Corporate Payroll Services

Running a business comes with many perks and challenges, but there is one ever-present challenge … HR compliance.

What is HR Compliance

HR compliance is the work of ensuring your employment practices conform to federal, state, and local laws.  This work requires learning which laws apply to your organization and understanding what they require you to do, which is easier said than done.

HR compliance requires knowledge, skill, and cooperation.  You have to be able to decipher legalese, know where to go to ask the right questions, and create policies and procedures which minimize business risk.  You have to ensure everyone, from the executive team to newly minted managers, know what they can and cannot do.  You have to conduct investigations and enforce your rules consistently.  And all this is just the bare minimum—necessary, but not enough to create a truly successful culture.

The work of compliance is never entirely done.  Not only do new legal requirements appear on the regular, but, as you’ll read below, compliance obligations are often unclear.  While some compliance obligations are definitive, others are unresolved, and a good number of laws require you to make a judgment call.  Let’s look at each of these in turn.

Why HR Compliance Can’t Always Be Assured

Some employment laws take the form of “Do this” or “Don’t do that.”  The requirements may be simple, like minimum wage, or complex, like FMLA, but either way there’s usually no real question about what you need to do or not do.  Compliance with these laws is pretty straightforward:

  • Don’t pay less than the minimum wage
  • Provide leave to eligible employees
  • Continue their health benefits (if applicable),
  • And return them to their position when their leave ends.


As long as you’re clear on the details, you’re not likely to lose sleep wondering if your policies and procedures are compliant.

Sometimes, however, those details are unsettled.  Lawmakers don’t always specify everything a law requires before it passes or takes effect.  Even when laws seem clear, trying to put them into practice often raises a lot of questions.  Keeping up with the latest official guidance takes time and persistence.  It can feel like a marathon, when what you want is a quick sprint to the answer.  You have other demands on your time, after all.

Finally, a lot of employment laws have standards you have to follow, but they don’t tell you how. Neither the IRS nor the DOL, for example, tell you whether your workers are employees or independent contractors—unless there’s an audit or complaint.  Instead, these agencies publish tests with general criteria which you use to make case-by-case determinations.

The Americans with Disabilities Act (ADA) works this way, too.  Under the ADA, an employer is required to provide reasonable accommodations to employees with disabilities, with a few exceptions.  One of the exceptions is the accommodation doesn’t create an undue hardship on the employer’s business.  The basic definition of an undue hardship is an action which creates a significant difficulty or expense.  Although the law provides factors to consider in making this determination, the onus is on you to decide whether an expense or difficulty from an accommodation is significant.  And, ultimately, your conclusion could be challenged in court.

Why HR Compliance Looks Like This

In the United States, HR compliance seems convoluted and confusing because, well, it is.  It’s the result of three competing and ultimately incompatible philosophies.  Government action with respect to employment has tried to empower workers and afford them certain rights, protections, and freedoms in the workplace, all while preserving the employer’s control over their business.

We can see this balancing act in the differences among state laws.  Some states prioritize the right of owners to control their workforces and are loath to restrict this right through legislation.  Other states act out of what they see as a duty to secure the rights of workers. Imposing obligations on employers doesn’t bother them.

We also see this balancing act in the way which employment laws tend to set parameters rather than dictate exactly what employers must do.  You can pay employees whatever you want, so long as you pay at least the minimum, offer an overtime premium when applicable, and meet equal pay requirements. You can theoretically terminate employment for any reason or no reason at all (though we don’t recommend it);  but you can’t fire someone for an illegal reason.  Even laws which require a new practice, such as paid leave, allow flexibility provided the minimum conditions are met.

Takeaways for HR Compliance and your Business

First, when you’re assessing your compliance obligations, understand not all compliance obligations are clearly delineated or settled law.  Unsettling as that may be, it’s how our system has been set up. In those cases, you’ll have to weigh your options and the risks involved, and then make a decision.  Sometimes you may need legal advice in addition to HR guidance.  Remember, though, despite all the many employment laws on the books and in the imaginations of legislators, the system is designed to keep employers in charge of their work and workplaces.  You can’t eliminate all risk, but by understanding the nuances and open questions, you can significantly minimize it.

Second, document your actions and decisions.  It only takes an employee filing a complaint for enforcement agencies to get involved, but you are better protected if you can quickly and clearly explain to them the reason for your actions.

Third, evaluate whether your policies, procedures, and practices are satisfactory to employees. No employment law gets written in a vacuum, and no law is truly inevitable.  The Fair Labor Standards Act came to be because workers and the general public felt labor standards were unfair.  Today we wouldn’t have people pushing for predictive scheduling laws if the general perception was schedules in hospitality, retail, and restaurants were already sufficiently predictable.  Harassment prevention training wouldn’t be mandatory (where it is) if sexual harassment weren’t widespread.

Fourth, lead by example.  Make good employee relations a key part of your brand and competitive advantage.  Employees have higher expectations today than they used to.  Meet those expectations and motivate other employers to do the same, and you may find the compliance landscape of the future is less winding and boggy than it could have been.

Finally, spend some time each day on our HR Support Center to learn about your compliance obligations.  Our laws section breaks down federal and state employment laws in a way laypeople can understand, and the News Desk keeps you up to speed on the latest compliance obligations and contingencies you should consider.  HR compliance is an art, and the first step to mastering it is learning what it entails and how it works.

To learn more about our HR Support Center and how it can benefit your business or to schedule a free demo, fill out the form below.