5 Regulatory Risks Quality HR Can Help You Avoid

Regulatory compliance can be deceptively risky for businesses to manage. Today, there are so many regulations to keep in mind, including data privacy, safety regulations, payroll and employee rights, and more. On top of that, regulations are frequently changing, and when businesses don’t keep up with those changes, they may not be aware of key risks.

Fortunately, quality and comprehensive HR can help you stay up-to-date and compliant with all the regulations that your business faces.

In this post, let’s go over some of the regulatory risks that a quality HR team can help you avoid:

Avoid Regulatory Risks with Quality HR

Here are some of the core regulatory risks and how quality HR helps you avoid this.

1. Wage & Hour Law

The Fair Labor Standards Act (FLSA) is a federal regulation set by the US Department of Labor that determines how employees should be paid and treated in their work. It sets out the federal minimum wage, the hours that employees can work, and what that should entail. Highlights of the FLSA include:

• A minimum wage of $7.25/hour, with some exceptions for tipped employees
• Overtime pay for nonexempt employees who work more than 40 hours per week
• A definition of “hours worked” as the time an employee spends at a prescribed workplace or on duty
• A requirement to keep a poster stating the requirements of the FLSA in the workplace
• Regulations about child labor

However, even if you have a good understanding of the FLSA, you also have to take state regulations into account. For instance, $7.25/hour may be the minimum federal wage, but New York’s state minimum wage is $15.50/hour — and $16.50 within New York City, Long Island, and Westchester County. As state minimum wages change, it’s important for your company to remain compliant.

2. Overtime & Exempt vs. Nonexempt Employees

There is a distinction between exempt and nonexempt employees that determines whether or not an employee is exempt from overtime pay. According to the Department of Labor, an employer is not required to give overtime pay to employees who meet all of the following requirements:

• Earn more than $684 per week
• Have a primary duty to “manage the enterprise, or [manage] a customarily recognized department or subdivision of the enterprise.”
• Regularly direct the work of at least two other full-time employees
• Have the authority to hire and fire employees or offer suggestions for hiring, firing, and offering promotions or advancement

If an employee meets all of these conditions, the employer is not required to pay them overtime, even when they work over 40 hours per week. However, if any of the conditions are not met and the employer fails to pay overtime, they could face dreaded fines for failure to comply with regulations.

3. Safety Regulations

Compliance with safety regulations is essential for a number of reasons, not just the fines and penalties your company could face for failure to comply. If you fail to ensure that your workplace is safe for your employees, you could also inadvertently cause injury to those who work for your company or to your customers.

Federal safety regulations are set out by the Occupational Safety and Health Administration (OSHA). They can be quite complex, as relevant regulations vary from business to business. For instance, a restaurant likely has different safety concerns from a construction site, which has very different safety regulations from a law office. But it’s important to know what regulations apply to your company and to meet all minimum requirements. Some universal guidelines include:

• Fire safety and exit route regulations
• Having an emergency action plan
• Having medical and first aid supplies on hand
• Having clear and unobstructed walking paths and safe working surfaces

4. Payroll

Payroll regulations are more complex than simply ensuring that your employees are paid on time and in full. There are tax considerations and deductions to keep in mind, such as:

• Social Security wage base

• Health FSA contribution limits
• Pre-tax contribution levels for 401(k)
• Tax deductions on not just the federal but state and local levels

It’s also crucial that wages be calculated correctly, including overtime pay, which means having proper documentation to back up your calculations.

5. Data Privacy & Cybersecurity

Almost every business today operates at least partly digitally. Even if you handle transactions primarily through physical interactions, you likely store customer data, payment information, or communications digitally. This means that if your business is vulnerable to cyberattacks, both your customer data and business data could be forfeited.

The European General Data Protection Regulation (GDPR) of 2018 changed the game for many digital businesses when it came to data privacy. It introduced a number of stringent policies to ensure that businesses took measures to protect against cyberattacks and data theft. And it doesn’t just apply to European businesses, but any business that works with European consumers. In addition, many American data privacy regulations have taken cues from the EU GDPR. In New York, businesses are beholden to the New York State Personal Privacy Protection Law (PPPL), which has similar regulations about safeguarding data and sensitive information.

How a Quality HR Team Can Help You Avoid Regulatory Risks

Part of the job of an HR professional – whether part of your internal team or outsourced to an HR partner - is to keep a finger on the pulse of employment regulations. While you might be busy running your business, your HR team will research regularly and set up alerts so that they know when regulations change. When they do, it becomes part of their job to change the company practices to stay compliant.

HR can also organize comprehensive training for the other departments within your company. This training might cover safe business practices, correctly calculating payroll, and upholding data security. By keeping the entire company prepared, you run less risk of falling out of compliance.

HR teams will also document your compliance practices. This way, in the event of an audit, your business will have the paperwork to show that you are compliant. They will also conduct internal audits regularly to evaluate the company's compliance practices.

Finally, HR can create crisis management plans to handle the unexpected. No one wants a workplace accident or legal trouble, but with a good crisis management plan, your HR team can guide you through these worst-case scenarios.

Find Quality HR Solutions When You Partner With TBM

TBM has been a trusted HR resource for businesses in various niches since 1993. We are a Professional Employer Organization (PEO) partnering with your business through a relationship called co-employment. TBM supplies your business with custom HR solutions such as payroll, benefits, recruitment, compliance, and crisis management so you can do what you do best: running your business.

Let us help you start today with quality HR and top-notch regulatory compliance. Reach out to TBM to learn more