With so many federal, state, local, and industry requirements governing the HR and employment landscape, the cost of noncompliance can be substantial for small businesses. Direct costs may include fines and damages, while indirect costs may involve lower employee morale and productivity, higher turnover, and a damaged reputation.
Here are best practices to help you meet your compliance requirements in seven key areas:
#1: Discrimination and Harassment
Federal, state, and local laws prohibit sexual harassment and protect employees and applicants from discrimination on the basis of age, race, color, religion, sex, national origin, disability, and genetic information, among other characteristics.
- Implement and enforce a strong written anti-discrimination and anti-harassment policy that is communicated to all employees
- Train supervisors on the law and how to identify and respond to policy violations
- Provide multiple avenues (supervisors, human resources, other managers) for employees to report misconduct
- Take all complaints seriously and conduct a prompt, thorough and impartial investigation of all complaints
- If you determine a violation occurred, take immediate and appropriate corrective action to remedy the situation and prevent it from recurring
Over the past few years, retaliation has become the most frequently cited Equal Employment Opportunity Commission (EEOC) complaint. Many federal, state, and local laws prohibit employers from taking adverse action against an applicant or employee because he or she engaged in activity that is protected under the law. Depending on the law, this may involve opposing an unlawful employment practice, participating in an investigation or lawsuit, or exercising another right granted to the employee by the law. In addition, there are prohibitions against retaliation for taking job-protected leave, filing workers' compensation claims, and for raising ethical, financial or other concerns.
- Include anti-retaliation provisions in equal employment opportunity, leave of absence, workplace ethics, anti-harassment, workplace conduct, and other policies where appropriate
- Encourage employees to come forward with complaints without fear of reprisal and provide a process for employees to report retaliation claims
- Provide supervisors and HR personnel with training on what types of conduct may constitute retaliation and how to respond if an employee files a complaint
The Occupational Safety and Health Act (OSH Act) requires covered employers to maintain a workplace that is free from recognized hazards. The OSH Act also includes specific rules for various workplace situations and industries, addressing issues such as personal protective equipment, hazard communication, and emergency preparedness. Workplace hazards can lead to hefty fines, result in missed workdays for employees, and lead to higher workers' compensation costs.
- Understand the safety rules that apply to your business (consider state, local and industry requirements as well)
- Consider developing a safety plan and/or forming a safety committee
- Analyze your workplace and eliminate or control recognized hazards
- Provide employees with safety training
- Investigate all safety-related incidents, including near misses
#4: Wages and Overtime
The Fair Labor Standards Act (FLSA) and many state and local laws set a minimum wage for non-exempt employees. Under the FLSA, non-exempt employees must also receive overtime pay (1.5 times their regular rate of pay) whenever they work more than 40 hours in a workweek. Some states require overtime in additional circumstances, such as when the employee works more than 8 hours in a workday. Failure to properly pay overtime and misclassifying employees as exempt from overtime are two of the most frequently cited wage and hour violations.
- Understand the federal, state, and local wage and hour laws that apply to your business
- Ensure that you have an accurate and reliable timekeeping system that accounts for all hours worked
- Pay non-exempt employees at least the minimum wage per hour and overtime whenever they work more than 40 hours in a workweek (or other threshold, as required by state, local, or industry rules)
- Carefully assess all employee classifications to ensure that exempt employees truly meet the criteria required to qualify for an exemption.
Note: The Department of Labor recently proposed revisions to the federal exemption tests. Final regulations are expected in 2016.
#5: Leave of Absence
Depending on your size and location, you may be required to provide, among other types of leave, family and medical leave, paid or unpaid sick leave, military leave, voting leave, crime victims leave, and pregnancy leave. These laws typically provide employees with paid or unpaid time off for certain qualifying reasons as well as job and benefits protection while out on leave.
- Understand the federal, state, and local leave laws that apply to your business
- Create written leave policies that address, among other things, eligibility requirements, pay, benefits continuation, medical certification, advance notice, and job reinstatement
- Train supervisors on how to recognize and respond to leave requests
#6: Section 7 of the NLRA
Section 7 of the National Labor Relations Act (NLRA), which applies to all employers, gives employees the right to act together to improve their pay and working conditions (known as "protected concerted activity"). In recent years, the National Labor Relations Board (NLRB), the agency that enforces the NLRA, has decided a number of cases regarding the circumstances in which employer policies may infringe on employees' Section 7 rights. For example, the NLRB has consistently found that policies that prohibit employees from discussing their pay with co-workers violate Section 7. Social media and other policies have also faced scrutiny.
- Review policies and practices to assess whether they could expressly restrict, or could be construed to restrict, employees in the exercise of protected activity
- Update policies to reflect emerging NLRB guidance and include sufficient details and context to make it clear that the rules do not infringe on employees' rights
- Train supervisors on employees' Section 7 rights
#7: Documentation and Recordkeeping
Various federal, state, and local laws dictate which records employers must retain, for how long, and who can have access to those records. Beyond compliance with the law, effective documentation and recordkeeping procedures can help drive and support employment decisions. By contrast, lax procedures can result in fines and make it more difficult to defend employment decisions.
- Know what records you are required to retain and for how long
- Keep records of all employment decisions, including but not limited to disciplinary actions, performance reviews, merit increases, trainings, transfers, and promotions
- Establish a personnel file and a separate confidential or medical file for each employee
- Establish controls that prevent unauthorized access to employee records
- Develop procedures for properly disposing of employee records at the conclusion of the retention period