Why Use Our Checklist?

HR compliance is one of those certainties in life you can always count on. But with ever-changing laws and regulations, it can be difficult for businesses to keep up. And, if it seems like it gets harder every year, many businesses agree that it has. In fact, an important 2022 survey confirms it.

Compliance was a universal stressor for many organizations over the past year.

In fact, 63% of respondents report that their HR department felt significantly more pressure to maintain compliance. As a result of the pandemic, 77% of organizations were forced to spend more time and energy on new and expanded compliance issues.

Our complete HR compliance checklist can help you stay on top of changing deadlines and create policies and procedures that minimize business risk. It includes everything human resource specialists like you need to prepare for an HR audit.

What’s Included

Our HR compliance checklist has the documents you need, critical laws you need to be aware of and the best ways to alleviate your compliance concerns. See the deadlines, laws and top tips you need to tackle compliance in these crucial areas of your business. 

 The checklist is broken down into these basic categories:

• Interviewing and hiring employees
• Time management
• Payroll and taxes
• Employee benefits
• Company policies
• Diversity, equity and inclusion

Download our HR compliance checklist to get key compliance deadlines and help with some of the hardest HR compliance issues. (Step 1: Use this checklist. Step 2: Sleep better knowing your company won’t get penalized or fined.) The more you use it, the less you have to worry — we know you have enough to focus on as it is. 

As an HR leader or business owner, you’re busy. We understand. If you’re interested in spending more time on growing your business and less time worrying about compliance, you’ve come to the right blog.

With EmPower as your HR partner,  you can rest easy knowing your compliance is locked down. Contact us to put some reliance in your compliance.

Define The Rules Of Engagement Upfront

To manage conflict when you’re working in a hybrid environment, it’s important to set the ground rules with your team beforehand. This will help to avoid any misunderstandings or conflicts down the line. The first rule of engagement to manage conflict when working hybrid is all-around communication. When employees are working from home, it is important to have a clear and concise way of communicating with them. 

• This can be done through email, instant messaging, or even video conferencing. Whatever method you choose, make sure that everyone is on the same page and knows what is expected of them. Conflict usually stems from a lack of communication or when the communication is unclear. 
• Setting the expectation of the modes of communication upfront ensures everyone is on the same page and knows the tools to use when trying to reach and connect with one another.

Build Trust With One Another

We come from a workplace practice in which we equate the effort someone puts in their job by seeing what time they show up and when they leave their desk at the end of the day. Those that are in early and stay late are the ones to be seen as “putting in the work,” whereas those that stroll in or take a long lunch can come across as lazy or not pulling their weight. 

• With hybrid working, all of that is out the door. In a hybrid work environment, it is important to trust that everyone on the team is pulling their weight and meeting their deadlines. Even if we do not see them getting the work done like we are used to, give them the benefit of the doubt and trust that the work is getting done and that they are attending their meetings. 
• Just because someone is working from home doesn’t mean that they are not working hard. In fact, many people find that they are more productive when they are in an environment where they feel comfortable and respected. So make sure everyone is trusting one another, and if there are any work concerns or missed deadlines, they are discussed and not swept under the rug. This is important to ensure you manage any conflict ahead of time while working in a hybrid environment. 

Encourage Open Communication

Different team members may have different communication styles in a hybrid work environment. Some like to be more direct and to the point; others want to give as many details as possible. Regardless of communication, you should encourage everyone on the team to be open with one another when sharing concerns or issues they encounter. This is key because since we are not together in the same space, it is easy to ignore or not prioritize issues or potential conflicts in a hybrid work environment.

• Encourage everyone to be open with each other and to share any concerns they may have. This will help build trust and understanding and prevent small issues from escalating into bigger problems.
• Conflicts that are not resolved can develop into small issues brewing under the surface, potentially leading to an outburst. Plus, since many conversations happen online vs. in person, there are not usually any witnesses, which can lead to potential accusations and finger-pointing quickly. 

Be Flexible

With different team members working in different locations, it’s important to be flexible in your approach to conflict resolution. What works for one team member may not work for another, so it’s important to be willing to try different tactics.

• One way to do this is to find common ground with the other party. For example, if you are dealing with a scheduling conflict, try to find times that work for both of you. Another way to be flexible is to be willing to compromise, which means being willing to give up something to reach an agreement. 
• Finally, it is also essential to be open-minded. This means considering the other person’s perspective and finding a resolution that works for both of you. By being flexible in your conflict resolution approach, you will be more likely to find a solution that works for everyone involved.

When you bring people together for a common purpose, you can expect some heads to bump and potential friction. Working together as a team is not always sunshine and rainbows in this new hybrid world. However, managing conflict while working hybrid is vital for work production and creating a collaborative workplace culture. It takes all of us to create healthy and engaging workplaces we need to be in, so using these tips will ensure that conflict is minimum and we can all work happily.

We’ve listed the top questions we get asked about contacting references without permission. Can employers contact references without permission? What are backdoor reference checks and are they illegal? Here are our top answers and compliance tips regarding checking references. 

If a Candidate Asks You Not to Contact Their Current Employer

It’s ultimately up to you, but we recommend that you respect the candidate’s wishes. When candidate’s ask you not to use references from their current employer, it’s (usually) for a valid reason. While it may be tempting to see this as a red flag, be open to see the situation from the candidate’s perspective. Some common reasons that candidates request a vow of secrecy include: 

• Keeping their job hunt on the down low. The candidate isn’t ready to inform their employer about their search for a new opportunity. It’s understandable that they don’t want to put their livelihood on the line, their current employer could fire them if they find they’re looking for work elsewhere. (Even though we don’t recommend terminating an employee for looking for another job.)
• Fear of repercussions in their current workplace. If word gets out about their job hunt, current employers or coworkers could retaliate and treat the employee differently if they decide to stay at their current company. 
• Inaccurate responses. A toxic boss might give an inaccurate statement about their ability to do the job based on personal conflict that isn’t accurate to the job’s responsibilities.

Can Employers Contact References Without Permission?

