Mid-sized firms are making people compliance a top priority. While this is not an easy task for any business, there are some tools and procedures that can assist.
Even the most seemingly innocuous of events can cause a devastating negative reaction in an organization. Imagine a minor warehouse accident takes place, in which a person is injured. They may claim it was the company’s fault for not providing training. Even if the company did, yet did not have records in place, their compliance has failed, and the results will hit their bottom line hard. Legal battles, payouts and fines may ensue. While global companies may be able to survive the fallout, smaller companies will not. This is why mid-sized businesses are making people compliance their top priority.
What Are the Foundations of People Compliance?
People compliance, also known as HR compliance, is the practice of following regulations that have been set by authorities. Compliance itself can take many different forms and will differ depending on your business. It may be set by the government, industry bodies, or regulatory bodies.
While some of these will cover how you operate your business, people compliance specifically focuses on those who work for you. From the moment you hire someone and do their background check, the information you have begins to age. What certifications could have lapsed in that time? What convictions could the person have gained that could prevent them from legally doing their job?
All of this makes compliance vital because it is the company that is inevitably liable for any errors. A survey by FloQast in 2024, named ‘Exploring Strategic Compliance: The Next Frontier,’ stated that 47% of compliance professionals are focused on simply finding a better, easier way to alleviate the legal requirements of compliance. However, only 16% are willing to go beyond checking a box and adopt a strategic approach.
Finding the Tools to Facilitate People’s Compliance
Compliance is tough, but there are many different procedures and software packages that can help you with it. One essential tool is something that automates the tracking of hours worked and paid time off. Factorial HR is one solution that provides a range of capabilities; among the most vital for day-to-day compliance is robust vacation and PTO tracking. Allowing automation of your PTO process provides real-time visibility of absences, holidays and the approval system. All of this can be used on a mobile app, with real-time notifications as requests come in.
A handy calendar overview also gives you an upcoming view of who will be absent in the future, and the ability to add others to approve time off. Even your company’s own policies and compliance can be added, based on location type, contract and more.
Tools such as this can keep you in line with documentation regarding compliance for hours, wages and associated benefits. Factorial itself even highlights the hidden cost of getting paid time off wrong. It states that the average time accrued and owed to employees is $1,898, with 24% of them not feeling comfortable with asking for time off. This leaves a total of 55% of time off going unused by employees.
The Must-Know Areas of People Compliance
Certain areas of people compliance should be known by all Human Resources workers. They are the foundation of labor laws in the United States.
Workplace Discrimination
Workplace discrimination ensures that people can work in fair, equal-opportunity environments. They ensure people are not discriminated against based on their race, religion, age, gender, sexuality, if they are pregnant, or any number of other factors. Certain compliance issues based on workplace harassment may also fall under this category.
Several laws are in place to ensure this happens. This includes the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Equal Pay Act, and the Pregnancy Discrimination Act.
Wages, Hours, and Benefits
The Fair Labor Standards Act is the main law that dictates compliance with wages and hours. This provides a minimum wage, establishes a 40-hour working week and lays down the laws for child labour and overtime. It also provides the Family and Medical Leave Act, which provides paid leave for new parents. This area makes a vacation and PTO tracking software programme essential.
Benefits are any entitlement that a company must provide to workers. This can be healthcare-related, pension plans, insurance for continued healthcare should the person leave employment and certain health accountability areas related to data privacy. All of these are changing, showing the importance of continuous people compliance.
Workplace Safety
If a worker has an accident on your premises, then you need to ensure that your health and safety compliance is up to scratch. This is covered under the Occupational Safety and Health Act (OSHA), which oversees workers’ compensation schemes and disability programs.
Immigration
The Immigration and Nationality Act ensures that people hired can legally work in the United States. I-9 forms are essential in maintaining compliance in this area, which is changing even during the time of writing.
The Results of Failing With Compliance
An example of how this can go wrong can be found with the upmarket London department store Harrods. Last year, in the busy holiday season, they hired a recruitment agency to oversee their warehouse staffing. The Guardian newspaper reported that incorrect payments regarding holiday pay had left the company owing thousands to individual workers, who had been underpaid.
Concerns had been raised almost two years before the problem was published in newspapers and came amidst concerns that discounts to corporate clients were being offset by payments to staff. The Qatari Wealth Fund that owns the department store is now in talks with the hiring firm to redress payments, but much of the damage has already been done, including legal fees and possible reparations for lost earnings on top of that owed.
Added to this is the damage caused to the brand. Speaking of the incident, Marysia Cousins, a senior HR business partner at consultancy Pace HR, told HR magazine that “The Harrods case shows how third-party failures can seriously damage a brand, reputation and employee trust, despite the errors being with the third-party.”
The Paths of Rescreening and Continuous Monitoring
Addressing the issue of people compliance can be conducted in two ways. These are rescreening and continuous monitoring.
Rescreening involves doing a complete check on a person at regular intervals. This would be the same type of check you do when you first hire them. It could be performed as a regular part of the calendar, taking place annually, or it may just apply if a person takes on a new role.
The other option is continuous monitoring. This operates as an almost constant screening process and it draws from national databases to keep records up to date. Should anything happen or change, then the employer is notified straight away.
Both have strengths and weaknesses. When it comes to rescreening, more control is given to the employer. They can decide when to perform checks and who to perform them on. It also allows them to be specific about which type of check they want to undertake, with broader searches and follow-ups if needed. The downside is that they only give you information based on that moment in time, and need to be repeated.
Continuous monitoring benefits from its simplicity; once set up, it can be left to run, reducing the burden on HR staff. They will only need to do something when the system notifies them of changes. Its downside is that it relies on national databases, which can be slow to get information. They also have a limited scope, and as they are continuous, the price can mount up compared to rescreening.
Why Is People Compliance Vital for Mid-Sized Firms?
Compliance is vital for all companies. Yet mid-sized firms often have an increased burden that they have to deal with. Essentially, they are like a middle manager, having to organise issues from below, while dealing with pressure from the top.
Many of these companies now have increased numbers of staff, which in itself amps up the workload. Yet their compliance will drift into that required by large-scale companies, often global in scale. This costs time and money, though without the budget and workforce. Compliance becomes harder to instigate.
Failing to do this can also have much bigger ramifications. Large-scale companies may be able to shake off the odd fine for non-compliance, or even use astute marketing to paper over the damage to their brand. Yet with medium-sized companies, this can be fatal. Thus, compliance is vital to ensure sustainability and to build their workplace culture and brand identity.
Overhauling Your Mid-Sized Business Compliance Protocols
Compliance is not an option; it is a necessity. As someone in charge of a mid-sized business, this burden will weigh more heavily on you than it does on larger companies, and even some smaller ones that don’t have the levels of staff or share of the market. Any errors could really damage your business in a growth phase, so prioritise.
Compliance does not need to be a burden. Get the right tools in place, like paid time off and vacation trackers, along with selected software for other areas. Decide if you will do screening sporadically or opt for continuous monitoring. Then allocate individuals who are in charge of each area.
The impact will be huge. Compliance is not just built to enforce. It will also foster a positive workplace culture, with people getting the right work-life balance. This could change the way you work, reduce staff turnover and increase productivity.