By Nicholas Kowalczyk, Vice President, Chief Risk, Compliance, and Privacy Officer at Kelly
The regulatory environment for HR departments continues to evolve at the federal, state, and local level. Understanding these changes and implementing best practices for compliance can protect your organization from legal and financial consequences while safeguarding employee rights.
A recent study from HR.com and the HR Research Institute found that only 33% of organizations have "highly mature" legal compliance processes that employees fully understand. This highlights a significant gap in compliance readiness across organizations.
Additionally, less than 40% of organizations report using up-to-date technologies for HR compliance processes. Without intentional approaches to compliance management, businesses risk falling behind regulatory requirements and facing potential penalties.
Here are seven best practices to strengthen your organization's approach to HR compliance that I recommend based on 15 years of experience in employment law and risk management:
The foundation of effective compliance is understanding which laws apply to your organization. Start by identifying applicable laws at all three levels of government—federal, state, and local—that affect your workforce based on your industry, employee locations, and business activities.
Next, monitor enforcement priorities, which can shift significantly with changes in political administrations. For example, immigration compliance enforcement has seen notable fluctuations between different federal administrations.
Finally, watch state-level developments. When federal enforcement decreases in certain areas, states (particularly those with more progressive labor policies) often step in with new regulations. Pay particular attention to developments in states like California, New York, and Illinois, which frequently create new workplace requirements. Policies can even come at the county or city level.
A compliance map helps you prioritize your efforts and allocate resources where they're most needed.
A compliance map is a comprehensive inventory that documents all the laws, regulations, and requirements that apply to your organization. It serves as a visual or structured representation of your regulatory obligations, helping you prioritize your efforts and allocate resources where they're most needed.
An effective compliance map typically includes:
Most organizations start with a simple spreadsheet that lists regulatory requirements in rows with columns for responsible parties, deadlines, and compliance status. Color-coding can indicate risk levels, while filters help sort by department or location. As your compliance program matures, you might explore dedicated compliance software with automated updates and notification systems, or integrate mapping into your existing document management system. The key is consistent maintenance—even a basic spreadsheet that's regularly updated provides more value than a sophisticated system that's neglected.
This structured approach creates a living document that serves as both a roadmap for compliance activities and a tool for demonstrating due diligence if questions arise.
Effective compliance management requires clear responsibilities and processes. Designate specific individuals responsible for monitoring regulatory changes and implementing compliance processes. This could be centralized with a legislative implementation team or distributed across your HR department. Then establish consistent processes for capturing regulatory information, analyzing requirements, and implementing changes. This process flow should define how compliance is delivered in different scenarios.
Not everyone needs to be an expert in every compliance area. Create a foundation of general knowledge among all HR staff, with deeper expertise developed for high-risk areas relevant to your business. For complex areas like immigration law, recognize when it's appropriate to consult outside experts rather than attempting to develop in-house expertise.
Compliance risks vary dramatically in their potential impact, enforcement likelihood, and operational relevance to your business. Organizations benefit from conducting structured risk assessments to identify where to direct resources. When prioritizing compliance areas, consider:
According to the HR.com study, nearly one-quarter of respondents (23%) identified employment screening laws as one of their highest compliance concerns. Conducting a thorough risk assessment can help you identify similar priority areas for your organization.
With remote work becoming more common, geographic compliance tracking is increasingly important:
This geographic approach is particularly valuable when your workforce spans multiple states or includes remote workers.
Having compliance processes in place is only half the battle. You also need systems to verify they're working. Establish metrics relevant to your key compliance areas to track performance over time and schedule regular compliance audits based on risk level. Higher-risk areas might warrant quarterly reviews, while more stable programs might be evaluated annually.
Regularly test critical systems like payroll processing and worker verification to ensure they're operating correctly. Your monitoring approach should balance addressing immediate compliance requirements while watching for emerging regulatory trends that may affect you in the future.
Technology can significantly enhance your compliance efforts, though the HR.com study found less than 40% of organizations currently use up-to-date compliance technologies. Consider these approaches:
The right technology infrastructure makes compliance management more efficient and reduces the risk of overlooking important requirements.
Rather than attempting to address every compliance issue simultaneously, take a methodical approach. Begin with a strategic assessment to identify your organization's specific compliance risks and prioritize them based on potential impact and likelihood. Then develop targeted action plans with specific step-by-step processes to address each priority area rather than pursuing broad, unfocused compliance initiatives.
Build your compliance program incrementally, starting with fundamental processes in your highest-risk areas, then gradually expanding to cover additional requirements. While regulatory changes can seem overwhelming, maintaining perspective with a calm, systematic approach will help you navigate even complex compliance environments.
HR compliance management can seem daunting given the complex and ever-changing regulatory environment. However, by taking a methodical approach focused on your specific risks and requirements, you can develop an effective compliance program that protects both your organization and your employees.
The key is to resist trying to tackle everything at once. Start with the basics—identify what regulations actually apply to your business, get the right people in place, and focus on areas where you face the greatest exposure. As your program matures, you can expand your monitoring capabilities and leverage technology to make the process more efficient. What matters isn't having the perfect system on day one, but rather building something practical that addresses your day-to-day compliance needs.
Most organizations still have considerable work to do on their compliance processes. By implementing these best practices, you'll not only reduce your legal and financial risks but also create a workplace where employees understand and appreciate the protections in place for them. That's good for everyone involved.