a company-wide goal and celebrate together when you hit your mark.

5. Safeguard Against Common Compliance Issues through Internal Audits

Noncompliance is a huge financial risk. As federal, state, and local guidelines can change from year to year, you should be completing an organization-wide compliance audit once a year. According to SHRM, an HR compliance audit consists of two main parts:

• An evaluation of the organization's operational HR policies, practices, and process
• A review of current HR numbers like unfilled positions, turnover, employee satisfaction, etc.

Common compliance issues that may come up in an internal audit include:

• Discrimination and harassment
• Wage and hour compliance
• Family and Medical Leave Act (FMLA) compliance
• Immigration compliance
• Record keeping and documentation

The good news is, you don’t have to manage it all by yourself. BambooHR can help you collect and maintain your employee records in a single, secure system. Create peace of mind knowing your employee records are in order and focus on building people instead of processes and spreadsheets.