Legally, yes, you can contact references without permission and backdoor reference checking isn’t illegal. The decision is up to you, but it’s highly recommended that you respect the candidate’s request not to contact certain references. The hiring process should make an effort to build the candidate’s trust with the company. If you contact previous employers against a candidate’s wishes, they may feel disrespected.

If you do decide to contact the current employer despite the candidate’s request, it’s best practice to let the candidate know beforehand and explain what questions you will be asking their employer (job performance, job title, etc.). The candidate may opt to let you go ahead with the reference check or they may decide to withdraw themselves from consideration instead of having you reach out. Either way, it’s best to let them know your intentions, especially if contacting their current employer could have negative repercussions for them.

Are ‘Backdoor’ Reference Checks Illegal?

It’s known as a “backdoor reference check” when a recruiter reaches out to a contact that was not provided by the candidate. There’s other names floating around for this such as informal checks, or quiet checks – they’re all the same thing. Through networking sites or contacts, recruiters can identify mutual connections that can answer questions about a potential candidate. 

Wondering if a backdoor reference check is illegal? The answer is no. Even though it’s legal to perform backdoor reference checks, it can cause problems. You may have to deal with:

• An uncredible source. When reaching out into the unknown, you never know what you’re going to receive. You may find yourself contacting an unreliable contact that didn’t work directly with your candidate or at a different time period or location.
• Biased information. Selecting a random ex-coworker or connection can end up being a best friend or an enemy, either way you’re probably going to receive a biased review. 
• Broken trust. Contacting references the candidate didn’t provide will confuse them and break any trust they have with you and your company during the process – especially if you contact their current employer without permission.

Reference Check Compliance Tips

Ask Compliant Questions

Be mindful of the information you can and cannot receive. It’s crucial to be respectful of company policy and know the restrictions on what information references can legally provide in your state. For example, you can only request information on “job performance” from an employer in Illinois. 

When reaching out to employers, their company policy may prevent them from sharing some job specifics such as salary and dates of employment. These company policies aim to prevent risk of liability for discrimination or defamation. 

Stay Organized

When speaking to a referral, it’s best to have a script. Asking each referral the same question gives your candidates a level playing field. Plus, without a standardized process, you could miss crucial details about your candidate. An organized approach will help you stay compliant and get the best information. 

Avoid Bias and Discrimination

Be sure to talk to multiple references to reach common themes. (Just like in baking, the key to reference checks is consistency!) If certain referrals seem far off from the others or unreliable, use your best judgment to determine the accuracy of their story. 

Interviewing references is similar to conducting a job interview, you can’t discuss personal information in reference checks. Even if you don’t realize you are being biased or discriminatory, even the best interviewers can slip up. To avoid that slippery slope, don’t ask personal questions unrelated to the job description. As a reminder, you cannot ask about:

• Age
• Marital status
• Ethnicity
• Sexuality
• Religion
• Disability

These, and others, fall under federal Equal Employment Opportunity (EEO) Laws that protect candidates from discrimination.

HR Can Keep You Compliant

Too often, HR leaders and business owners get bogged down in the nitty gritty details of HR. (Wait, what can I legally ask in a reference check again?) Business owners and HR leaders, consider outsourcing HR to help expand your talent search and streamline your recruitment process. Outsourcing HR gives you access to HR gurus who have mastered what you can and can’t ask references. So you don’t have to worry about asking the wrong questions and potential legal penalties. They can help you build an organized approach to the referral process, know what to ask and how to interpret the responses.

Here are 5 of the toughest HR compliance challenges companies of all sizes face, with examples of compliance rules and recommended best practices to help you stay ahead of the compliance curve.

5 Toughest HR Compliance Issues Every HR Leader Should Know

We know that HR responsibilities fall way beyond throwing job-anniversary parties. From hiring to payroll, HR leaders handle a variety of compliance issues related to employees. So we’ve given you a birds eye view of some of the toughest HR compliance rules that, like Ross and Rachel, are just complicated.

1. Identifying the compliance requirements that apply to your business

Being compliant requires learning which laws apply to your organization and understanding what they require you to do. That’s easier said than done. While there’s no shortage of compliance rules that apply to all employers – employment taxes, wage garnishments, termination pay, and unemployment insurance, just to name a few — there are plenty of small, nitty gritty details that determine whether some rules apply to your business. 

Some HR compliance rules, like great modern art, are open to interpretation. Laws like the Family and Medical Leave Act and whether or not you are legally required to pay an intern are somewhat subjective and require some serious compliance expertise to master. (Did you know that your employees need to meet 3 qualifications before they’re eligible for FMLA leave?) 

The little complexities and ever-changing nature of compliance makes it difficult for even the best human resources professionals to know what rules actually apply to their business. One of the ways to sort through the madness is to pay attention to your business size. For example, some compliance laws only apply to businesses of 50+ employees. 

We’ve laid out the laundry list of compliance requirements for your business, whether it has 1 employee or over 100. Check out or checklist to help you determine what compliance laws apply to your business.

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2. Employee benefits regulations

Most companies offer their employees a laundry list of benefits – PTO, health insurance, tuition reimbursement, disability insurance and retirement savings – just to name a few. It can be confusing for compliance newbies to determine what benefits are good perks, and what ones are federally required. 

Employee benefits fall into two categories: those required by law (social security and medicare) and those an employer chooses to offer voluntarily (vacation time.)  Businesses are bound by federal law to offer certain employee benefits — and it takes some research to know which benefits a company has to provide its full-time workers. Federal mandatory employee benefits include:

• Social Security and Medicare
• Unemployment insurance
• Workers’ compensation insurance
• Family and Medical Leave Act (FMLA) protections

But what makes employee benefits compliance truly complex are the mix of federal and state laws that employers must adhere to. The following are just a few examples of the most complex mandatory benefit requirements.

Unemployment Insurance

Take unemployment insurance for example. Employers are required to contribute to unemployment insurance through payroll taxes at both the state and the federal level, to assist workers who lose their jobs. While this is a federally required benefit, since unemployment insurance is administered by individual states, the cost of this insurance and amount required for each employer varies from state to state. 

