What is HR compliance?

Human resources teams juggle many responsibilities: ensuring businesses follow labor laws, supporting organizational goals, and fostering a workplace where people thrive. It’s a lot to manage, but at the heart of it all is HR compliance—a cornerstone of effective people management that helps companies meet legal requirements, uphold fairness, and create a positive environment for every team member.

In this article, we’ll explore what HR compliance means, why it’s essential for your business, and how to implement best practices to build a strong compliance strategy. 

What is HR compliance?

HR compliance is the process of ensuring that company policies and actions consistently adhere to the labor laws in your jurisdiction. Compliance-related tasks include developing, documenting, and maintaining ongoing alignment with business goals and legal workplace requirements. 

Why is HR compliance important?

Following all applicable laws and regulations proactively ensures that you will: 

• Protect your people: Workplace safety regulations protect your people from physical harm, while anti-discrimination laws protect them from bias and maltreatment
• Avoid legal penalties: Violation of workplace laws and regulations may lead to legal penalties, including costly fines
• Support a positive company culture: HR compliance is legally required, but it’s also an essential ingredient for building a positive company culture, reputation, and team member experience 

Consequences of HR noncompliance

HR noncompliance can have both legal and cultural ramifications. Failure to comply with legal regulations may lead to hefty fines, legal actions, and operational disruptions. Non-compliance also has direct consequences for your people, like delayed payroll, mishandled benefits, or unsafe working conditions. Prioritize regular compliance audits so your team feels protected and valued.

<<Download your complete HR compliance checklist.>>

Important laws to know for HR compliance

Let’s review some HR compliance workplace laws and regulations in the United States and the United Kingdom.

US laws impacting HR compliance

1. Fair Labor Standards Act (FLSA): The FLSA establishes regulations for minimum wage, overtime pay, recordkeeping practices, and youth employment. This law applies to private sectors and federal, state, and local governments.
2. Affordable Care Act (ACA): The ACA’s primary goal is to ensure access to affordable health insurance. Employers with over 50 team members must offer health insurance to full-time employees and their dependents. 
3. Family and Medical Leave Act (FMLA): Under the FMLA, covered employers must offer unpaid, job-protected leave to eligible employees for specified family or medical reasons. It also protects group health insurance during leave periods.
4. Title VII of the Civil Rights Act: Title VII of the Civil Rights Act prohibits discrimination in the workplace based on race, color, religion, national origin, and sex (including sexual orientation, gender identity, and pregnancy). It also prohibits neutral job policies that disproportionately exclude minorities and requires reasonable accommodations for team members (such as leaves of absence or time off for religious holidays).
5. Occupational Safety and Health Act (OSHA): OSHA establishes health and safety standards and avenues for enforcing them. It also provides resources for research, information, education, and training in occupational safety and health.
6. Equal Pay Act (EPA): The EPA prohibits the practice of offering different levels of compensation based on sex for jobs that involve equal skill, effort, and responsibility. It covers all types of compensation, including benefits, bonuses, and overtime.
7. Americans with Disabilities Act (ADA): The ADA protects Americans with disabilities from discrimination across various areas of public life, including employment, public accommodations, transportation, and government services. It prohibits discrimination against job applicants or team members with disabilities and requires reasonable accommodations.

UK laws impacting HR compliance

1. Employment Rights Act 1996: The Employment Rights Act established employment rights in situations such as dismissal, unfair dismissal, parental leave, and redundancy. It consolidated existing laws and extended the personal rights of workers.
2. Equality Act 2010: The Equality Act protects people from discrimination based on age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. It prohibits direct and indirect forms of discrimination, harassment, and victimization.
3. Health and Safety at Work Act 1974: The Health and Safety at Work Act set out provisions to protect workers’ health, safety, and welfare. It has specific regulations for industries with high-risk environments like construction or chemical manufacturing.
4. National Minimum Wage Act 1998: The UK’s National Minimum Wage Act established the minimum wage in 1988 and was then amended in 2016 to require a National Living Wage for workers over 25.
5. Data Protection Act 2018 and General Data Protection Regulation (GDPR): The Data Protection Act implemented the UK’s General Data Protection Regulation (GDPR). The GDPR establishes requirements for how organizations handle personal data, enhancing people’s rights and giving them more control over what happens to their own data.
6. Working Time Regulations 1998: The UK’s Working Time Regulations establish legal working hours, rest breaks, workday length, and paid leave. For example, the weekly working hours limit is 48, but workers can choose to opt out.  
7. Employment (Allocation of Tips) Act 2023: The Employment (Allocation of Tips) Act ensures fair distribution of tips, gratuities, and service charges. Employers must pass on all tips after standard tax and National Insurance deductions and share them transparently and equitably.

<<Download your complete HR compliance checklist.>>

How HR compliance efforts support your business

Let’s review the different areas of HR compliance and how they support your people and your business.

