What is HR Compliance?

By TechFunnel Contributors - Last Updated on May 14, 2020
HR Compliance explained

HR compliance is when policies(1) and procedures are defined to ensure that your employment and work performance demonstrate a thorough understanding of applicable laws and regulations, while also being aware of the company’s objectives of larger human capital resources.

How Does HR Compliance Work?

The way that HR compliance works are that everyone within the workplace must follow the rules and be aware of all the compliance issues that the company may encounter. For more insight about this, head over to our article, “Roles and Responsibilities of the HR Compliance Officer.”

Why HR Compliance is Important?

It is pretty simple. Every organization needs to run on a tight ship. Here’s why:

  • It keeps you on track

    Believe it or not, companies face several complexities when it comes to HR compliance. Whether if it’s schedule requests, paid time off, or payroll, every employee within a workplace needs to comply with regulations coming from HR because it will help your company grow and stay organized.

  • Helps maintain work relationships between employers and employees

    One of the biggest concerns with HR Compliance is that every company should provide fair recruitment policies that prevent discrimination against other employees. It’s important that every employee has the obligation to be treated equally in the workplace.

Steps To An Effective HR Compliance Program

Here are 10 steps that will effectively help you with your HR Compliance Program: 

  1. Come up with your own HR policy manual

    Every company needs to create guidelines consisting of HR policies. It’s important that said guidelines are set up in a way where the rules fit well into your company as well as keeping these regulations up to date.

  2. Keep a record of your decisions

    Keep a record of all the updates and any other decisions that you make when creating your HR compliance program. Good organization and documenting each update can allow you to look back on previous decisions.

  3. Ask for advice—the good kind

    It’s okay to ask for help and seek advice from others. When creating your HR Compliance Program, consider the advice of people that have experience with HR compliance such as an HR Compliance Officer. Seeking advice will allow you to create and improve work regulations that can fit into your company’s workplace.

  4. Educate yourself

    The main thing to do before creating or updating HR policy manuals is to be aware of how things function within the system. With every task being assigned, comes a set of instructions that must be followed. It’s better to brush up and research what you should know before making any decisions regarding work regulations.

  5. Train your managers

    The first people you want to train about these types of things are your managers. Obviously, in the workplace, managers have to oversee the employees and make sure that all rules will not be violated.

  6. Train your employees

    Your employees should be trained in the same policies as your managers. Anything involving HR Compliance must be universally taught to anyone working for an organization.

  7. Partner with an Human Resource Management Solutions Provider

    To get a head start with this process, consider a solutions provider to help organize your HR management. Just like dating, you have to find the right fit for you. Check out these types of HR management software to see which one would be the appropriate provider to manage HR for your company.

  8. Always keep your Ears Open

    Listening carefully about what’s being said and done can improve HR compliance. You want to actively listen since people nowadays talk more than listen to their peers. If you want to be on the right track with an effective compliance program, always keep your ears open.

  9. Give feedback

    Because honesty is the best policy, be open when giving comments and criticism. It is never a good thing to sugarcoat opinions, especially anything relevant to HR.

  10. Know the laws

    Follow the rules or face the consequences. Every system has laws and with HR Compliance, it’s important to be aware of the laws that revert back to all the compliance issues that HR stresses about when creating an effective program.

HR Compliance Issues

  • Sexual harassment

    One of the most common issues that employees are currently facing in the workplace today. Whether it be harassment or sexual assault, it is important to prevent such incidents from occurring and make your workplace a safe environment.

  • Federal W-4/withholding

    It is required by law that a W-4 must be filled out. This will determine how much federal tax deducts from your salary, and it’s just a little too important to not forget about it.

  • Minimum wage and overtime

    It’s no secret that minimum wage fluctuates every now and then. However, these are major issues for employees who work minimum wage and overtime due to the fact of lacking compliance with regulations that the company’s issues.

  • Leaves of absence

    This can be a tricky situation in the workplace. Requesting for leaves of absence from work need to have serious and legitimate reasons. Sometimes this can be taken advantage of, which is why it’s important to provide a good reason to request a work leave.

  • Recruiting

    The stakes are high for the job market nowadays. There are a large number of passive candidates with an increase of expectations for talent. Recruiting can be challenging because of the competitive environment that it brings during job searching.

  • Training

    Every employee within the workplace must be trained at what to do with their position. It’s important that employees within your company adapt to the regulations and comply with the policies established by the company.

  • Non-discriminatory hiring

    Everyone should feel safe at their workplace. This would entail workplaces hiring anyone that is of a different race, gender, religion or even living with a disability.