Disability Insurance

While disability insurance is not a mandatory federal benefit, it is one of the legally required benefits for employers in California, Hawaii, Rhode Island, New Jersey and New York.

Health Insurance

Under the Affordable Care Act, applicable large employers (ALEs) risk a potential assessment if they do not offer adequate and affordable coverage to their full-time employees and their dependents and at least one full-time employee receives a premium tax credit. (ALEs are companies with an average of 50 or more full-time employees, including full-time equivalents, during the prior calendar year.) The coverage should also meet minimum essential coverage requirements and minimum value.

3. Complying with wage laws

If everyone needs payroll, why is it so complicated? Payroll may appear simple, but it’s really a complex administrative function. For one, even a small error can ruin the whole process, and leave you with some pretty mad employees. (Don’t mess with payroll, people.) 

Here’s just a few reasons why payroll is complicated:

• Ever-changing payroll laws. It’s hard to hit a target that’s always moving. Your payroll team needs to be aware of any changes that are happening at the federal and state level. While making changes to payroll policies, it’s best to get the new policies validated by experienced officials or external payroll firms.
• Taxes. Between income tax, Social Security taxes, unemployment taxes and more – there’s just too many tax rules to stay on top of. Many companies are moving towards payroll management systems to automate their payroll calculations. Did we mention that you also need to have a list of voluntary deductions for each employee and reimbursements need to be accounted for? 
• Employee attendance calculations. Managing employee time off and attendance is another line item that goes into calculating payroll, and that can be hard to calculate manually. To streamline your operations, you can implement HR software with payroll, attendance, and time off features.

Here’s an HR pro tip: have you tried outsourcing your HR or using a PEO? Rely on the companies you partner with for employment-related compliance services to help with payroll. There are plenty of benefits to using a PEO and outsourcing your payroll function. If you’re thinking about outsourcing HR, get started with us and we’ll work with you to help manage HR.

4. Anti-discriminatory hiring processes

The recruiting landscape has officially shifted to the digital space. The shift to remote work in the past few years has created an influx in remote hiring and virtual interviews. But some challenges never change. HR leaders still need to be experts on recruiting compliance and help lead company execs to avoid being bested by changing regulations. 

It’s easy to fall into a verbal tripwire, especially in a Zoom meeting. Seemingly innocent questions — are you married? What church do you go to? — are seen as discriminatory and can land you in hot water with federal law. As with the job announcement itself, it is best to have interviewers steer clear of any questions or discussions that touch on the areas of race, religion, sexual orientation or any of the other topics covered by anti-discrimination law.

For HR professionals, the real challenge is making sure that everyone – from the executive team to newly-minted managers – know what they can and cannot do. Our advice? Try using compliance-approved interview scripts and distribute them to any interviewers that aren’t as HR savvy as you.

5. Correctly classifying workers

It’s no secret that classifying workers can be confusing and time-consuming. Federal and state laws do not define the terms full-time, part-time, or temporary employees, so it’s up to the employer to define these terms. For example, A full-time employee generally is defined as one who works a “normal work week,” which is generally 40 hours a week. But some companies define the work week as 37.5 hours or even 35 hours depending on the work day and meal schedule. HR leaders should be sure that full-time and part-time classifications are defined as part of a company-wide employment classification policy so that they are consistent throughout the organization. 

The main reason why correctly classifying workers is so tough is because members of the same team can be classified in many different ways. You could have several different classifications on your workforce including:

• Full-time employees
• Part-time employees
• Temporary and seasonal employees
• Independent contractors
• Statutory employees and non-employees
• Interns
• Volunteers

Clearly, classifying employees isn’t something you can generalize. Solidifying the definitions of employment classifications is critical because it defines your employees’ eligibility for benefits, overtime pay and their tax status.

Here are just a few examples of complex classifications: 

1099 Vs. W2 Employees

 A 1099 worker is an independent contractor, which means they’re technically not an employee. 1099 contractors may work part-time or full-time hours, which can make it easy to confuse them with your other W2 full-time employees. But it’s an important distinction to make because, as a result of the short-term nature of their employment, 1099 contracted employees generally do not receive any benefits and have to pay their own income taxes. 

HR leaders need to be sure that they don’t misclassify 1099 contractors vs. W2 employees. Besides DOL litigation costs, there are potential federal civil penalties of $2,074 per violation (generally one penalty per misclassified employee), state penalties (which will vary), and in some cases the potential for jail time.

Exempt Vs. Non Exempt

Although full-time, part-time and temporary employee classification are up to the employer to define, exempt and nonexempt classifications are governed by FLSA law, which includes minimum wage and rules for overtime pay. Whether an employee is exempt or non-exempt determines whether they are eligible for overtime pay. 

Nonexempt employees are typically hourly (with some exceptions.) Exempt employees are typically executives, managers, professionals, administrative staff, and/or outside sales whose job descriptions meet criteria for non-exempt status as defined by the U.S Department of Labor.It’s a tough compliance issue that can trip up even the best of HR leaders. But it’s important to get right because the penalties of misclassifying employees can be big. Wal-Mart misclassified 4,500 employees back in 2011, which ended up costing them $4.8 million in back wages. Ouch.

Business owners and hiring managers looking to hire interns, we’ve got your back. In this article, we answer whether employers have to pay for an internship, explain the legality of unpaid internships and give the pro and cons of paid internships.

Do You Pay For An Internship?

Ultimately, it’s up to the employer as long as the intern is the one benefitting the most from the work arrangement. Although most internships (about 60%) tend to be paid, the Department of Labor (DOL) is flexible when it comes to internship payment options and allows the employer to make the final decision. But only if the work arrangement adheres to the DOL’s primary beneficiary test – that the intern is the “primary beneficiary.” 

The primary beneficiary in a work arrangement determines whether the internship should be unpaid. If the employer is the primary beneficiary (they benefit the most from the work arrangement) then the intern is considered an employee and entitled to all FLSA protections – including federal minimum wage and overtime pay. 

