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Human Resources

Make Sure Your Organization is HR Compliant

By Accounting Resources July 02, 2021
Overview of people working on a project on a table.

HR compliance is the laws, policies, and regulations regarding employees put in place by federal and state governments that a business or organization must follow. It affects an organization’s internal systems, policies, and record-keeping and requires that employees receive all entitlements in their employment contract.

It just might be the least sexy part of Human Resources.

But here are some important things you need to know.

HR Record Retention is Critical

Record keeping is the foundation of HR compliance obligations. Adherence to the following guidelines is critical:

  • The U.S. Equal Employment Opportunity Commission (EEOC) Regulations require that employers retain all personnel or employment records for one year.
  • If an employee is involuntarily terminated, his/her personnel records must be retained for one year from the date of termination.
  • Under Fair Labor Standards Act (FLSA) recordkeeping requirements, employers must keep payroll records for at least three years.
  • Employers must keep on file any employee benefit plan (such as pension and insurance plans) and any written seniority or merit system for the entire period the plan or system is in effect and for at least one year after its termination.
  • For at least two years, employers must retain all records (including wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements) that explain the basis for paying different wages to employees of opposite sexes in the same establishment.
  • Did you know that, as an employer, you must maintain two separate files for each employee – one that serves as a personnel file and one for the employee’s medical records? You’ll find more details on this topic below.

Maintain Employment Eligibility (I-9) Forms Carefully 

The Immigration Reform and Control Act of 1986 requires employers in the United States to verify the identity and work authorization of every employee hired. Form I-9, officially the Employment Eligibility Verification form, is part of the federal immigration regulatory process.

  • Employers must maintain I-9 forms separately from personnel files. To expedite response in the event of an audit, I-9 forms for all employees should be kept in one file.
  • I-9 forms must be retained for three years after the employee is hired or one year after employment ends, whichever is later. Keep the records of active employees separate from those of former employees. Purge the latter regularly.

It is a best practice to maintain a reminder system for those employees with temporary employment authorization and send a notice well in advance of the termination of their work permit advising them to update their I-9 form.

Fines can be more than $2,200 for just one  I-9 documentation violation. To avoid HR compliance errors and the related fines and penalties, employers are advised to self-check their I-9 forms every 6-12 months and conduct an independent audit every 2-3 years.

So far this year, U.S. Immigration and Customs Enforcement (ICE) has levied over $3 million in fines on employers for I-9 violations – a new record.

Employers are Responsible for Protecting Employees’ Medical Information

To protect the privacy rights of employees and to insulate employers from liability, the Americans with Disabilities Act (ADA) requires that employee medical records be maintained confidentially and separate from an employee’s general personnel file.

The following documents should be filed separately from an employee’s personnel file:

  • health insurance enrollment, continuation forms, and COBRA notices
  • employee medical exams
  • disability benefits claim forms
  • notes from doctors
  • requests for leave under the Family and Medical Leave Act (FMLA)
  • requests for ADA accommodations
  • worker’s compensation history
  • claims and related documents
  • fitness-for-duty results
  • functional capacity assessments
  • referrals concerning an employee’s participation in the company’s employee assistance program
  • results of drug and alcohol tests
  • reimbursement requests for medical expenses
  • health-related information about an employee’s family members
  • documentation about past or present health, medical condition, or disabilities.

Employee Training is Mandatory and Requirements Differ by State

Employee Training is an important component in compliance. The following are examples of training that your organization may be required to fulfill, depending on where and in what industry your business operates:

Sexual Harassment Training:  For example, in Connecticut, any employer with three or more employees must provide two hours of sexual harassment training to all employees, not just supervisors. Training must be completed within six months of hire, and failure to do so can result in a fine of up to $1,000. The state of New York requires training within 60 days. Each state has its own requirements.

Occupational Safety and Health Training: Each employee must be trained in the tasks, situations, and tools they will use on the job. OSHA provides information on its website on training requirements for employers.

Mandated Reporter Training: Mandated reporters are required to report, in the ordinary course of their employment or profession, if they have reasonable cause to suspect or believe that a child under the age of 18 has been abused, neglected, or is placed in imminent risk of serious harm.

Again, additional training may be required for your business, depending on your state.

Compliant Employee Handbook Protects the Employer and the Employee

The employee handbook provides guidance and information related to the organization’s history, mission, values, policies, procedures and benefits in a written format. Before outlining your employee handbook, it is important to familiarize yourself with federal, state, and local employment laws as several are required to be included in the company employee handbook.

As a best practice, include the following:

Family medical leave policies.

  • The federal government’s Family Medical Leave Act requires employers of a certain size to provide employees with up to 12 weeks of unpaid leave during any 12-month period for the birth or care of a child, to care for an immediate family member with a serious health condition, or if the employee has a serious health condition.
  • Be aware that a few states, including Connecticut, also have their own policies regarding unpaid family leave. For example, Connecticut recently passed its own Paid Family Medical Leave Act.

Equal employment and non-discrimination policies.

  • The U.S. Department of Labor requires businesses to post information stating that the business follows non-discrimination and equal employment opportunity laws in hiring and promotion.

Worker’s compensation policies. 

  • Many states require that employees be informed of worker’s compensation policies in writing.

Among other laws that might require inclusion in employee handbooks are policies regarding accommodation of disabilities, military leave, crime victims leave, and breastfeeding.

Many Notices Are Legally Required to Be Posted in Prominent Locations

The federal government and most states require employers to post notices in the workplace informing employees of their rights and obligations under various employment laws. The notices must be placed conspicuously throughout the workplace so they can be easily seen by employees as they enter and exit.

Required Federal Postings

  • Federal Family and Medical Leave Act – for employers (50+ employees)
  • Federal Minimum Wage Law
  • Employment Discrimination (15+ employees)
  • Americans with Disabilities Act – Employment Discrimination (15+ employees)
  • Federal OSHA (private sector employers)
  • Polygraph use prohibition
  • USERRA (related to veteran and reservist reemployment)

Connecticut Department of Labor (DOL) Postings

  • Electronic Monitoring
  • Minimum Wage Orders
  • Unemployment Compensation
  • Connecticut OSHA
  • Sexual Harassment
  • Workers’ Compensation
  • Managed Care

Our HR Professionals can Help You Assess and Mitigate Risk

Unfortunately, we seldom onboard companies or not-for-profit organizations that are in full compliance with all laws.

But, over the years, we have helped companies in many states throughout the U.S. and across nearly every industry assess their compliance requirements to help ensure they become, and remain, in compliance with federal and state laws and regulations.

As a business owner or non-profit executive director, you should not be kept awake at night worrying about whether your organization is fulfilling its compliance obligations.

Our team will help assess your organization’s risk by conducting a comprehensive audit and will work to identify solutions to eliminate that risk.

Contact us today to discuss your organization’s needs.

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