The year 2016 was eventful in many ways, and it's easy to say the biggest workforce-related compliance challenges of 2016 were the ongoing employer responsibilities related to the ACA, the FLSA and wage garnishment. Here, we examine each and explore the ways finance departments can continue to effectively tackle these challenges in the upcoming year.
The Affordable Care Act
The biggest labor-related compliance challenge has been, and will likely continue to be, the Affordable Care Act of 2010, whose complexities and multiyear rollout has created unprecedented levels of regulatory risk for organizations. Considering that 2016 was an election year for the U.S. and a change of administration, the fate of the ACA now remains unclear; however, it's important to remember that the law is the law until, well, it isn't.
What is clear is that complying with the ACA has led organizations to invest heavily in integrated payroll systems. ACA compliance requires a multidepartmental approach to gathering employee-related data and reporting it to the government. Because penalties for compliance gaps are high, integrated workforce management systems may be a key to ACA compliance success.
The Fair Labor Standards Act
New overtime rules issued by the DOL under the Fair Labor Standards Act of 1938 were scheduled to be implemented on Dec. 1, 2016. According to the DOL, more than 4 million employees would DOL has said that over 4 million workers would be "impacted by the new overtime rules." But just before the planned Dec. 1 implementation, a federal court in Texas stepped in and issued an injunction against the implementation, reports Forbes. This now puts the status of the new overtime rule in the hands of the legal system and leaves U.S. employers in limbo pending a final ruling.
Like the case with the ACA, the new administration could also exert influence on the situation, just as the federal courts have and will continue to do. Organizations will need to rely on their HR departments to ensure that compliance gaps are filled and their integrated systems are calibrated to collect the necessary data for compliance — especially leaning on updated time and labor management systems that enable firms to monitor labor costs and make decisions to control them. Having the ability to access, analyze, report and leverage your employee-related data should be an integral element to compliance success, now and in the future.
Wage garnishment orders can leave firms caught in the middle between following the law and keeping their employees engaged, even when those employees have been court ordered to pay debts. Not complying with a wage garnishment order, or complying improperly, can result in legal liability for employers. Moreover, state laws on garnishment are an area of rapid regulatory change, making compliance with wage garnishment orders a major challenge for businesses operating in multiple state jurisdictions.
Major changes in garnishment laws occurred in 2016 in states like California, Michigan and Missouri, but software and services support can make it possible to address changes in regulation in real-time. So automating the way you process wage garnishments makes great compliance sense.
How to Get Compliance Right: Data and Agility
A proactive approach to compliance is one that allows you to leverage your data and make fast changes as compliance challenges arise. This approach provides financial leaders and their firms with a competitive advantage over their industry peers. Finance leaders and HR leaders should consider investing in an integrated platform with analytic capabilities that let them prioritize compliance activities. This should afford you the flexibility necessary to protect your bottom line as regulatory changes happen and as you continue to monitor the future compliance challenges of 2017.
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