Although it’s not technically required to pay for internships if the intern is the primary beneficiary, most career services professionals recommended paying interns. Interns are contributing meaningful work to your organization (as long as they’re not stuck getting coffee!) They should be compensated for their time and effort. Just be sure that you’re adhering to minimum wage and overtime laws.

Unpaid Internships For Nonprofits

It’s important to note that unpaid internships for non-profit organizations are generally persmissible. The Fair Labor Standards Act (FLSA) does exempt certain people who perform services for a state or local government agency or who volunteer for humanitarian purposes at nonprofit food banks. The DOL’s Wage and Hour Division also recognizes an exception for individuals who volunteer their time.

How Much Should I Pay an Intern?

A recent National Association of Colleges and Employers (NACE) study found that companies can expect to pay an average of $20.76 per hour for bachelor’s degree-level interns. While younger interns with less experience, such as high school students, may receive minimum wage.

Are Unpaid Internships Legal?

Unpaid internships are legal as long as the intern is the “primary beneficiary” of the work arrangement. According to the DOL, a “primary beneficiary test” determines whether an intern is classified as an employee. The test examines who primarily benefits from the relationship: the employer or the intern. In all cases, employers should document the duties of the internship to show it adheres to the DOLs primary beneficiary test.

The DOL Test To Determine An Internship

To determine whether a student or intern should be classified as an employee under the FLSA, consider using the DOL’s primary beneficiary test. The test considers seven factors and how they apply to the intern-employer relationship. For example, any direct or implied promise of pay suggests that the intern is an employee, and vice versa.

The key consideration is determining who benefits more from the internship; the student or the employer. If the employer is profiting from the work, the company may have to treat the intern like an employee and pay them at least minimum wage and overtime according to federal guidelines. States, cities, and local jurisdictions may have additional, conditions that employers must satisfy.

The “Black Swan” Lawsuit

The importance of the determination “primary beneficiary” in an internship was solidified when a lawsuit on the production of “Black Swan” was settled. According to CNBC, Eric Glatt and Alex Footman worked on the award-winning film “Black Swan” as interns, filed a lawsuit against Fox Searchlight alleging the production company violated the Fair Labor Standards Act by not paying them for their work. 

After an appeal in 2015, the judge found that rather than consider if the organization received a benefit from the work of an intern, “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.” 

In 2016, Glatt and Footman settled their case with 21st Century Fox. Those who interned on the movie were awarded amounts ranging from $495 to $7,500.

State Laws and Unpaid Internships

As long as the intern passes the DOL primary beneficiary test, it depends on your state. The Fair Labor Standards Act (FLSA) does not require compensation for interns and students, but state laws may beg to differ. Some states, such as California, require that workers must be paid at least minimum wage except in very limited circumstances. California has a stipulation that student workers must be paid 85% of the California minimum wage (as little as $11.90 per hour.)  When meeting terms of federal standards, local rules may be more strict and can take precedence.

The Pros Of Offering Paid Internships

Hard work should always be rewarded. If your interns are contributing good work for your company (more than just the intern doing a coffee run!)  — they deserve to be compensated. Offering paid internships will benefit the intern but also your business, you will notice an increase in: 

• Motivation. Knowing the work you’re putting in comes with monetary results can motivate interns to work hard and feel included and encouraged.
• Appreciation. It makes people feel good when they are rewarded and a paycheck is a great way to show appreciation for the work your interns are putting in. 
• Reputation. Giving your interns a great experience will make your company stand out. This reputation boost will give you positive brand awareness and candidates will be more likely to apply for future opportunities. (Hello new customers and awesome employees!)

Perks of paying your interns go beyond internal reward and recognition. While those are great benefits – paid vs. unpaid internships can spark legal confusion or backlash. When in doubt, the safe option is to make it paid.

The Cons Of Offering Paid Internships

Let’s be real, no one prefers to not get paid. But as a small business owner, it may not be in your budget to offer a paid internship. If you’re unable to compensate your interns, that’s okay – but they must receive academic credit instead and ideally, an impactful experience as well. 

If your business has the means to pay your interns, it’s highly recommended that you should. If you think you’re saving money or time by avoiding paperwork, it’s not worth it in the long run and can damage your reputation and even company morale.

Preparing To Hire An Intern? Here’s How HR Can Help

Planning ahead is crucial to the success of your internship program. If you don’t know where to start, HR can help you determine payment guidelines for an internship. Here’s what HR can do to make your interns give glowing recommendations: 

• Develop a policy. An internship policy will set the tone prior to an intern starting so they’re aware of what to expect and any company rules, values, etc.
• Define job duties. Clarifying the job role informs the intern of what their responsibilities include in order to be prepared for the role and what’s to come. 

• Define supervisor roles. Identifying the intern supervisor is a must. Interns need mentorship in order to be successful. 
• Implement evaluations. Coordinating check-ins and reviews allow the intern to know how they are doing, how they can improve, or any feedback they can share to benefit their experience. 

Lean on HR professionals to create an impactful internship program for your organization. Need kick a** HR? Get started today.

We get asked about HR compliance a lot. Business owners want to make sure they’re compliant but don’t always know where to start. So, we wrote this (very awesome) guide to help you navigate the murky waters of HR compliance. Use our guide to learn the critical things you need to know: what is HR compliance, why it’s important to your business and HR compliance best practices.

What is HR Compliance?

HR compliance is the process of ensuring that your company’s practices, policies and procedures conform to federal, state, and local laws. Being compliant requires learning which laws apply to your organization and understanding what they require you to do. That’s easier said than done. 

Some employment laws are simple, they take the form of “do this” or “don’t do that.” The requirements may be easy, like minimum wage, or complex, like the Family and Medical Leave Act. Compliance laws can be pretty straightforward. (Pro tip: don’t pay less than the minimum wage!) But not all compliance laws are as clear on the details, which is what makes HR compliance an art to be mastered. 

Staying compliant requires knowledge, skill, and cooperation. You need to know where to go to ask the right questions and create policies and procedures that minimize business risk. (Not to mention, you need to be able to decipher HR legal-speak!) You have to ensure that everyone – from the executive team to newly-minted managers – know what they can and cannot do.

