With continually changing employment laws, all businesses, regardless of their size, encounter overwhelming pressure to stay compliant with them. Failing to strictly adhere to these laws —whether purposely or not—they expose organizations to legal disputes and financial penalties, which eventually hurt their reputation, in the opinion of Charles Spinelli. To avoid such consequences, knowing about the most frequent compliance violations of these laws and measures can help avoid them.
Classifying employees wrongly
One of the commonly violated compliance issues happens when employees are incorrectly classified as independent contractors rather than employees. Workers are often misclassified due to a lack of knowledge or mistakes about job duties, industry norms, etc. However, if it is done intentionally, the employer may even face criminal charges, leading to imprisonment. Regardless of the reason, misclassification may invite audits and penalties.
How to Avoid It:
It should be the first job of employers, in doubt, to consult a legal professional specialized in employment law. Also, conducting web research while accessing information on government-issued checklists, like guidelines provided by the Department of Labor or IRS, can help get a clear understanding.
They should also conduct internal audits and compare job descriptions with the legal guidelines, ensuring the classification status of employees is flawless. Spinelli suggests creating clearly defined documentation explaining each role and ensuring roles are categorized appropriately.
Wage and Hour Law Violations
The second important area where many companies fall short is in wage and hour laws. Typical mistakes include failing to pay overtime, erroneous timekeeping, or inappropriate meal and rest breaks. While these violations generally occur due to a misunderstanding of the HR team, employers may do it purposefully to deprive employees of their overtime by defining them as ‘exempt’.
How to Avoid It:
Employers should train HR managers and respective departments about the Fair Labor Standards Act (FLSA) in the US to become well-versed about the exempt and non-exempt employees before deciding to pay overtime benefits. Implementing a software-based payroll system and organizing yearly reviews of pay practices can be ideal to ensure compliance with regulatory changes. Employers are suggested to maintain clear-cut policies for breaks, work hours, and overtime approval.
Inaccurate or Incomplete Employee Documentation
Maintaining employee records in I-9 forms or equivalent, personnel files, and payroll documentation needs to be kept securely. Incomplete forms, missing signatures, and improper documentation can attract public audit, causing legal liabilities, audits, or legal claims.
How to Avoid It:
Set a standardized onboarding procedure so that every employee is required to complete the necessary documentation. HR should be responsible for maintaining well-organized personal files securely and periodically reviewing them. Charles Spinelli suggests employing digital HR systems that offer automated documentation without the risk of making errors.
Failure to Provide a Safe Workplace
Employers are required to comply with OSHA regulations by providing the necessary safety training, protective gear, and reporting of injuries. Noncompliance can result in serious legal and physical repercussions for both employees and companies.
How to Avoid It:
Train workers on safety continuously, conduct hazard inspections regularly, and keep reporting procedures open and clear. Write down every incident and foster a culture in which employees do not fear retaliation for reporting their issues to the higher management.
Moreover, employers should set strict rules to promote anti-discrimination and anti-harassment throughout all levels and encourage employees to immediately report if discriminated against in any form or harassed for needed investigation and action.