2021 HR Compliance Checklist

Federal, state and local regulations must be followed by every business, regardless of the industry they operate in. The challenge for business owners is following each and every regulation.

There is no way of knowing precisely how many businesses are not HR compliant, but government agencies are increasing the frequency of their audits.

The penalties for not being HR compliant are severe. In January 2020, Chipotle was fined $1.4 million for breaking Massachusetts child labor laws, with an estimated 13,000 separate infractions, for example.

For 2021, this HR compliance checklist will ensure your business is compliant and up to date with current federal employment regulations.

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1. Determine Exempt And None Exempt Employees

The Fair Labor Standards Act (FLSA) makes it clear that there is a difference between exempt and non exempt employees. An exempt employee is not entitled to overtime pay and is paid at their usual salaried rate. Non exempt employees are entitled to additional overtime pay, as per federal guidelines.

Getting this classification wrong can cause a serious backlash if uncovered later, including fines and necessary back payment of appropriate overtime pay.

Exempt employees typically make at least $684 per week and $35,568 annually, whereas non-exempt employees typically make less, although this is not always the case.

Be aware of which classification your employees fall under.

2. Review And Update Company-Wide Policies

Company-wide documents are living policies that must grow alongside the business. Failure to review and update these policies can leave the business vulnerable to changing rules and regulations.

Review and update the company’s broad policies each year. An HR compliance officer should be responsible for matching each provision with the current rules on the matter, while being aware of any potential changes.

Proposed changes should receive a comprehensive review to ensure it does not contravene federal, state or local regulations.

3. Ensure Compliance With Labor Laws

Ensuring compliance with labor laws does not have to be as daunting as it sounds. Firstly, the HR department should be aware of current laws regarding the number of hours worked, pay, distribution of employee benefits and working conditions.

Review the documentation for each employee for the year and determine whether all labor laws are being upheld. This can be time-consuming for smaller companies, but the law does not make distinctions between small businesses and large corporations.

4. Complete I-9 Forms For Each Employee

Whenever an employee is hired, the business will have filled out an I-9 form for them. Every employee requires an I-9 form separate from their employee file. It is designed to show that their verification documents have been analyzed and recorded.

Every employer must maintain the original I-9 file for at least three years following the day they start their employment, or one year after their termination. Government agencies can demand to inspect I-9s with as little as 72 hours’ notice.

5. Evaluate Recruiting And Interviewing Processes

Your HR compliance checklist should further include a review of the company’s recruiting and interviewing processes.

Special attention should be paid to whether the company is sufficiently complying with the Fair Employment and Housing Act and the Americans with Disabilities Act. Furthermore, at-will employment should be defined, and interview questions should be written down and reviewed to ensure they are compliant with employment law.

Larger companies with a federal contract worth at least $50,000 or companies with more than 50 employees must also take into account Affirmative Action laws.

6. Audit Hiring And Training Procedures

The HR compliance checklist must take into account the hiring procedures of the company. This includes reviewing employee contracts and new employee orientation programs.

All documents should be reviewed within the context of Title VII, which discusses discrimination in the workplace, as well as the Age Discrimination in Employment Act.

Make a further check of current workplace training requirements. In 2020, a total of 16 states have updated their compliance standards by requiring COVID-19 workplace safety training programs to be initiated. Your state could be one of them.

7. Check Employee Files And Records

Take the time to review the current records of all employee files. Federal and state guidelines are specific about how long records need to be retained for. Dispose of any outdated records in a safe and secure manner.

If the records need to be updated, take the time to do so, or ask the employee in question to supply any missing or incomplete records.

8. Ensure Payment For Working Time

The Department of Labor defines working time as any time in which an employee is working, regardless of whether it is authorized. This may include overtime, working from home pay, travel expenses and meals. Review hours logged and whether employees have been paid according to federal regulations.

Companies must review this policy and ensure there is a foolproof system for logging work hours. There are a variety of third-party software options aimed at streamlining this process.

9. Review Insurance Policies And Benefits Packages

The coronavirus pandemic means many employees are working from home. Businesses should contact their insurance brokers to determine whether there is any additional exposure their current insurance policies do not cover.

It is also an ideal time to review the current range of employee benefits packages on offer to determine whether they will continue to meet the needs of employees going into 2021.

10. Assess Eligibility For Unemployment Benefits

Part of HR compliance is understanding whether a business is required to pay out unemployment benefits. It is a good idea to ensure your business is complying with these rules.

Under the current regulations, employees who are dismissed during a period of probation, which is typically the first 90 days, are not eligible to receive unemployment benefits. Furthermore, employees dismissed for leave without cause or reasons relating to conduct are also ineligible for benefits.

Employees dismissed for reasons relating to performance are nearly always eligible for benefits.

11. Keep Up With Changes To Employment Laws

Employment laws are constantly changing, and it is vital that businesses check to ensure they are continuing to comply with the law as it stands.

An aspect many employers are unaware of is certain federal employment laws can be overridden by state laws. This means that businesses operating in a certain state may be exempt from certain federal laws.

On the other hand, some states may have stronger employment laws than the federal government; therefore, businesses operating in such states must conform to those laws, rather than the federal equivalents.

This is why it is important to speak to a professional with knowledge of employment law within your state.

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Speak With A Remote HR Consultant Today

Employment law at the federal and state levels is extremely complicated. Businesses found not to be HR compliant are putting themselves at serious financial risk.

Ensure your business will not be in breach of the law by contacting a specialist remote HR consultant with HR Search & Rescue. Contact HR Search & Rescue for more information on staying HR compliant in 2021.

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