Why HR Needs to Stay on Top of Increasingly Changing Legal Issues

Mark Floyd is a partner with the Cleveland law firm Walter & Haverfield.
Mark Floyd is a partner with the Cleveland law firm Walter & Haverfield.

By Mark S. Floyd

In the past, the HR department simply provided operational support and performed back-office personnel tasks in most workplaces. Today’s competitive and highly regulated marketplace has created significant changes in the human resources function.

HR has evolved beyond a worker bee existence into securing a significant advisory role within an organization. These days, senior leadership relies heavily on your department to ensure that the company’s overall business strategy is consistent with the many complex laws and regulations that govern the workplace environment.

Each year, new legislation is passed or substantively changed, bringing about more concerns and issues for human resources professionals and highlighting the importance of remaining compliant in a heavily regulated workplace environment.

The HR function must ensure that companies successfully operate by effectively dealing with the many compliance issues affecting the modern workplace – employment discrimination; harassment; immigration; employee privacy; unemployment; workers’ compensation; age, race and sex discrimination; and employee benefits, to name only a few.

Why compliancy?

As each of these areas continues to change, the HR function must evolve and change as well. It’s imperative that you avoid complacent, resistant-to-change attitudes by staying informed of the constant changes affecting labor and employment law. Take care to proactively revise and implement policies on a timely basis in order to efficiently assure compliance with the increasingly changing regulatory and legislative landscape that governs the contemporary workplace.

There’s no doubt that HR capabilities extend beyond compliance. On any given day it’s likely that you and your team spend time doing interviewing and hiring, employee documentation, job descriptions, staff and management training programs, performance evaluations, and implementing various organizational development programs.

With such an extensive list of responsibilities, it’s possible to overlook the importance of staying informed of changes in labor and employment law. However, a well-informed and reactionary HR department is likely to operate more efficiently and cost effectively than one that favors a complacent and resistant-to-change attitude. Proactively implementing policies that align with changes in labor and employment help your company avoid liability for being noncompliant.

When working to remain compliant, be sure to avoid the tendency to engage in cost/benefit analyses that assess the benefits of refusing to comply with the law with the costs associated with compliancy. Fully understand that the ramifications of noncompliance, which can include various penalties, risk of civil action, and lost profits, often are greater than the costs associated with remaining compliant. Knowing the impact that noncompliance may have on the overall success of the business is essential for understanding and appreciating human resources’ role within the compliance framework.

Auditing your needs

In your compliance efforts, adopt appropriate checks and balances systems, such as an audit, help you assess your level of compliance. Audits examine the effectiveness of the HR department’s current policies, procedures and systems as they relate to the latest changes and developments in labor and employment law.

The simplest approach to an audit is to develop a checklist of the most heavily regulated compliance areas in labor and employment law. These include hiring, wages and hours, benefits, employee relations, employee rights and workers’ compensation, to name only a few.

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The checklist should probe whether each key compliance area conforms to the laws that govern them. Update the checklist periodically but also be sure to do it any time substantive changes to existing laws or newly enacted laws become available. Additionally, because so many of the key compliance areas are regulated by employee threshold (i.e., 15 or more employees, 20 or more employees, etc.), you also should make updates in accordance with the business’ ongoing growth and development.

If your department lacks the staff to implement and execute compliance audits, consider hiring consultants that specialize in Compliance and Ethics (C&E) programs. Many large organizations increasingly have begun to hire C&E professionals to develop an audit checklist and other programs designed to prevent and detect illegal conduct. Such proactive planning may prove to be well worth the investment in the long run as C&E professionals will ensure compliance with the law and make sure that the your department understands and follows it.

Long-term compliance

In the past year or so, the U.S. Department of Labor (DOL) implemented one such program that is committed to ensuring that companies comply with labor and employment laws: Plan/Prevent/Protect. This new federal regulatory enforcement strategy targets all employers that fall under the purview of the Occupational Safety and Health Administration (OSHA), Mine Safety and Health Administration (MSHA), the Office of Federal Contract Compliance Programs, and the DOL’s Wage and Hour Division. It requires them to develop a compliance action plan and other programs that address certain employment law compliance issues within each agency’s portfolio.

The DOL’s three-part Plan/Prevent/Protect strategy involves the creation of a compliance plan to identify and mitigate the risk of legal violation; implementation of the plan throughout all levels of your organization in a way that prevents legal violations; and careful monitoring, or protection, to ensure that the plan’s objectives are being met.

While the DOL’s regulatory enforcement strategy is not a requirement for all employers, it is one example of a compliance action plan that any human resources department could easily implement.

In fact, any action plan, whether it is based on the DOL’s Plan/Prevent/Protect strategy or one that is created internally, would add another layer of regulatory compliance to any already existing measures taken by your department. Such a plan also would serve as an additional reminder of the importance of remaining compliant with labor and employment laws.

By creating an effective, long-term compliance action plan that becomes a vital part of the company’s culture, your department and your company’s senior management are more likely to ensure that successive leaders and employees will continue to follow the plan and remain committed to the vision of achieving compliance in an increasingly evolving workplace environment.

Mark S. Floyd is a partner at the law firm firm Walter & Haverfield LLP in Cleveland. As practice head of the firm’s Employment Litigation group, he has more than 25 years of experience in defending management in such cases as alleged discrimination, wrongful discharge, covenant not to compete and trade secret litigation. Contact him at 216-978-2913, or at -mfloyd@walterhav.com.