Why HR Compliance is Crucial to Your Business

Believe it or not, compliance isn’t just an HR problem. HR compliance is the support beams holding your business infrastructure together. No matter your company size or industry, all businesses need to conform to certain laws. Staying compliant protects your business’ assets and growth. But with the regulations constantly evolving, you need to be able to adapt.

81% of organizations reported that legal and compliance concerns were a challenge for their business over the last year.

The cost of non-compliance can affect all areas of your business. Between penalties, federal and regional regulation, reputation repair, and updating technology after a data breach – you can’t afford to be out of compliance.

 Here are just a few common costs associated with being out of compliance:

• Penalty fees
• PR costs associated with repairing brand image after a scandal
• Repairing brand reputation or the cost of rebranding
• Lawsuit settlement fees
• Fees to recover funds after a financial crime, scam or a data breach

Regulatory compliance helps you protect your business’s resources and reputation. In the long run, it’s worth it to invest in HR compliance. 

 Why is failing compliance so expensive?

Compliance failure can include hefty legal fees, compliance audit costs, and loss of revenue due to client mistrust. To defend yourself against the dark arts of compliance regulations, you’ll need to understand why companies fall out of compliance. Here’s just a few common penalties.

Common HR penalties that can cost you:

• Health Insurance Portability and Accountability Act (HIPAA): Violating HIPAA includes fines up to $50,000. If it is discovered that the violation occurred due to a lack of training, the employer is penalized. When healthcare professionals violate HIPAA, it is usually their employer that receives the penalty. 
• Affordable Care Act (ACA): A penalty of $2,750 (for 2022) per full-time employee (minus the first 30) will be incurred if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents, and any full-time employee obtains coverage on the exchange.
• Wrong Information on I-9s or W-2s: For 1-9 paperwork violations in 2022, the penalties range from $252 to $2,507 for the first offense for substantive violations or uncorrected technical errors. Failure to verify Social Security numbers or federal employer identification numbers (FEIN)on tax documents adds up. At the end of the year, missing or incorrect numbers on W-2s could result in a penalty by the IRS of up to $270 for each return.
• Occupation Health and Safety Administration (OSHA): Fines can add up to $14,502 per violation, as long as they’re not willful or repeated. Repeat offenders can be fined up to $145,027 per violation.

Examples of Common HR Compliance Issues

Even with the ever-changing compliance requirements, there are a number of regulations you’re bound to run into. Benefits, hiring and termination are just part of the employee circle of life (cue the music.) We’ve listed the compliance issues you’re bound to run into in the jungle of business.

Benefits Compliance

Most companies provide employee benefits: dental insurance, retirement plans and health insurance just to name a few. But few companies truly understand the requirements for each. For example, your company health coverage may need to adhere to the Affordable Care Act (ACA) and retirement plans are bound to the The Employee Retirement Income Security Act of 1974 (ERISA.)

Business owners should be aware of their responsibilities when it comes to offering employee benefits. Lean on your HR team to pay attention to compliance rules and help you determine the best way forward.

Non-discriminatory Hiring Practices

Every company needs employees but the hiring process can be tricky. For one, you need to be mindful about how you narrow down your candidate list and be sure that you don’t turn down candidates based on illegal factors. When going through your compliance checklist, be sure that you don’t do anything that could violate Equal Opportunity Commission laws. (Meaning that you can’t deny candidates based on disabilities, color, ancestry, and gender.) 

Updating your Employee Handbook

Your employee handbook isn’t just the most fun piece of literature your employees anxiously wait to read every year. (Ok that might have been over-exaggerated.) But even if no one reads the employee handbook — and only about 40% of employees ever do — updating your employee handbook is important. It protects employers against discrimination or unfair treatment claims. Having written documentation on your values and policies only benefits your business.

Your handbook is a living document that should adapt to constantly changing regulations and the changing needs of the company. It needs to be updated annually. And to really conquer compliance, you should require every employee to provide a written acknowledgment of having received the handbook.

HR Compliance Best Practices

When outlining your compliance playbook, there are a few best practices you need to know. That is, if you want to proactively tackle any compliance issues. Don’t wait for an audit and let your compliance plan be a Hail Mary pass. Follow these top tips and get ahead of the game: 

Review Your Rules Regularly

Compliance work is never really done. Not only do new legal requirements appear on the regular, but compliance rules need to be enforced consistently. Regularly checking your company practices allows you to identify risks and diagnose compliance issues before they turn into problems. 

On the surface, it might seem like HR compliance is only about protocol and blindly following the rules. But dig a little deeper and you’ll see that your HR compliance function shapes employee experiences and the workplace as a whole. For example, team diversity and inclusion training opens up your workplace’s culture to be more inclusive and engaging.

Create a Culture of Accountability

Company compliance starts with effective communication. (Human resources should be on your front lines promoting company compliance!) Let HR regularly communicate with your employees and train them on the critical compliance issues — like keeping company data secure, verifying employee information for W-2s and sending out updated employee handbooks. 

HR plays a crucial role in creating a culture of accountability, but all of your employees need to work together to reach compliance goals and solve problems.

Use a HR Compliance Checklist

Keeping up with compliance deadlines can be like trying to hit a moving target. Between tax deadlines (W-2s are due to the IRS in January,) 1094-C and 1095-C forms (due to the IRS in March) and more compliance documents — staying on top of compliance deadlines can be difficult. Many companies use a checklist to stay on top of the issues they need to keep in mind. 

Using a HR compliance checklist helps you stay organized and ensures that you won’t miss any important steps in the compliance process. Don’t lose sleep wondering if your policies and procedures are compliant. Use our complete 2022 checklist to make sure nothing falls through the cracks — so you can get back to driving your business’ success.

Of course, that number—the $4.24 million dollar global cost of a data breach—includes breaches from some pretty high-profile companies (For example, Facebook and Amazon had a breach in 2021.) So, it’s not like your company will necessarily be swindled out of millions. But there’s definitely a lesson to be learned here. 