Security and privacy

HR teams work with confidential people and company data, making security and privacy a key part of HR strategy. Make sure you: 

• Secure documents: Safeguarding personal data is essential for protecting your team members’ privacy and maintaining compliance. Carefully store employee files, training documents, performance reviews, medical records, and any demotion or termination documentation to avoid legal penalties. 
• Protect background check information: Employers and potential employers must protect the privacy of future and current team members when seeking background checks. Obtain written authorization, inform your people of its purpose, provide them with a copy, and take steps to protect their personal information.
• Safeguard payroll and other data: Use reliable cloud data and password protect your payroll data to protect your people’s personal information, such as salary, health data, or home addresses. Review laws like the US’s Health Insurance Portability and Accountability Act (HIPAA) to learn about regulations and how your team can meet those standards.

HR compliance best practices in security: 

• Implement data protection measures like choosing reliable data storage solutions with strong data encryption
• Train your team in data protection measures
• Develop clear policies for data access to limit unauthorized log-ins
• Conduct regular data and process audits to stay up-to-date with regulations 
• Collaborate with your IT department to determine the best tools and strategies to protect data

Workplace fairness and equity

Avoid compliance issues with: 

• Leave of absence policies and processes: Some team members may need to take leaves of absence for the birth of a child, adoption or foster care, caretaking duties for an ill family member, or their own serious health condition. Compliant policies help your people feel supported and stable.
• Fair pay practices: Wage discrimination occurs when a team member is paid unfairly for reasons unrelated to their performance or job responsibilities. This can include wages below minimum wage, unpaid overtime, or discriminatory pay practices based on factors like race, sex, religion, national origin, disability, or age. Fair pay practices foster a positive workplace by boosting morale and productivity, enhancing retention, strengthening a company’s reputation, and helping avoid costly legal consequences.
• Adequate health coverage: Healthy teams lead to higher productivity and lower costs related to turnover and administration issues. Adequate health coverage (such as the requirements laid out in the US Affordable Care Act) helps your people get the medical treatment they need to bring their best selves to work.
• Workers’ compensation: Mismanagement of workers’ comp might include delayed care for medical treatment, denial of treatment, unnecessary additional medical exams to dispute disability determinations, or mishandling paperwork to cause delays in compensation. Companies with well-managed workers’ comp policies can avoid fines and see an increase in productivity, a decrease in administration costs, and better morale.
• Final wages: Unpaid final wages are when an employer fails to issue a final paycheck after a team member leaves or is dismissed. Safeguard your people’s well-being and avoid the extra costs of lawsuits by providing timely final wages. 

Fair workplace best practices:

• Review your compensation strategy regularly to ensure continued pay equity to help attract a diverse workforce and reduce turnover
• Offer flexible work arrangements to help your people balance work and home life and improve retention
• Provide mentorship programs to ensure all team members have access to education and skill-building opportunities that may boost their careers
• Communicate with your team consistently about any changes in pay structure or policies

Hiring and training

Your current team members aren’t the only ones you can protect. Fair hiring practices ensure all applicants are treated with care and respect and help you attract the best candidates for the organization. Make sure to: 

• Avoid discriminatory job listings: Discriminatory job listings may include age- or gender-specific requirements, mentions of race, specified religious preferences, language related to nationality, and references to physical capabilities. Review postings carefully and consult HR compliance experts to create fair, inclusive job listings that comply with requirements like Title VII in the US.
• Ask compliant interview questions: Interview questions may be noncompliant if they ask about age, race, ethnicity, religion, marital or family status, disability, work or visa status, pregnancy, or plans to start a family. Non-job-related questions may also be noncompliant, including questions about personal habits or relationships.
• Late new hire reports: New hire reporting helps prevent fraud in government benefit programs by providing accurate employment data. Child support agencies also use this information to ensure parents fulfill their payment obligations. 
• Classify workers correctly: Misclassifying workers can deny them fair pay, benefits, and protections like workers’ comp, paid sick leave, unemployment insurance, and union rights. For example, misclassifying a full-time team member as an independent contractor is a common issue.
• Provide proper training or orientation: Improper training may lead to safety hazards. Train your people on safety protocols, offer approved safety equipment, and provide adequate supervision.

HR compliance best practices in hiring: 

• Develop EEO statements to demonstrate your commitment to diversity and equality in hiring
• Regularly review legal regulations related to hiring and update processes as necessary
• Review employee onboarding materials to determine if policies or training need updates
• Work closely with your team when drafting job postings so you can benefit from multiple perspectives

Insurance and benefits 

A strong compensation strategy balances the company’s budget with your goal to attract and retain top talent. Make sure you:

• Offer compliant benefits packages: Protect your people from benefits discrimination based on race, sex, age, or other protected characteristics. Ensure compensation packages include benefits that meet the Affordable Care Act’s requirements for health coverage. 
• Communicate benefits details clearly: Your people need clear and accurate information about their plans so they understand coverage, costs, and enrollment procedures. Provide an employee handbook and walk new joiners through their benefits.
• Properly manage benefits administration: Increase team satisfaction and retention with properly managed contributions and deductions, addressing team member concerns, and timely paperwork completion.

