When you’re hiring in a new location, whether in-country or abroad, make sure that you understand what HR compliance means in that specific area. Because of ever-changing regulations, knowing what standard to hold your HR team to can be tricky.
As you think more about HR compliance, consider what you can do to bridge the gap between compliance and employee care. Compliance with local laws should remain a top priority to avoid penalties and fines, but you’ll also want to protect the integrity of your company’s reputation by treating employees fairly.
Proper HR compliance builds a solid workplace for everyone at your company, as well as helps you avoid any legal ramifications.
Curious to learn more? Keep reading our guide on HR compliance, which includes 6 tips on how to improve compliance at your company.
HR compliance is the process of building procedures and policies that adhere to all applicable labor and tax laws in the area you’re conducting business. Most importantly, these procedures should be clear and fair for all employees.
The larger your organization, and the more geographic areas your organization operates in, the more complex your HR compliance policies need to be.
HR compliance is crucial to running a successful and reputable business. Without following compliance laws, you’ll be subject to anything from fines and tax penalties to lawsuits filed against your business for treating workers improperly.
If you’re solely operating your business in the United States, the regulations for compliance will vary at the state, federal, and local level.
However, some of the most important laws to understand are:
If you’re planning to expand your business abroad, or need to hire global employees, you should research exactly what HR compliance means in the country you’re expanding to.
Much like how the United States has differences on a state-to-state basis, each country will also have their own local and federal laws you’ll need to comply with. For example, Latin American countries like Brazil and Mexico make it a little more difficult to hire independent contractors because they put an emphasis on protecting workers rights.
Common international HR compliance laws to research include:
Wage and hourly rates
Taxes and payroll
Mandatory and recommended employee benefits
HR’s role in compliance is making sure that there is always consistent communication between the employer and its employees. When vetting your HR team and creating policies for compliance, think about your larger company goals and ways you can align it with federal and state regulations.
A good HR department should create a culture of integrity across the entire organization. Help your HR team create policies that are fairly applied at every organizational level. Employees that are freshly hired should feel as protected by HR as high ranking executives. Your company should always have ways for employees to report any harassment or unethical activities.
If a change to a law is made in your area, your HR team should be the first to know and trained on the law. These changes should then trickle down into the employee handbook, onboarding, and training.
At an international level, HR compliance needs to cover exactly what the new country's regulatory bodies expect when a business decides to expand or hire across borders. Do you need to open an entity to run payroll? Can you partner with a global EOR service like Via?
Problems with HR compliance locally and internationally arise because of improper training, poor management of employees, or a lack of care.
In Brazil, for example, it’s standard practice for employees to file lawsuits against their employers for discrimination or not following standard termination and severance protocols.
Here are some common HR compliance issues:
Discriminatory job listings
Inappropriate interview questions
Unsecure documents and management
Payroll and tax errors
Unfair pay practices
Mismanagement of healthcare
Improper compensation and benefit management
Employees working off the clock or not taking mandatory lunches/breaks
When HR compliance issues arise, your business could face fines or penalties for mismanagement of payroll practices, or you could find yourself facing a hefty lawsuit that will cost even more money and worse: your company’s reputation.
In her 2019 study of Silicon Valley Culture, Brotopia: Breaking up the Boys’ Club of Silicon Valley, Emily Chang points out that many small but growing startups don’t even have HR teams, since functions like operations, engineering, and product development tend to grow faster than people teams.
As companies scale up, executives should focus on establishing an HR team sooner rather than later. This can help avoid issues such as discriminatory hiring practices and compliance issues related to payroll & benefits.
You can avoid mismanagement of HR compliance by ensuring that you have compliant business practices set up.
Here are 6 strategies to improve HR compliance.
Once you have built a solid HR team, continue to regularly train your employees on new laws and regulations in your area. You should never let the sparkle of improvement go out of your business, as this leads to neglect of employees and runs the risk of complacency.
If your HR team needs to hold new training sessions for employees, encourage them to do so and give them the proper tools to hold these sessions.
Another way to keep knowledge sharp is to update your HR manual every year. Given the amount of regulations and changes at the federal and local levels, quarterly changes may be required.
Share this manual with not only HR, but all of your employees. This way, all of your workers are aware of their rights. This bolsters a culture of transparency at your company.
One of the easiest ways to maintain HR compliance is to create a checklist that covers major areas:
Hiring and onboarding
Employee benefits and compensation
Sexual harassment and prevention
You should always have strong hiring and recruiting practices in place wherever you decide to hire. Define who and how you plan to recruit as a business.
If you start off on the right foot with hiring, you’ll avoid any future complications or penalties for mismanagement of employees.
Ensuring company-wide compliance means that you’re staying on top of laws and new legislation.
Regularly check policy updates and follow discussions on government websites about pertinent information regarding your business.
You may even need to hire an employment attorney that can keep track of laws and advise you on HR compliance.
Employee compliance with HR policies starts with building a community and streamlining communication.
Always inform your employees about their rights and what protections your company has in place for them. Make sure that accommodations are made for employees that need them and that the information is clear to everyone.
When you build your own entity and establish an HR team across borders, it needs to align with local HR on local employment laws, as well as local data privacy laws.
Navigating a new country’s federal and local labor laws can be a daunting task for employers looking to expand globally. The paperwork required to launch an entity or subsidiary in a new country can take months to complete. You will need to register with a number of government institutions, hire a team of on-the-ground experts, open a bank account in the new country, secure a local address, and wait up to a year for final approval.
Because setting up an entity can take months, if not years, you run the risk of missing out on recruiting top talent. Once you have your entity up and running, it’s your responsibility to ensure the HR process remains compliant. Labor laws can change without notice, and employers are expected to respond immediately or face potential legal repercussions.
Many companies want to expand across borders, but do not have the in-depth knowledge of beginning the process compliantly. Via makes hiring employees and building your global team seamless. Via helps you manage local HR processes for direct employment such as work visas & permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your global employer-of-record/entity, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.