Clearly, company data protection isn’t something you should worry about after a leak or after an employee suddenly leaves on bad terms. Securing your company data is critical to protecting your money and your business.

Check out our HR best practices for keeping your company’s information safe. We asked our top inside experts for their advice. So we’ve added HR pro tips to keep burglars from stealing your data – and your hard-earned money.

5 Crucial Company Data Security Best Practices

Big companies are, in general, way ahead in the ever-changing data protection game. But there’s a lot that small businesses can learn from their best practices. (Underdogs, unite!) We’ve listed the ways to protect yourself against security breaches that we’re seeing with our larger clients.

1. Protect Against Phishing Scams

Unfortunately, phishing scams are becoming more common and – what’s worse – they’re becoming more sophisticated. Generally, a scammer will pose as the owner of a company and ask their accounting department to make a transfer to a new bank account. Many phishing attacks simply send a fake invoice or ask for payment in gift cards. 

The problem is that scammers know their stuff. There’s no stand-out grammatical errors in the invoices, no elaborate requests and they look legit. The best way to combat scams is to raise employee awareness on what popular scams look like, how to flag new account transfers and to criticize any requests for money.

The $121 Million Email Scam

According to Bloomberg, scammers orchestrated a scheme that sent fake emails to trick Facebook and Google employees. The thieves pretended to represent one of their hardware makers, Quanta Computer. They told Facebook and Google workers that the companies owed Quanta money, and then directed payments be sent to bank accounts controlled by the scammers. The scheme netted about $23 million from Google in 2013 and about $98 million from Facebook in 2015.

2. Install a Firewall

A firewall acts as a barrier that monitors and blocks suspicious traffic. It’s the moat around your castle, only built out of cyber-bricks. Firewalls are the first line of defense in network security and establish a barrier for your controlled internal networks. 

Big companies rely heavily on basic measures like two-factor authentication, firewalls and anti-malware solutions. Be sure to install quality antivirus and anti-malware software on all computers used for company purposes, and set up regular scans. Protect your network with security software and always keep this software up-to-date. Trust us, a quality firewall is a must-have. There’s a reason why major businesses invest in the protection a firewall offers.

3. Backup Files

If it’s not already part of your security routine, be sure to backup your files on a regular basis. If your files are ever compromised, you don’t want to risk losing everything you’ve worked so hard to build. Having a recent backup will enable you to restore your data so you can continue to operate. (Thank you, cloned files.)

Failure to backup data compromises your information. Having all of your data in one place opens you up to the risk of theft, viruses, malware and ransomware. In the case of data loss, having redundant backups is critically important. 

Be sure to make it a point to back up files when off-boarding employees. It’s just the reality of the corporate world – employees come and go. Unfortunately, many departing employees end up unknowingly taking confidential corporate information with them. You need to have a process to men-in-black style wipe company data from employee’s devices when they leave.

HR Pro Tip

Have processes in place for off-boarding and device disposal for any laptop, computer, thumb drive or any equipment that stores company data.

4. Limit Access

This is a big one. You should only provide employees with the access they need to perform their job. Sharing too much information is a risk to data security and makes it difficult to pinpoint where a breach started. 

Get with your human resources team. Experienced HR can set your business up for success and implement appropriate access controls. (Need kick-ass HR? We know some people.) Let HR define the data that an employee needs to use even before hiring or onboarding them. Limited access = optimal employee data protection. 

Let HR train employees on your internet safety and security policy and procedures, your security software, recognizing potential security threats, and creating strong passwords. It’s important to make sure everyone knows your company policies on data security.

5. Know Where Your Data is and Where It’s Going

It’s important to know what data is being stored and where. This includes laptops, company hard drives, company-issued cell phones and other electronic devices. You need someone on your team with compliance laser-vision: high-level visibility into all corporate data across every part of your infrastructure.

Have someone on your team who understands your data flow. That empowers you—the decision maker—with knowledge to make informed decisions on creating effective data protection policies.

HR Pro Tip

Never, ever email sensitive information such as W-2s, benefit enrollment forms, completed census forms, or anything with social security or credit card numbers. Email databases are notoriously insecure, and if malicious parties get access they can often see or get everything.

The Next Step: Training Employees on Data Protection

It’s up to the higher-ups to champion employee data protection. You probably have some pretty awesome humans working at your company. Your employees are #1 in a lot of areas: customer service and revenue generation— just to name a few. Unfortunately they’re also the #1 cybersecurity threat to your business. 

The key to employee data protection is thinking ahead and being cautious. Without paying close enough attention, employees can miss easy signs of scams or other major cyber risks. Prevent scams and boost security with the following tactics:  

• Always pay close attention to the sender of an email
• Don’t respond to scammer emails outside the organization
• Don’t click links in emails from outside of your organization
• Be aware that hackers pose as employees through email
• Double check the site before entering sensitive information
• Use a shredder for sensitive information

Company data is valuable, especially to small businesses. Whether your company is big or small, there is always the risk of sensitive information being stolen, leaked or handed over through various scams. As a business leader, it’s up to you to ensure employee data protection and company data security. Check out our cybersecurity checklist to see how your business is doing.

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As an employer, you know that your employees may not be totally stoked about the extra hours. You may be wondering about implementing mandatory overtime. We hear these questions a lot. Can a company make overtime mandatory? Is mandatory overtime legal? We’ve laid out the rules, potential risks and best practices when it come to mandatory overtime.

Can a Company Make Overtime Mandatory?

Yes, but you’ll have to pay for it. Working overtime is when an employer requires their staff to work more than the normal 40-hour work week. An employer is in charge of creating and modifying schedules, which can include overtime. But that comes at a price.

Know that this isn’t a one-size-fits-all approach – the rules vary between your employees. Nonexempt employees must be paid for the overtime. Salaried employees can be asked to work mandatory overtime they don’t need to be paid extra. Their hours are flexible and all contained within their salary. It comes down to whether the employee is exempt or nonexempt.

