Most small and midsized businesses don't have the luxury of a dedicated HR department. In many cases, HR responsibilities are delegated to one or two people who wear multiple hats within their company. If this situation sounds familiar, be aware that you may be leaving yourself open to compliance risks that you can't afford to take. If your HR is DIY, develop a plan to address ever-changing compliance regulations.
Employment and labor laws
Laws governing employment in the U.S. have grown exponentially since the 1960s. What's more, this trend shows no sign of slowing down. Designed to protect employees against unfair treatment, these laws affect hiring, termination, drug testing, medical leaves, and more. If your HR practices in all of these areas aren't fully compliant, you may be vulnerable to costly lawsuits.
"But our employees are like family – they would never sue us," you say? You're partly right. It's likely that most employees would prefer not to sue their employers. But it only takes one employee lawsuit to cost a company a lot of time and money.
According to statistics cited by CNA Insurance,1 studies show that an employer is more likely to have an Employment Practices Liability claim than a general liability or property loss claim. And almost 75% of all litigation against corporations involve employment disputes.
The cost to comply with employee regulations is just the tip of the iceberg. Penalties for failure to comply with even one of the new Affordable Care Act (ACA) requirements can amount to thousands of dollars.
For example, in 2013, a national entertainment employer began cutting fulltime employees' hours to avoid providing health insurance as required under the ACA's employer mandate. In mid-2015, company employees filed a class action lawsuit claiming the employer violated section 501 of the Employee Retirement Income Security Act (ERISA), a federal law governing employee health and pension plans. The outcome of the case is still pending, but the company is expected to pay a significant amount defending its actions in court.
Employers have good intentions when offering wellness programs to improve the health and well-being of their employees. But these programs also come with regulations.
For example, if you offer a health-contingent program (i.e., one that requires an employee to either satisfy a certain health factor, or take additional action to obtain a reward), there are requirements the program must meet. For example, the maximum program reward can't exceed 30% of the annual premium for employee-only medical coverage. Without in-depth knowledge of applicable regulations, your wellness program and your business could be at risk.
ADP® has you covered
Protect yourself from these and other potential compliance issues with help from ADP. Our highly trained HR professionals can help you navigate your business's specific compliance risks. ADP HR services include recruiting and hiring support, time-recording and payroll management, benefits administration, workplace safety, and more.
1 Employment Related Lawsuits: High Risk, High Cost, http://georgiaemployers.org/employment-related-lawsuits/
2 2015 Hiscox Guide to Employee Lawsuits, http://www.hiscox.com/shared-documents/The-2015-Hiscox-Guide-to-Employee-Lawsuits-Employeecharge- trends-across-the-United-States.pdf
- Health Care Reform,
- Research for Human Resources Professionals