what is HR compliance

HR compliance is the practice of aligning business policies with laws, regulations, and guidelines. It encompasses a broad range of operations, including hiring, onboarding, and payroll.

Although human resources are central to the process, every department in a company should play a role in maintaining HR compliance.

Why is HR compliance important for a business?

Maintaining HR compliance with applicable laws is essential to business stability and growth. It protects your company from legal risks such as lawsuits and penalties which affect your bottom line. Non-compliance can also cause reputational damage and erode trust among employees and customers.

HR compliance also ensures the well-being of your team. Following regulations like the Fair Labor Standards Act (FLSA) and foreign equivalents helps you to meet the right standards and create a supportive work environment.

What’s the role of HR compliance in the global workforce?

HR compliance serves as a critical foundation for businesses operating across multiple countries. These strategies help you navigate the complexities of international employment, avoid legal pitfalls, and maintain ethical standards. You can also address global challenges such as visa regulations, international labor standards, and cross-border privacy concerns.

However, the role of HR compliance goes beyond mere adherence to laws. Effective strategies allow you to incorporate global best practices into company policies and remain competitive on an international scale. You can attract top talent, retain employees, and foster a culture of equality and respect regardless of location.

Now that global workforces have become standard, there are also specialized solutions like Deel for remote, dispersed teams. Our global HR compliance management supports international HR strategies and ensures you meet legal requirements in over 150 countries.

What are the key areas of HR compliance?

HR compliance involves most aspects of the business, especially the following areas:

Immigration and work authorization

When hiring abroad or relocating employees, companies must comply with visa requirements. You’re usually expected to employ workers for a specific purpose and meet a minimum salary threshold as well as adhere to local laws. If you’re acting as the sponsor, your business is also responsible for ensuring candidates follow the terms of their visa.

Many companies now outsource visa processes to specialized immigration services. With a global provider like Deel, you gain access to experts in multiple countries who can expedite applications while maintaining compliance. Deel Immigration also provides a platform for you and your employees to track your status and upload essential paperwork.

Hiring

Organizations must follow fair hiring practices when advertising positions, conducting job interviews, and selecting individuals for jobs. Recruiters may ensure they’ve accurately represented the work and treated candidates equitably.

Discrimination is a key area of focus. Your recruitment activities shouldn’t show any prejudice or bias towards specific candidates. For example, any job listings or interview questions that imply certain demographics will be more welcome than others could violate strict anti-discrimination laws.

Most country’s regulatory boards also insist on thorough background checks. It’s the company’s responsibility to ensure there are no issues that would prevent a candidate from working with them. However, you can use services like Deel’s background checks to screen applicants and verify their credentials.

See also: How to Conduct International Reference Checks: Compliance Considerations

Contracts and policies

When drafting policies, HR leaders have to align them with local and international employment laws. Afterward, they must guarantee teams not only have access to this paperwork but have read and understood it. Documents like job contracts and employee handbooks not only clarify the rules but also inform workers of their rights.

Many HR professionals now manage documents using consolidated HR platforms like Deel. We can provide expert legal guidance on policies like health insurance and paid time off. Using our employee self-service portal, you can let workers log in to view and sign policies from wherever they are.

Worker classification

Your hiring process must classify workers correctly and ensure their contracts reflect their status. The key issue is that you can only require independent contractors to follow certain guidelines or they’ll count as employees. For example, you can’t usually dictate when or where freelancers carry out their work.

Misclassification can lead to high penalties and legal action. That’s why it’s best practice to have experts review contracts before you ask new hires or contractors to sign them. Deel Contractor of Record not only checks documents but also assumes liability for any misclassified workers.

Employee compensation

Compliance with tax and labor laws affects a wide range of compensation policies, including:

• Minimum wage
• Payroll frequency
• Equal pay
• Work hours
• Overtime rates
• Paid time off
• Employee benefits
• Tax withholding

HR departments work alongside payroll to ensure their business complies with these regulations at the city, state, and country levels. If there are guidelines, they should strive to meet these as well. It’s standard to detail all these policies like entitlement to leave and healthcare benefits in contracts to demonstrate to workers that you meet all compliance requirements.

A global payroll provider like Deel allows you to automate some aspects of compliance. Deel Payroll calculates taxes and withholdings, files with authorities, and sends payments ahead of deadlines for more than 110 locations.

Data privacy and security

New data regulations have made safeguarding customer and employee data an essential part of HR compliance. HR can work alongside the IT department to create policies for:

Secure password management

• Recordkeeping
• User authorization
• How, when, and where they can use company devices
• Which departments have access to certain data

It’s also essential to choose software that complies with all relevant international guidelines and has robust security features. For instance, Deel Security has high-grade encryption, secure data storage, and single sign-on to protect any clients on our systems. All our features meet the stringent General Data Protection Regulation (GDPR) guidelines so there are no compliance issues with cross-border data transfers.

Workplace safety

Businesses are responsible for their workforce’s physical and psychological well-being. They must develop detailed health and safety policies alongside fostering a supportive work environment.

Occupational safety varies between roles as some work carries more physical risks than others. Providers like Deel can help you review and stay updated with compliance across different industries. We have expertise in such diverse fields as gaming, marketing, and ed tech.

HR teams must also protect their team from harassment, discrimination, and other unfair practices. Policies may outline what they consider to be inappropriate behavior, how to address it, and how to report it. They can also accept complaints, provide one-on-one support, and help companies navigate issues.

What are some HR compliance best practices?

A company can maintain continuous compliance through the following initiatives:

Conduct regular updates and checks

As laws and regulations evolve, HR must remain proactive by conducting regular reviews of company policies and practices. You need to check that every aspect of the business adheres to current legal requirements and reflects the latest industry standards.

To help companies stay updated with regulatory changes, Deel recently released our Compliance Hub. We deliver monthly insights into changing laws that could pose HR compliance issues.

Provide ongoing training

Training is crucial in keeping your team aware of their rights and responsibilities under various laws and regulations. Regular sessions ensure they understand the latest compliance requirements, from workplace conduct to data security. You not only minimize the risk of violations but foster a culture of accountability and respect within the organization.

Consolidate operations

A centralized HR platform like Deel can simplify and streamline compliance management. By having a unified system, companies can better manage and monitor activities as the software acts like a single source of truth.

Consolidating your system also enables you to enforce HR policies more consistently across different departments and regions. You can be sure every employee has viewed the same document and check whether they’ve read it in one place. If workers have questions, they can communicate with you via the platform.

See also: How to Transition to Centralized Compliance Software for Enterprises