Mandatory Overtime Rules for Nonexempt vs. Exempt Employees

Non-exempt employees are usually paid an hourly wage or earn a salary that’s less than a minimum amount determined by the DOL. If employees are non-exempt, it means they are entitled to minimum wage and overtime pay when they work more than 40 hours per week.

Nonexempt employees must receive overtime pay. These employees are protected under The Fair Labor Standards Act (FLSA.) They’re legally entitled to extra compensation for overtime work. To calculate their overtime rate, they must receive 1.5 times their regular rate times all overtime hours worked – known as the “time and a half” rule.

Exempt employees typically must be paid a salary above a certain level and work in an administrative, professional, executive, computer or outside sales role. The Department of Labor (DOL) lists the criteria that can help employers determine who meets this exemption criteria.

Exempt employees do not need to receive overtime pay. According to the FLSA, the qualifications of exempt employees are that they make at least $684 per week in a salaried position. This means that they will receive the same paycheck whether they work 40 hours a week or more.

Is Mandatory Overtime Legal?

Yes, employers do have the ability to make their employees work overtime. The Fair Labor Standards Act (FLSA) establishes a 40-hour work week but doesn’t cap the maximum working hours. Employers can also terminate an employee for refusal to work the mandated overtime. Still, you don’t want to be that boss. (Have we learned nothing from Office Space?) Consistently overloading your employees with extra hours will likely lead to burnout and, what’s worse, you could end up with a mutiny on your hands.

Know that exempt employees may be protected from overtime work through their employment contract or collective bargaining. Before scheduling exempt employees, be sure to double-check their contracts to avoid any conflicts.

Risks of Mandatory Overtime

Religious Discrimination Cases

When you force your employees to work overtime, be prepared for employees to request exceptions. Religious accommodations (such as not working on the employee’s Sabbath) and disability accommodations do have to be provided. Ignore religion in the workplace and you could be looking at a religious discrimination case. You’ll need to understand religious exemptions and how to navigate them when implementing mandatory overtime.

FMLA Noncompliance

Depending on the circumstances, employees could also be excused from the extra work hours through a leave law. A great example of this would be employees on leave related to the federal Family and Medical Leave Act (which applies to employers that have 50 or more employees).

Mandatory Overtime: What To Prepare For

Before you go ahead and pencil in all of your employees to work 60 hours next week, there are some things you should know. Employers do have the power to schedule overtime, but with great power comes great responsibility. (Thanks for the advice, Spider-Man.) 

Remember, work-life balance is crucial to your employees! Mess with that balance, and you could be left with a significantly smaller workforce. (Don’t forget about the mutiny!) If you truly have to have your employees work mandatory overtime, you’ll want to follow best practices. 

Here are some things to consider:

• Give plenty of warning. Although it’s not required, you should give your employees a heads up if you’re going to need them to stay late. This way they can arrange their plans and prep their family at home if needed.
• Scheduling conflicts. Some employees may have commitments they can’t change that would make them unable to work the extra hours. If you plan to make the extra work a requirement for certain positions, you may experience unwelcome turnover.
• Employee burnout. Working overtime and excessive hours can lead employees to burnout. If you need them to work overtime, consider giving them the next day off or other schedule adjustments to make up for it.
• State laws. Labor laws vary among different states. For example, some states have a limit to how many hours can be worked in a day.

Thinking of Implementing Mandatory Overtime? HR Can Help

Mandatory overtime requires some serious compliance knowledge. An HR expert can help you navigate you the regulations of overtime work. Compliance demands placed on your business can be confusing and time-consuming. HR professionals keep you compliant with state and federal labor laws and protect your employees and keep them happy.

Unfortunately, most business owners don’t understand how complex FMLA is. Employers – you should be aware of FMLA, whether it applies to your small biz and how to comply with it. To help you understand how FMLA works, here are the 4 top questions we hear about FMLA from small business owners and our top tips on how to stay compliant.

What is FMLA?

FMLA is short for the Family and Medical Leave Act. It’s a federal law that provides employees with unpaid, job-protected leave and benefits continuation in certain circumstances. The federal Family and Medical Leave Act (FMLA) allows employees to balance their work and family life by taking reasonable unpaid leave for certain family and medical reasons. When unique experiences arise in an employee’s personal life, they are eligible for a leave of absence under this Act. The idea behind the law is this: under FMLA, an employee can prioritize their health and family needs with guaranteed job protection and continuation of benefits in their absence.

FMLA is a federal law that allows employees to take 12 weeks of unpaid leave in a 12-month period under specific circumstances. (Plus, they may be eligible for more leave time if caring for an injured or ill service member.)

But it’s not like all of your employees can just take a 12 week leave of absence. To qualify for leave, employees must meet certain criteria and be leaving for a covered reason – like leaving to take care of a terminally ill spouse or adopt a child.

4 Top FMLA FAQs For Small Business Owners

The Family Medical Leave Act gives employees peace of mind while dealing with big changes in their personal life. But how does it work and do you have to offer FMLA to your employees? See our top questions about FMLA for small businesses, answered. 

1. Does the Family Medical Leave Act Apply to Small Businesses?

FMLA is enforced when businesses meet certain criteria. If your business has more than 50 employees within a 75-mile radius, the FMLA must be offered – making you a covered employer. (This includes various business types including public, private, and nonprofit.)

A covered employer under the FMLA is any company that employs 50 or more employees within a 75 mile radius for 20 or more workweeks in the current or previous calendar year.

Covered employers have to provide FMLA leave. Keep in mind that your business does not need to have 50 employees at the time an employee requests FMLA leave. Instead, this number means that you must have had 50 employees in 20 or more workweeks in the current or previous calendar year! Plus, part-time employees must be counted for FMLA purposes.

If your company has under 50 employees

Companies that employ over 50 people are required to comply with the FMLA, but that doesn’t mean they’re the only ones allowed to provide this benefit. Small businesses under 50 employees have the option to offer the FMLA, but they aren’t required to by law. Integrated or joint employers – you may need to offer FMLA. Having multiple small businesses with less than 50 employees at each doesn’t exclude you from FMLA criteria. 

