Human Resources

HR Compliance 101



Compliance in the workplace is something that applies to all organizations, and many know how important it is for maintaining lasting relationships with stakeholders, customers and employees. Every department at your company is responsible for meeting regulations and staying current with the latest industry requirements to prevent significant fines and penalties.

Knowing what compliance issues are prevalent and how to combat them is essential to maintaining compliance in your HR practices. Beyond the administrative benefits, ensuring compliance helps create an ethical, positive and open company culture with happy employees and confident stakeholders.

What Is HR Compliance?

HR compliance is the process of ensuring your organization adheres to the relevant labor regulations for your industry. You must comply with multiple regulations if your company is large and operates in more than one region. Businesses must balance maintaining compliance with the relevant laws and regulations as well as ensuring they meet human capital resources objectives.

Your organization should develop HR policies that help you maintain compliance. Many businesses work with an HR compliance consultant to ensure they don’t incur fines and penalties, as lack of knowledge is not a legal defense for noncompliance.

What Is HR’s Role in Compliance?

HR departments fulfill many functions, including creating a safe, equitable environment for employees and helping the organization meet human resources goals. They also bridge the gap between the company’s growth and objectives and compliance practices that regulate HR-based activities such as hiring, employee relations and employee retention.

Primarily, HR ensures that the organization meets its legal requirements in many areas, including:

  • Payroll
  • Benefits
  • Hiring
  • Termination
  • Employee relations
  • Workplace safety

In addition, HR has a role in creating a culture of honesty and integrity. Prioritizing compliance across your organization fosters consistent employee education and communication, providing them with methods of reporting unethical activities. Applying compliance policies fairly at every level of your company can boost retention, alleviate compliance-based anxiety and elevate your organizational culture.

Crucial HR Compliance Issues

HR compliance is detailed and complex. Many of the following top HR compliance issues require a comprehensive approach to staying compliant.


If you’re seeking new talent, your approach is subject to specific laws and regulations. Several U.S. laws regulate hiring practices that prohibit recruitment and hiring discrimination based on race, religion, sex, age, disability, or genetic information. Inappropriate interview questions and discriminatory job listings go against these regulations. Hiring compliance also includes following the correct process regarding offer letters, contracts, and new hire paperwork.

Misclassified Workers

Misclassifying workers can result in inaccurate overtime wages and tax payments, leading to severe fines and penalties. HR teams must distinguish between employees and independent contractors. Then, determine the non-exempt employees from the Fair Labor Standards Act, which entitles them to overtime and minimum wage.

Employee Benefits Compliance

Providing employee benefits is essential to boost retention rates, and it’s important to ensure your areas of entitlement are compliant. There may be some benefits you’re required to offer, depending on the size of your organization. Outside of the mandatory areas of entitlement, any additional benefits you offer must comply with the relevant regulations. Working with an HR benefits consultant can be instrumental in creating a benefits strategy that works for your company and employees.

two workers talking to each other

Information Security

HR data compliance involves taking the necessary measures to ensure your employee data is stored and managed safely. You may need to determine and enforce employee data permissions and train in cybersecurity procedures to implement them within your organization. You must ensure your business complies with data privacy regulations to prevent sensitive data like employee bank details and personal phone numbers from being used illegally by cybercriminals.

Background Checks

Although conducting criminal background checks is expected, you must abide by regulations to ensure they are legal. Someone other than the hiring manager should conduct these checks, and only after your organization has made a conditional offer of employment.

Pay Equity

The Equal Pay Act stipulates that employees must receive equal pay for equal work. In addition, some states have further legislation to navigate gender pay inequality. Gender inequity may not be deliberate, but it can occur for several reasons, including transfers, promotions, and recruitment. Conduct regular pay audits under professional guidance to redress any issues.

Best Practices to Ensure HR Compliance

Navigating the world of HR compliance can be challenging at times. Keep the following best practices in mind to make the process easier:

  • Documented policies: Document all your policies and procedures and have this information accessible to all employees. Provide new hires with comprehensive orientation so they understand their roles, responsibilities and rights within your organization and know where to report unethical behavior and noncompliance.
  • Employee communication: Ensure you regularly communicate with employees regarding ethical conduct and best practices. Your employees should know how to communicate — and feel comfortable doing so —  if they witness undesirable activities.
  • HR assessments: Contact an HR professional to conduct a thorough business assessment. They can pinpoint opportunities for improvement and help you maintain compliance within your industry.
  • Regular updates: Stay abreast of any regulation changes, whether at the local, state or federal level.
  • Experienced consultants: Working with experienced HR consultants allows you to spend less time worrying about compliance and more time making your business a success. These professionals know which regulations to meet and how to ensure compliance in HR-related areas.

Are There Benefits of Outsourcing HR Compliance Help?

Navigating compliance is stringent, specialized, and time-consuming, which is why many businesses outsource HR consulting services. Getting assistance from professionals has considerable benefits.

HR Expertise

With access to HR compliance experts, you can rest assured that you comply with industry employment laws and regulations, removing the risk of penalties, revoking your business license or lawsuits. Partnering with an expert will help you understand the rules that apply to your organization and alleviate the stress of the unknown. Knowing you’re compliant is a huge relief for you and your team and prevents loss of stakeholder trust in the future.

Employee Satisfaction and Productivity

When your HR compliance is covered, you don’t have to worry about compliance issues filtering through to the rest of your business operations. Your HR partner can help you build a positive and compliant culture, minimizing potential problems. Employees who understand and participate in an ethical and compliant culture are happier, and happy workers perform better.

Contact Exude Human Capital to Assess Your HR Compliance Needs

contact Exude HC

HR compliance can be daunting, and outsourcing can change how you operate for the better. Exude has the compliance knowledge, technological advancements and expertise to mitigate noncompliance and other HR risks. We can help you develop practical on-site and remote solutions and provide support in compliance considerations.

Contact an HR professional to conduct an assessment of HR processes and practices. to better understand your baseline compliance. We will create a compliance strategy that ensures you’re adhering to industry laws and regulations. Our mission is to support yours — reach out today to get started.