Regulatory Compliance: Is your business prepared for change?

Regulatory ComplianceEach American business owner takes on the burden of the U.S. regulatory environment, which is strict and constantly evolving. In fact, the failure to adhere to U.S. regulations can result in fines to the business, reputation damages, and more severe penalties. Research indicates that a majority of small-to-medium-sized businesses have a very reactive approach to managing the regulatory environment and are becoming increasingly susceptible to the penalties associated with non-compliance.

With the addition of significant regulations like the Affordable Care Act, overtime changes, local-level minimum wage changes, many businesses take risks because they neglect human resources, payroll, benefits and worker’s compensation regulations. For many businesses, avoiding these penalties is a must, and therefore, have to develop proactive compliance management strategies.

We have identified some of the key compliance requirements that affect business owners and positively benefit companies:

Tax Laws & Tax-Related Reporting Requirements

Making tax payments and dealing with the complexity of the tax system is a burden for many business owners. More efficient tax payments and procedures can bring efficiency to business owners, leaving more time to contribute to business growth and development. Routine business tax payments include:

  • FICA taxes – Medicare and Social Security taxes
  • State Unemployment tax
  • Federal Unemployment tax
  • Other local or state taxes

It takes the average business approximately 175 hours to comply with all U.S. tax laws. -Paying Taxes 2015, PwC

Discrimination & Harassment Regulations

Employees should be protected from bias, harassment, and discrimination while at work. When one group or type of person is favored over another, and when that unfair treatment negatively impacts employees, those are grounds for a lawsuit. Employers are responsible for ensuring their employees have a safe and reliable environment to work in. Failure to do so could result in hefty punitive and compensatory damages paid to employees.

The Equal Employment Opportunity Commission (EEOC) oversees discrimination cases and enforces the following laws: 

  • Title VII
  • Age Discrimination in Employment Act (ADEA)
  • Americans with Disabilities Act (ADA)

64 percent of workers say they have seen or experienced age discrimination in the workplace. -Staying Ahead of the Curve, AARP

Wage and Hour Laws

Paying employees requires employers to meticulously monitor hours worked and rates of pay. Wage and hour regulations are heavily regulated, and are constantly being changed. Underpaying wages or late payment of wages are more common problems than people think, and they come with heavy fines and legal fees that disrupt businesses.

Some of the regulations employers must comply with include:

  • Minimum wage laws
  • FLSA Overtime pay regulations
  • Equal Pay Act regulations
  • Recordkeeping requirements
  • FLSA exemption

Of all wage and hour cases, 45% of allegations were related to an overtime violation. -Trends in Wage and Hour Settlements: 2013 Update, NERA Economic Consulting

Health Care Reform

While the Affordable Care Act may have passed into law in 2010, it is still a major area of concern for employers. Employers must dedicate significant amounts of time and energy to maintain compliance.  Smaller organizations may feel the brunt of the effects of the law with the increased information they have to collect and benefits they have to provide.

Here are some key areas to watch for when it comes to the Affordable Care Act:

  • Identifying your full-time equivalent employees
  • How many fines are you susceptible to?
  • Are fines actually cheaper than offering affordable coverage?

82 percent of employers surveyed say the law is increasing their organization’s costs this year. -2015 Employer- Sponsored Health Care: ACA’s Impact, International Foundation of Employee Benefit Plans 

Pathway to Improved Compliance

Centralize compliance management.

Improve the communication between the key employee relations portion of your business. Benefits, payroll, and HR departments need to be in sync in order to ensure proper paychecks and benefits deductions are made. Uniting these departments is paramount to building efficient business practices that offer business owners more control and security.

Improve efficiency and communication with technology.

Old paper systems are inefficient, because they are easily disorganized and increase the possibility of HR, payroll, and benefits errors. Having a software service that integrates data between departments, managers, and employees will help you remain organized, minimize errors, and increase overall productivity.

Seek advice on the topics you don’t understand.

Whether in-house or outsourced, hire professionals that stay current with federal, state, and local laws. They will help you develop and maintain practices that reduce your chances of being fined, and ensure you demonstrate compliance. 

 

This post provided by XcelHR who specializes in people resource management, Government contracting, HR data integration, and PEO & ASO services. You can request more information from Xcel on their company profile page here.