Employment Law Compliance and HR Department Risk Mitigation

Labor Law Compliance and HR Department Risk Mitigation

This article was updated on July 19, 2018.

Employment labor law compliance and HR department risk mitigation involves judicious use of talent, software, policy and workflow-enabled process re-engineering.

That's a mouthful, but the advice can be boiled down to this: no pain, no (risk reduction) gain.

Employer Size Thresholds

Employers may be subject to other employment laws as they increase employee headcount. For example, most employers with 50 or more employees are subject to the Family and Medical Leave Act. Title VII compliance is required for firms with at least 15 employees. Still, other de facto thresholds come about because of the multi-jurisdictional reach of larger firms.

Companies that employ across state lines must accept the reality of overlapping compliance mandates.

A Multitiered Compliance Effort

But while varying state laws can affect companies with employees in multiple states, even the smallest organization can get caught up in overlapping compliance requirements. Here, for example, is how complicated compliance efforts can be for employers in San Francisco.

San Francisco: Labor Law Compliance and HR

The San Francisco Paid Sick Leave Ordinance specifies that for employees working for an employer on or before the law's effective date (Feb. 5, 2007), paid sick leave begins to accrue when the law takes effect. Employees hired after the law's effective but before Jan. 1, 2017, paid sick leave begins to accrue 90 days after employment begins or on Jan. 1, 2017, whichever is earlier. For employees hired on or after Jan. 1, 2017, leave begins to accrue when employment begins. Employers are required to carry accrued sick hours from year to year but can be subject to certain caps outlined in the statute. But the streetcar town's ordinance also specifies the minimum accrual rate: one paid sick hour for every 30 hours worked. Add to that the fact that the ordinance defined permissible uses for sick leave and you're already dealing with quite a heavy HR compliance burden.

But there's more.

California: State Labor Law Compliance

All California employees are entitled to at least 24 hours or three days of leave in each year of employment, calendar year or 12-month period, according to the California Employment Law Report. Among other rules, the law specifies that employers must display the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave. Also, it doesn't have to be on a stub — it can be in a separate writing provided on the designated pay date with the employee's payment of wages. Employers must keep for at least three years records documenting the hours worked and paid sick days accrued and used by an employee.

Because of those changes, attorney Michelle Barrett Falconer of Littler Mendelson told the SFGate that employers that do not track vacation and sick hours separately should now consider "separately [tracking] sick leave." But as a general matter, employers should comply with the law or rule that is most beneficial to the employee.

Risks Not All Created Equally

Most employment laws entail penalties, costs and fees for noncompliance, but employee complaints represent another major risk area. The risk increases for those larger employers who may be at risk for class action complaints, where many employees are impacted by certain employment decisions.

According to Troutman Sanders, one legal observer advised that, "Class action settlements related to allegedly non-compliant disclosure forms can range from hundreds of thousands to multi-million dollars."

Best Practices

Regardless of your size, complying with employment laws will require diligence in the following key areas:

Talent — HR, legal and operating unit line managers should all be on the same page and communicating regularly.

Software — Some interlocking puzzle pieces of regulation are too burdensome to go alone, so integrated software can be a major boon to this process.

Policy training — Set firm policies and then ensure face-to-face and intranet-based compliance training is ongoing.

Workflow-enabled processes — Workflow enablement may be the enterprise level compliance linchpin, but it's not undertaken without tireless work by those involved.

Labor law compliance and HR is an ever-evolving web of interconnected jurisdictions and varied requirements. So it will be the HR leadership that incorporates the right blend of talent, technological aids and optimized processes who will have the best chance at helping to reduce risk and protecting your organization.