Insurance and benefits best practices:

• Understand company policies and team member needs so you can propose benefits packages that balance priorities
• Communicate benefits registration and administration policies clearly
• Collect feedback from your people to determine whether your benefits contribute to business outcomes and a positive company culture
• Consider offering alternative benefits like mental health support, wellness programs, flexible work arrangements, or student loan assistance
• Automate processes with HR software to minimize human error in benefits administration

Workplace safety

Strong workplace safety policies protect your people’s physical and emotional well-being and, as a result, build team trust and a positive company culture. Make sure you:

• Meet OSHA standards: In the US, OSHA enforces worker safety protection to avoid preventable injuries and illnesses. Protect your workers’ health with personal protective equipment (PPE), training, and regular equipment monitoring.
• Handle potential workplace hazards in a timely fashion: Employers have a responsibility to monitor safety equipment, procedures, and any safety issues that may arise during work. Protect your workers from injury or illness by addressing and communicating potential hazards to your team.

Workplace safety best practices:

• Schedule on-site OSHA consultations to identify potential hazards
• Display the OSHA Job Safety and Health poster prominently in the workplace
• Train your people on workplace safety and provide regular training programs to review and update safety education
• Conduct regular testing (such as checking air quality) to check that your workplace meets OSHA’s safety standards
• Provide protective gear for free if workers need the equipment to do their job
• Record injuries and illnesses in the workplace and notify OSHA (notification must occur within eight hours for work-related deaths and within 24 hours of work-related inpatient hospitalization, amputation, or loss of an eye)
• Display OSHA citations and workplace illness and injury reports in the workplace

Immigration

Ensuring compliance with immigration laws does more than prevent the risk of hiring unauthorized workers—it builds trust with your team and enhances your ability to attract international talent. Stay compliant by:

• Preventing discriminatory treatment or harassment: Build a healthy, supportive work environment by encouraging company-wide equal treatment for all regardless of actual or perceived immigration status. HR can handle incidents of harassment and provide proactive education for team members.
• Comply with immigration hiring laws: Companies can only hire a US citizen or national over a noncitizen if both candidates are equally qualified and if the employer has fully considered all other applicants’ candidacies.
• Prevent document abuse: Avoid requesting documents beyond what is required for establishing valid work authorization (i.e., green card or birth certificate).

Documentation best practices:

• Regularly review immigration laws to stay up-to-date
• Establish clear hiring policies for new hires
• Check employment eligibility with Form I-9
• Train staff on inclusion and the management of sensitive immigration information
• Consult an immigration attorney to ensure you comply with all relevant laws
• Give notice to your people if you suspect Immigration and Customs Enforcement (ICE) may conduct a raid so they know their rights

Diversity, equity, inclusion, and belonging

Diversity, equity, inclusion, and belonging (DEI&B) policies are essential to maintain a fair and equitable workplace. You’ll also see a positive impact on your business with new perspectives and creative solutions to problems. 

You can encourage DEI&B by:

• Increasing awareness of DEI&B benefits: Help people understand the importance and benefits of DEI&B by explaining how initiatives align with company values and business goals
• Expand recruitment practices: Conduct research during the hiring process to learn where you can find candidates who fit the company culture and care about DEI&B 
• Provide adequate training: Offer semi-annual or quarterly workshops on DEI&B can educate your people on DEIB best practices and help them maintain positive habits

Workplace safety best practices:

• Educate leadership on DEIB practices and the importance of seeking various perspectives in the workplace
• Provide bias training to managers to increase their skills in combating unconscious bias
• Give every team member a voice with anonymous surveys or town hall-type meetings
• Measure employee satisfaction with surveys to determine if any changes might improve company culture
• Create an inclusion council to advocate for and sponsor underrepresented groups

<<Download your free HR compliance checklist here.>>

Ensure a fair and safe workplace with strong HR compliance policies

Navigating the complexities of HR compliance is essential for ensuring the longevity and integrity of your organization. Staying informed, implementing best practices, and utilizing HR technology helps you effectively manage compliance and safeguard your company against potential risks, both now and in the future.

Ultimately, prioritizing the wellbeing, rights, and fair treatment of your team members not only fosters trust and engagement but also lays the foundation for long-term organizational success.

HR compliance FAQs

What does an HR compliance specialist do?

An HR compliance specialist is a third-party expert on employment law, health and safety regulations, and other compliance issues. You can hire an HR compliance specialist to audit company policies and processes to ensure consistent compliance.

What are HR compliance reports?

HR compliance reports provide an overview of company policies and practices that violate or may violate employment law or workplace safety regulations.

What is employee compliance?

Employee compliance is when your team members adhere to all the laws, regulations, and company policies that relate to their position. HR teams can help people remain compliant by training them in all the laws related to their jobs and suggesting ways to conduct business ethically.

Are there certifications for HR compliance?

If you want to stand out as an HR compliance specialist, you can seek a certification geared toward HR compliance. The University of Southern California offers a Human Resources Law and Compliance Certificate, and many general HR certifications include training on employment law and HR compliance.