Integrated employers typically own multiple branches or locations of their business.

Joint employers typically use an employee sharing or leasing service, otherwise known as contract staffing.

Make sure you are counting the employees at each branch if they exist within 75 miles of each other, and if the total adds up to over 50; you must fulfill the FMLA requirements.

2. When do employees become eligible for FMLA benefits?

Here’s the kicker. To take FMLA leave, an employee must:

1. work for a covered employer
2.  be an eligible employee
3. Use the leave for a “covered reason”

First and foremost, employees have to be working under a covered employer to consider taking leave under FMLA. These employees should have proven commitment to the company.

Second, to be eligible for FMLA leave, employees must have been employed for at least 12 months and a minimum of 1,250 hours at the same company. After these requirements are met, they will then need a valid reason for taking leave.

Third, the employee must have a qualifying reason they are able to take leave. The Family Medical Leave Act covers eligible reasons such as:

• Birth and care of a newborn child
• Adopting or foster care placement of a child
• Caring for a spouse, child, or parent experiencing a serious health condition
• A personal health diagnosis that interferes with job performance
• Any qualifying exigency due to active military family member on duty

When dealing with these life events, the FMLA encourages taking a break from work to prioritize family and health needs as they are time sensitive and ideally temporary.

3. How Does FMLA Work?

It’s important to note. As an employer, you cannot require that your employee use all of their 12 weeks continuously! Meaning that employees don’t have to take their time off in one consistent period. Under FMLA, an employee is entitled to 12 workweeks of leave during any 12-month period – but that leave time can be broken up. 

The FMLA provides that leave may be taken intermittently or on a reduced leave schedule under certain circumstances.

Intermittent leave is FMLA leave taken in separate blocks of time due to a single qualifying reason. For example, an employee may take intermittent leave for all doctor appointments associated with treatment of serious health condition (such as chemotherapy for cancer.)

A reduced leave schedule is a leave schedule that reduces an employee’s usual number of working hours per workweek or hours per workday. An example of a reduced leave schedule is an employee who is recovering from a serious health condition and is not strong enough to work a full-time schedule.

4. Can An Employer Deny an FMLA request?

Employers can only deny a request for valid reasons and the same goes for employees: requesting leave can only be approved for special circumstances. Without proper notice, employers can deny the FMLA request. It is rare for employers to deny these requests, but there are some circumstances that could include:

• Invalid reason for leave request
• Failure to authorize contacting health care provider
• Lack of proper notice
• Inability for an employer to fill the position if they have less than 50 employees
• Employer doesn’t need FMLA criteria

If your employee falls ill long-term, it’s essential to have a plan in place. While the FMLA leave can assist with any burdens in the meantime, businesses should be prepared for “what if” circumstances.

HR Can Help

Handling FMLA compliance can be tricky. (It’s the Rubix cube of taking time off!) If you’re unsure how to handle an FMLA request, reach out to an HR professional. They can guide you through eligibility requirements for you and your employees, while avoiding any legal issues.

Let HR guide you through a FMLA request. Facilitating FMLA correctly will help you build trust with your employees. Once your employees know you care about their well-being, they’re more likely be engaged and go above and beyond for your company goals. This is one compliance Rubix cube you’ll want to solve.

If you recently learned that your employee has one foot out the door, you may be wondering what your next step should be. (Back away from the big red button!) Before firing them, you need to check your options. 

Read our guide on whether you can terminate an employee for looking for another job. Plus, see our top alternatives to termination.

Can You Terminate an Employee for Looking for Another Job?

While it isn’t expressly prohibited by law, we wouldn’t recommend it. You might be surprised by how many of your employees are looking for other opportunities—either actively or passively—while still doing good work for your organization. 

A recent report by Joblist found that almost 75% of currently employed workers would consider leaving their company for a better role somewhere else. If you start terminating everyone who is keeping an eye out for the next opportunity, you may find yourself with a significantly smaller workforce. But don’t let that scare you! There are plenty of great ways to retain your top talent.

Legal Repercussions of Terminating an Employee Who is Looking for Another Job

Legally, you’re able to terminate an at-will employee in practically every state, except Montana (where termination after 6 months must be “for cause.”) Keep in mind certain types of employer-employee relationship don’t follow the at-will standard. A contract employee, for example, would not be at-will.

“At-will” employment refers to a rule that the employment relationship may be terminated by the employer or the employee at any time, with or without cause, without notice, for any reason (allowed by law) or no reason at all.

If you were to simply terminate an employee for looking for another job without any disciplinary actions or attempts to remedy the problem, the employee could claim they were terminated for an illegal reason. If you truly have to terminate the employee, use our our involuntary termination checklist to make sure you stay compliant.

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Our advice? Instead of terminating this employee, you should consider talking with them to determine why they are looking for work elsewhere and what might motivate them to stay. See our recommendations below on what to do if your employee is looking for a new job.

The Best Alternatives to Termination When An Employee is Actively Looking for Another Job

Make an Attempt to Retain the Employee

Your employee may be fishing for a counteroffer. If they deserve a raise or a promotion, research compensation in your industry and consider making the offer. (In this situation, communication is key!) Find out what matters most to your employee and whether you can convince them to stay. In this competitive market, flexible schedules and remote work options are the perks many professionals value the most.

Turn the Situation Into a Positive

Instead of terminating the employee, ask why they are looking for a new job. Use this opportunity to assess how you can improve your business and company culture. This information can help you to better engage your workforce and increase retention! Here are few of the most common reasons employees look for a new job:

• Culture challenges like lack of work-life balance. – Does your company culture need to be revamped? 
• Compensation concerns like insufficient salary or inadequate benefits package.
• Career roadblocks like unclear growth plans or company instability.

Remember that your other employees are closely watching how you handle the situation. If you simply fire the employee looking at a new opportunity, it could affect the level of trust with your other employees. Plus, there’s always a risk that an involuntarily terminated employee could turn the situation into an avoidable lawsuit. That’s why you need a HR hero – someone who can rescue your business from a wrongful termination case before it happens.