Ten important HR compliance and practice actions every employer should know

By Michael J. Burns, courtesy of SBAM Approved Partner ASE
   
If you are a private-sector employer of any size, failing to set up a proper Human Resource function will sooner or later cost your company hard-earned money. The costs can come from fines, lawsuits and accompanying damage awards, or just the cost that poor people-related decisions have on productivity. The start of the new year is a good time to do a quick review of your HR practices against a list of what we consider to be the most fundamental practices needed today.

Compliance demands change with the latest developments in labor law, but there are basic compliance requirements that, for practical purposes, you can regard as permanent and therefore fundamental to a good HR function. The following recommendations for HR compliance practices, arranged in priority order, can apply to any size organization. But they are critical for employers that have more than ten employees:

1.Use an up-to-date and compliant job application for employment – A universal starting point for employment is the job application. Limit application form questions to identification, education and training and employment history. Be sure to exclude illegal questions about age, religion, race, disability, and gender.
 
2.Record keeping and reporting — At a minimum, employment-related records include hours worked, job-related injuries, pay records. In Michigan the employee personnel file is defined by the Bullard-Plawecki Right to Know Act. This law gives the employee the right to access his or her personnel file kept by the employer. Keep in mind that all records have a defined length of time they must be kept pursuant to any number of laws and regulations.
 
3.Keep all required government postings up in a place where employees and applicants can see them. Federal and state governments (and some municipalities) require certain postings be displayed. Required postings include the consolidated EEO and Michigan Civil Rights postings, Wage and Hour poster, OSHA/MIOSHA poster, Employee Polygraph poster, USSERA (military service) poster, and FMLA poster (if over 50 employees) to name just some. An organization’s employee population, industry and whether or not it does business with the federal, state or local government may dictate additional required notices. There are companies that provide posters for a price and will automatically send new ones when changes occur.
 
4.Make sure your jobs are properly classified for wage and hour purposes – Correctly classify your jobs under the Fair Labor Standards Act as 1) Exempt or non-exempt from minimum wage and overtime requirements, and 2) Employees or contractors. Do not succumb to the temptation to make someone a contractor who should be an employee. The Department of Labor, the IRS and state tax collectors are going after these violations aggressively.
 
5.Develop an employee handbook and make sure it is compliant – An employee handbook provides employees important information on the employment relationship, compliance with employment laws, and summaries of your HR policies and procedures. It also sets a tone for the company’s culture.
 
6.Maintain current job descriptions – A comprehensive, accurate job description does not just delineate job tasks and responsibilities. It is also the foundation for legal defenses against discrimination, wage and hour, disability and any number of other potential compliance and legal challenges.
 
7.Train your supervisors and managers – An employer’s front line of defense against lawsuits for discrimination and harassment (sexual and otherwise) as well as other wrongful employment actions is a corps of supervisors well trained in understanding illegal discrimination, harassment and retaliation. They must know how to refrain from illegal practices themselves and recognize and respond appropriately to them when they occur around them. Such training is not legally required in most states, but is a sound investment in proactively keeping employers on the right side of the law.
 
8.Always review a termination decision before you carry it out – Most Michigan employers are “at-will,” which means they have the right to terminate an employee with or without cause and with or without notice. However, a wise employer will review every termination decision before executing it to assess the risk of a wrongful discharge (or some other) lawsuit. Wrongful discharges are terminations that cross the law in some way, such as illegal discrimination or inconsistent disciplinary practices. Count to ten, review the situation with other level-headed managers and (if you have one) the organization’s HR professional. Review it with your legal counsel if you are even slightly unsure of your legal ground.
 
9.Maintain a safe and healthy workplace – This is a requirement of both federal and Michigan law. The more potentially dangerous the work environment, the more critical it is to have a comprehensive safety and health program.  Here is a partial list of employer requirements under OSHA and MIOSHA:

Employers must be knowledgeable about occupational safety and health. For more information contact your state occupational safety and health agency. In Michigan it is the Michigan Occupational Health and Safety Agency (MIOSHA) or the federal Occupational Safety and Health Agency (OSHA).

10.Avoid compensation and benefit problems – Differences in pay for employees doing the same job are not illegal if they are based on seniority, merit, or other job-relevant factors you have defined. Clearly communicate your benefit programs in your employee handbook and where required provide Summary Plan Descriptions (SPDs). Most insurance benefits are governed by the Employee Retirement Income Security Act (ERISA). ERISA secures both welfare (health, dental, vision, prescription, disability) and retirement (defined contribution and defined benefit) benefits and makes sure they are fair and economically sound. This law has both notice and recordkeeping and reporting requirements that employers must follow.

Do not prohibit or discipline employees for sharing their pay information with others.

These recommendations are basic Human Resource compliance practices that every employer should embrace. They do not guarantee freedom from all legal headaches, but they form a solid foundation for protecting yourself and your organization against legal challenges you are likely to encounter sooner or later.