Complex rules, major administrative responsibilities, zero margin for error: When it comes to complying with employment legislation, the burden for U.S. businesses is substantial. After a year of major legislative developments — and with a new presidential administration in place — the need to stay on top of compliance is perhaps more pressing than ever.
Small and medium-sized businesses in particular must manage their resources wisely and can find it increasingly difficult to allocate the staff — and the time — to manage all of their company’s obligations for complying with today’s workplace requirements. Larger businesses, with thousands of workers employed across state lines, face the challenge of ensuring HR teams are following the right rules. It’s no wonder managing compliance can feel overwhelming.
But it doesn’t have to! Implementing a few best practices can make it easier to master the growing compliance burden and protect your company.
Here are three best practices I recommend to help you master compliance.
Automate your compliance processes
Not only are government agencies producing numerous rules and regulations, but businesses also have to deal with the increasing complexity of those regulations. Within the last year, legislation like the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act impacted business-related concerns like payroll tax credits, paid leave provisions and federal grant availability.
The Affordable Care Act (ACA) is another great example. It’s definitely a highly complex piece of federal legislation. Its nuances make manually tracking and storing information a challenge for organizations large and small. And given the possibility that specific ACA laws and regulations will change over successive administrations, the challenge of keeping up is unlikely to go away anytime soon.
Enter automation.
Automation improves a business’s efficiency and takes some of the guesswork out of complex processes. Specifically, the right system should be able to automate tasks like tracking garnishment payments and sending required COBRA correspondence. Through automation, businesses gain something truly valuable: peace of mind in a world of ongoing change.
Proactively find areas of risk
The risk of noncompliance is real and felt most notably in steep costs, both financial and reputational. In a 2018 Ernst & Young report, 12% of organizations reported mistakes in their I-9 records. In a period when many employers are taking advantage of the FFCRA’s tax credits to help cover the costs of employees’ paid sick leave, for example, accuracy of data — in this case, Form 941 data — remains crucial.
Take the Fair Labor Standards Act (FLSA) as another example. The FLSA requires employers to pay employees an hourly rate that meets the current federal minimum wage standard of $7.25 per hour, which was set in 2009. However, where state minimum wage laws establish a higher hourly minimum wage standard, an employee’s pay must meet the higher minimum wage amount. Currently, the push for minimum-wage increases is well underway. Seven states have already passed laws to bring theirs to $15, and many municipalities across the country have established their own requirements as well. As national attention toward this trend increases, so does the importance of organizational attention toward the FLSA’s provisions applying to wages.
Not only do businesses have to contend with rising penalties associated with noncompliance, but to stick with the FLSA example, class-action and wage-and-hour lawsuits add a painful one-two punch. These blows can leave marks.
But wait; there’s more: Litigation lawyers with splashy ads and the ubiquity of online information actually encourage employees to file claims against their employers.
Businesses that have the ability to quickly audit their workforce by gathering easily accessible and accurate data can proactively manage their risk of noncompliance and find opportunities for improvement.
Be the ultimate resource for your C-suite
Big regulations can mean big changes for businesses. Take, for example, the CARES Act provisions allowing Social Security tax deferral, which ended Dec. 31, 2020. It may sound simple enough, but this particular process of deferring taxes had more complexity than met the eye. Aside from employer-side taxes, there was also an option for employee-side Social Security tax deferral. However, this required employers to voluntarily opt in, which raised questions about the ultimate responsibility for repayment of those taxes — questions that were not to be taken lightly.
That’s why it’s so important to provide your C-suite with the data and information they need to make the best decisions for your company.
Experienced executives rely on key event alerts; intuitive, automatic reporting; and legislation overviews to keep them at the top of their game. Additionally, those types of tools give HR leaders crucial time to prepare solutions and points of reference when presenting recommendations in the boardroom.
HR technology can drastically improve a business’s efficiency and output. Automation features like Push Reporting® allow companies to schedule reports for things like expiring employment authorization documents and ACA status changes.
I know when it comes to leading your company through intensifying government regulations and new legislation, you don’t simply want to make it — you want to master it. With these tips and the right HR technology, you can be well-positioned to do just that.
DISCLAIMER: The information provided in this blog is for general informational purposes only. Accordingly, Paycom and the writer of the above content do not warrant the completeness or accuracy of the above information. It does not constitute the provision of legal advice, tax advice, accounting services or professional consulting. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other professional services.
