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Takeaway
Company size doesn’t make HR compliance easier; it alters it. Enterprises and midsize companies generally have more resources than small operations, but they don't have less regulatory responsibility. Learn about the federal laws that affect most companies with 100 or more employees, as well as four best practices to simplify HR compliance.
Whether you operate a midsize business or an enterprise, you’ve overcome a fair share of challenges. Even so, you’ll be gearing up for the next level of growth — or just refining the compliance strategy that supports your vast workforce. But no matter how many resources your organization has, it’s not free of HR compliance issues.
Hurdles affecting startups are distant memories to your company. Now, you face challenges related to:
- taxes
- audits
- health care coverage
- employment laws
These obstacles aren’t insurmountable, nor do they have to hinder ongoing success. With the right preparation, even stretched-thin HR teams can approach HR compliance laws proactively and with confidence.
What is HR compliance?
Regardless of a company’s size, HR compliance defines how a company adheres to local, state and federal rules affecting employment. It can cover treatment of individual employees, like with benefits administration or leave policies. On the other hand, HR compliance can relate to widespread practices, such as adhering to a minimum hourly wage.
What is the role of HR in compliance?
HR teams represent a company’s primary defense against noncompliance and the resulting fines or other penalties. Since HR manages so many of the variables impacting employees, it’s vital for the department to understand and guard its organization’s regulatory responsibility.
And no matter what software you use, your company is responsible for its compliance — not the tech provider.
Why is HR compliance important for businesses with 100 or more employees?
A larger company size doesn’t ease HR compliance responsibilities; it alters them. While a small business has fewer employees to monitor, a single labor law violation may hit it harder. In contrast, a midsize company or enterprise’s staff creates potentially higher vulnerability.
According to the U.S. Census Bureau, over 105,000 businesses employ 100 or more people. These companies feel pressure from both ends of the HR compliance spectrum. Each has its own set of unique challenges, but all of them should consider:
- data privacy
- benefits regulations
- documentation issues
- inconsistent policies
- penalties for noncompliance
With so much at stake, midsize and large businesses can’t rely on outdated, insecure, paper-based processes. The right HR compliance software and self-service technology help adhere to federal and local laws by:
- automating data flow
- generating insightful reports
- monitoring legislative updates
- empowering employees to manage their information
- scaling with a business’s needs
In the evolving compliance landscape, an organization’s HR tech must adapt to new guidance and challenges. Anything less won’t help sustain your ongoing success.
What laws and regulations matter to midsize businesses and enterprises?
Compliance varies across industries and local governments. HR professionals should consult the applicable resources for these requirements.
Still, there are national rules relevant to businesses with more than 100 employees. Here are five of the most common:
1. EEO-1 Component 1 Report
This report annually requires midsize businesses and enterprises in the private sector to provide specific data about their workforce, including:
- staff size
- job categories
- race/ethnicity
- sex
Information about when EEO-1 reports are collected each year is available on the U.S. Equal Employment Opportunity Commission’s website.
2. Worker Adjustment and Retraining Notification Act (WARN)
WARN requires midsize and large businesses to give their employees a 60-day notice about mass layoffs and certain plant closings. Employers aren’t required to provide notice to workers who have worked less than six months in the last year or less than 20 hours a week.
Because WARN isn’t exclusive to manufacturers, HR professionals and managers should verify with the U.S. Department of Labor if their workplace is covered.
3. Family Medical Leave Act (FMLA)
FMLA allows certain employees to take unpaid leave for family and medical reasons without losing their health care coverage. Some qualifying events are:
- childbirth
- adoption or foster care
- serious health concerns
- dependent health emergencies
- military orders
Since its introduction in 1993, FMLA has changed a lot. Plus, most state governments have legislation inspired by the act. Midsize and large businesses need to juggle both as their operations scale.
4. Fair Labor Standards Act (FLSA)
FLSA sets requirements for:
- minimum wage
- overtime
- hours worked
- record-keeping
- child labor
Similar to FMLA, local authorities may enact their own rules regarding FLSA, especially around minimum wages. Additionally, the Department of Labor regularly raises the cost of penalties for noncompliance, even if the requirements stay the same.
5. Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA allows employees and their families to temporarily keep their health insurance due to:
- involuntary job loss or change
- reduced hours
- divorce
- death
- other life events
While employees are still required to pay their premiums — up to 102% — qualifying events allow for coverage extensions of up to 36 months.
One of the biggest challenges of COBRA compliance is knowing when an employee qualifies and how they should be notified. Automation helps growing businesses avoid COBRA’s bite.
HR compliance best practices for midsize businesses and enterprises
With so many laws — and even more penalties — compliance can’t be an afterthought. HR professionals have to consider not only current legislation, but upcoming trends, too.
Luckily, the right tech keeps HR teams from constantly interpreting endless legal text and stressing over compliance woes. Here are three ways to stay compliant:
1. Monitor
It’s not hard for federal laws to feel overwhelming, especially if they’re susceptible to change. But the right strategic framework makes it easier, especially when it’s supported by effective software. Look for a tool that monitors national and local updates for HR compliance peace of mind.
2. Mitigate
The risk of violations, audits, penalties and subsequent litigation shouldn’t be taken lightly. A compliance misstep can stop a thriving midsize business or enterprise in its tracks. Proactive planning, organization and secure data storage help employers:
- meet annual requirements
- respond to government inquiries
- file claims
- and more
3. Report
Compliance is already a challenge; providing detailed reports is another hurdle. And manually drafting reports every year, quarter or whenever a specific law requires them adds an extra burden.
A robust reporting tool helps reduce a time-consuming piece of compliance by automatically building reports without losing accuracy. Consider an option that also adapts to legislative updates and provides reports in government-required formats.
4. Automate
The key to maintaining enterprise-level compliance lies in streamlining and simplifying HR. Tech like self-building payroll and automated time-off requests eases HR and managers’ administrative burden. This allows enterprises to take a centralized and coordinated approach to ethics and compliance across multiple business units.
How do midsize businesses or enterprises maintain compliant payroll?
Payroll poses a number of compliance pitfalls. In fact, 4 in 5 HR professionals said they’re stressed by the process, according to a OnePoll survey commissioned by Paycom. The top issues they cited were:
- miscalculated overtime
- incorrect tax deductions
- late expense reimbursement
- failed direct deposits
What if there were a way to easily address these issues and look ahead to new challenges? Luckily, midsize businesses and enterprises already have the people to make it work: employees.
Paycom’s self-building payroll experience guides your people to find and fix errors before payroll runs. HR spends less time stressing over noncompliance and retroactive, rushed corrections because employees verify the data they know best in advance. Empowering workers to manage their own payroll boosts accuracy and streamlines the process, allowing HR to consider compliance at a higher level.
Explore Paycom’s single software to see how it scales with the compliance needs of your business.