  • Improper salary deductions for exempt employees

    This applies to employees that fall under the Fair Labor Standards Act. when deducting salaries, it’s crucially advised for employers to understand certain circumstances of an employee such as filing for absence due to jury duty or other personal reasons.

  • Benefits compliance

    All of your employees in the workplace should have a decent amount of benefits. The more benefits that are offered for your employees, the better the reputation of your company’s HR department. However, we don’t live in a perfect world. Therefore, it’s still important to provide benefits for your employees no matter how big or small your company is.

  • Employers shared responsibility enforcement

    Since the Employer Shared Responsibility is under the Affordable Care Act, failing to comply with this issue will lead to a penalty of $2,570 per full-time employee towards employers who are responsible for enforcing Employment Shared Responsibility.

  • Legalization of Marijuana

    The legalization of cannabis has been passed in eight states including Washington D.C. Despite that, employers are no longer allowed to prohibit cannabis because of its protection under the federal Controlled Substances Act.

The next step that you should consider is how to conduct an HR Compliance Audit. This will truly get the process going as well as determine the progress of preventing noncompliance issues.

How to Conduct an HR Compliance Audit

Probably one of the hardest things aside from creating a manual filled with policies is conducting an HR Compliance Audit.

  1. Identify Your HR Audit Scope

    Remember all the details about your company’s procedures, practices, and policies. This will give you an idea about what you are working with.

  2. Decide who will conduct the Audit

    When conducting an HR Compliance Audit, you have to be smart with choosing the right person for the job. This means that the person that you decide should at least have experience of this process as well as your company from the inside out. I’ll give you a hint: HR professionals.

  3. Conduct the Audit and Document Findings

    This would be considered the middle of your auditing process, which consists of two parts. The first part is an evaluation of the company’s HR policies as well as the HR department’s distribution areas.

    The second part when conducting this audit is the reviewing of current HR indicators such as the number of unfilled positions, turnovers, legal complaints, and even the fill-up of new positions.  It’s a tedious process but having this type of insight about HR Compliance will reassure you on all things involving the HR department.

  4. Review the Results

    After findings and audits have been reviewed, look over your results carefully. Keep an eye out on what needs to be fixed and improved. Yes, leave some room for the positive portions, but what’s important is to have better results the next time around.

    Watch out for inadequate personnel files, inaccurate time records, form I-9 errors, prohibited attendance policies, and misclassifications of exempt and nonexempt positions.

  5. Resolve Any HR Compliance Issues ASAP

    Things won’t go anywhere unless there’s a solution. It’s already known that there are several issues involving HR Compliance. However, trying to get to the bottom of it and providing options to resolve any issues as soon as possible would keep you on track when conducting an audit.

Remember, you want to cover all bases within this program. Every law and rule is important, but never leave out any of the details. Here is how you can determine if you are on the right track.

Frequently Asked Questions about HR Compliance

Q. What is Legal Compliance in HR?

A. This means that everybody must comply with all necessary laws and rules that are applicable to the workplace.

Q. What are The Legal Compliance Issues facing HR Departments?

A. Well, to keep it very minimal, there is workplace harassment, federal law changes, and the Affordable Care Act, local laws, state laws, policies involving employee leaves, recruiting, data security, and the feat of cyber breaches.

Q. What is the HR Compliance Tax?

A. Basically, another word for payroll taxes. This would include federal income and state income taxes.

Q. What are Common HR Compliance Reports?

A. Any reports involving applicant lists, performance reviews, OSHA 300, 300A and 301’s, compensation summaries, and EE0-1’S,

Q. What is HR Compliance Nondisclosure?

A. This is where you, the employer, should ask employees to sign nondisclosure agreements. This can protect your company as well as safeguard any sensitive information that’s distributed within the workplace.

Final Thoughts

Taking this insight into HR Compliance into consideration will come a long way. Keep in mind the HR auditing process as well as the establishment of internal and external policies that make up your whole company. When adding company regulations, HR compliance laws should be made clear for employees to abide by.

One more thing to consider is how will one conduct an audit for HR compliance. This contributes as a major role in processing HR Compliance audits because it allows you to oversee your strengths and weaknesses with HR Compliance in the workplace.


Aileen Padua is an aspiring social media coordinator. She is currently majoring in Advertising at Fresno State University. With her understanding of the power of social media, Aileen is passionate about preserving and enhancing the image of one’s reputation in the public eye.

TechFunnel Contributors | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicated to sharing unbiased information, research, and expert commentary that helps executives and professionals stay on top of the rapidly evolving marketplace, leverage technology for productivity, and add value to their knowledge base.

TechFunnel Contributors | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicate...


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