Proper workforce compliance does more than keep you out of legal trouble. It helps you build a more productive workplace, keeps staff morale up by ensuring fairness, and streamlines operations with standardized procedures. It also fosters a positive brand image, solidifying your relationships with staff and clients.
Despite these benefits, an HR.com study found that only a third of organizations have well-established compliance policies that their employees understand. Additionally, more than a quarter of organizations aren’t confident in their ability to manage any compliance challenges that arise.
To help steer clear of this statistic, you can start putting a clear workplace compliance program in place that promotes a safer, stronger, and more legally sound workplace.
The two types of workforce compliance
There are two types of workplace compliance: internal compliance and external compliance. Internal compliance is about following your organization’s own internal policies and codes of conduct. This includes your house rules, like your company’s social media policy or how you keep records.
External compliance is everything required by entities outside of your business—the laws, regulations, and industry standards you must follow to operate ethically and legally. This includes must-dos like filing your business taxes on time and meeting workplace safety standards.
How workforce compliance requirements vary
External workforce compliance requirements vary across organizations based on factors like industry, location, and company size. Regulatory requirements are typically divided into two categories: federal, state, and local regulations and industry-specific regulations.
Federal, state, and local regulations
Federal, state, and local laws are external regulations that govern how your organization operates. Here are a few examples of each:
- Federal regulations: Businesses must comply with the Fair Labor Standards Act (FLSA), which sets the federal minimum wage, youth employment standards, and overtime pay. The Occupational Safety and Health Administration (OSHA) ensures safe and healthy working conditions, and the Americans with Disabilities Act (ADA) ensures equal employment opportunity for people with disabilities.
- State regulations: Some states require paid sick leave for employees, have different rules for overtime pay, and set a minimum wage higher than the federal minimum wage. Some states require paid rest and meal breaks during shifts.
- Local regulations: Some cities, counties, and municipalities have laws, such as fair scheduling practices, that require employers to give employees adequate notice of their work schedules. They may also enact laws to protect employees from wage theft.
Industry-specific regulations
Workforce regulations also vary widely by industry. Some examples include:
- Healthcare: Healthcare organizations with access to protected health information must follow specific data privacy regulations outlined by the Health Insurance Portability and Accountability Act (HIPAA).
- Construction: There are specific OSHA rules for construction workers that cover everything from fall prevention and scaffolding to electrical work and respiratory protection.
- Staffing: Staffing companies that focus on specific industries, such as healthcare staffing agencies, may work under unique regulations, including state-specific licensing requirements.
Maintaining workforce compliance requires awareness from numerous angles, and it’s worth the effort to satisfy federal, state, local, or industry-specific regulations.
Real risks: Why workforce compliance is essential
Workforce non-compliance can put your entire business at serious risk of financial, reputational, and operational damage. But when your organization prioritizes compliance, you can avoid:
- Hefty fines and penalties
- Loss of revenue due to business disruptions or closures
- Lawsuits and associated legal costs
- Increased costs due to corrective actions
- Data security breaches
- Criminal charges
- Loss of clients or staff
Staying compliant is more critical now than ever. Workforce lawsuits are not only increasing in number but also in cost. For example, FLSA-related wage and hour violations are now the top employment-related claim. The 10 largest settlements for wage and hour violations added up to $574 million, and the cost of these lawsuits is only expected to grow.
5 best practices for ensuring workforce compliance
Move past the “doom and gloom” of regulatory compliance and consider the positives. Approaching compliance with organization and intention can instill the confidence that comes from knowing you are meeting legal requirements and local labor laws.
Here are a few best practices to start building a solid compliance strategy.
- Create clear policies and procedures
Workplace compliance and communication go hand in hand. Your internal policies need to be clear, consistent, and accessible to all employees at all times. They should be updated regularly to account for changes in external compliance regulations, and HR should go over the documents during employee onboarding.
A key best practice is to create an employee handbook outlining company policies, procedures, and expectations so that employees can find their obligations and rights in the same document. Companies should store the document somewhere accessible, such as the employee intranet.
- Build a compliance culture
Compliance requires buy-in beyond your leadership team. It’s important to spell out company policies and embed them into your company culture. You can do this by creating a top-down culture of accountability.
Your leadership team can model compliance behavior by clocking in and out on time, taking scheduled rest breaks, and using paid sick leave when they’re sick. You can also focus on cultivating a safe environment where employees feel empowered to voice compliance concerns to keep minor issues from escalating.
- Conduct regular audits and assessments
To ensure consistent compliance, carry out regular audits for potential compliance gaps and areas for improvement. Your internal team can conduct these audits, and an external auditor can perform them to provide an unbiased assessment of your compliance program.
Once you have the results of your external and internal audits, develop a game plan for addressing any changes that need to be made or built into your existing policies.
- Stay up to date on workforce regulations
We know. This one isn’t as simple as it sounds. With ever-changing laws and multiple regulatory bodies to track, staying current on employment laws can be demanding. But you can’t comply with changes you don’t know exist.
To stay current on the regulatory landscape, try some of these tactics:
- Subscribe to human resources newsletters and journals like SHRM or HR Dive.
- Follow government and regulatory websites like the U.S. Department of Labor and local city and state sites.
- Attend webinars and conferences on emerging legislative changes.
- Network with other HR professionals or within industry-specific associations to share knowledge.
- Use workforce management software
When it comes to compliance, modern tools can make a world of difference. Workforce management software can simplify the compliance process by automating tasks, keeping audit trails, and providing real-time data that can help you monitor if compliance policies are being followed.
Workforce management software is a great tool for workforce compliance because it already stores all your workforce data, including time and attendance tracking. Some systems, like Teambridge, feature geofencing time clocks, which can help protect an organization’s compliance by ensuring employees are clocking in and out at their worksite, verified by GPS location.
These systems may also include scheduling tools, workforce analytics, and more. Establishing a single source of truth for this information streamlines data accuracy and is also key for compliance.
Benefits: Using compliance as a competitive advantage
Workforce compliance isn’t just good for risk mitigation. A solid compliance strategy can actually give you a competitive advantage in the eyes of your clients and staff. It can build client confidence in your data management, boost employee trust and engagement through greater transparency, and establish your business’s reputation as reliable.
A strategic compliance program can also streamline your operational efficiency with clear procedures that help employees work more productively and stay on task. For example, some internal compliance procedures may involve using checklists to ensure nothing slips through the cracks.
Embrace technology-powered compliance management
All organizations face workforce compliance risks. The key is to be proactive about setting up compliance and risk management programs.
This approach can benefit your business beyond dodging lawsuits. With proactive compliance, you can build stronger, more productive teams, cultivate a culture that welcomes feedback, and earn greater client confidence.
Workforce management software, like Teambridge, simplifies compliance with automation and detailed record-keeping. You can maintain a digital trail of work hours, paid time, overtime, paid leave, wages, schedules, and more.
Better yet, the system’s composable nature lets you customize the platform to match your existing workflows, so you don’t need to change your operations to adjust to new tech, as is often the case with other workforce management solutions. Instead, the software is built to fit your needs.
Let’s hop on a call to talk about how Teambridge can help strengthen your workforce compliance.
