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A Definition on Regulatory Compliance

All businesses have a certain set of regulations to which they must adhere. While regulatory compliance depends largely on the type of business, the function of employees, and the services provided, there are certain standards that the federal government requires of virtually all companies in the United States. In the study for a degree in human resources, students learn what compliance is and why it’s so important to the security of a business. Graduates with a Master of Science in Human Resources Management will have up-to-date information on common regulatory standards and know how to guide their organization in compliance with all applicable laws.

What is Regulatory Compliance?

Regulatory compliance has to do with a set of guidelines that an organization is required to follow in accordance with the law. A compliance definition in hiring practices, advertising, accounting, benefits, workplace environment and safety, discipline, and termination comes largely from departments in the U.S. executive branch. Those who wish to ensure regulatory compliance for a business should investigate all relevant rules for the industry and follow each law to the letter.

1. Hiring Practices

Human resources managers should always conduct their hiring practices in accordance with the law to avoid potential discrimination, or face possible discipline from the Equal Employment Opportunity Commission (EEOC). This applies to all workers who may be employed by a U.S. company. In particular, the EEOC gives special protection against discrimination of individuals based on sex, race, color, religion, national origin, age (over 40), disability, and genetic information. For example, a woman who states that she is pregnant while seeking employment cannot be refused a job based on her pregnancy. There are other departments that offer additional protections to workers based on other conditions. The Uniformed Services Employment and Reemployment Rights Act (USERRA) allows citizens to serve in temporary service in the U.S. military without worrying that they will ultimately lose their jobs. The Migrant and Seasonal Agricultural Worker Protection Act maintains standards for wages, housing, hours, and other limitations on temporary agricultural workers.

2. Health Benefits and Employee Privacy

The government has instituted certain regulations guaranteeing access to health care and also the privacy of employees’ health information. Employers with more than 50 employees are required to offer a health insurance plan or pay fines. The Employee Benefits Security Administration (EBSA) enforces the rules of the Employee Retirement Income Security Act (ERISA), which broadly covers virtually all employee benefit plans. The health insurance coverage given by an employer is often governed by state laws, with specific areas of coverage that employers need to maintain in a company-sponsored plan. This also means that employers often have more information about an employee’s health than they would otherwise. Those seeking a degree in human resources should educate themselves on the Health Insurance Portability and Accountability Act (HIPAA), a 1996 amendment to ERISA that ensures the security of an employee’s health information.

3. Work Environment

Employees deserve a work environment in which they are not subject to discrimination. As a branch of the Department of Labor, the Civil Rights Center enforces rights guaranteed to Americans as a part of the Civil Rights Act of 1964 and other relevant legislation. Discrimination, as a compliance definition, does not just occur in hiring practices and termination. An employee’s regular work at a job depends on an employer’s acceptance and enforcement of laws that allow workers to perform their duties without fear of reprisal based on who they are. Reasonable accommodations must be made for employees with disabilities or natural conditions that make it difficult for them to perform at standard. While employers are generally free to set their own rules for workplace conduct, those that do not discourage or indirectly promote discriminatory attitudes and practices may face civil liability or criminal investigation.

4. Wages and Hours

The Fair Labor Standards Act (FLSA) governs the way that workers may be employed, how time off is considered, and how much they must be paid. Since 2009, the federal minimum wage for most workers is $7.25 an hour, although some states have set a higher minimum. Employees must be paid for all time they spend on the premises in the expected fulfillment of their duties to an employer. Any nonexempt worker who works more than 40 hours in a week need to be paid at least 1.5 times their usual wage for any time worked over 40 hours. Depending on the industry, FLSA also requires employers to maintain regulatory compliance for all workers under the age of 18. These FLSA standards must also be demonstrated clearly (usually in a poster) in a place accessible to all employees. While employers are not obligated to offer paid time off for employees with family-related health concerns, the Family and Medical Leave Act assures employment protection for qualified employees who need to take time off due to their own health condition, to care for a new baby, or to care for another family members.

5. Workplace Safety

Employers are obligated to provide a safe working environment for all employees. This obligation is governed by the Occupational Safety and Health Administration (OSHA). Businesses are inspected regularly and without notice by OSHA representatives, who check that all regular functions of the company are designed to ensure employee’s freedom from workplace-related injury or illness. When employers have complied with all OSHA standards for hazard avoidance and employee training, they receive a certificate of compliance that they can show to employees and prospective clients. Businesses are also required to carry insurance for Workers’ Compensation, regardless of industry, to protect employees who are injured on the job. Workers’ Compensation provides assistance in:

  • wage replacement
  • medical treatment
  • vocational rehabilitation

Workers’ Compensation also includes other benefits dependent on the industry and type of injury or illness acquired by the employee.

6. Recruitment and Retention

In today’s competitive job market, HR executives are required to pay increasing attention to talent management issues, including recruitment, retention and productivity. When employees exhibit hard work, commitment, leadership, and other positive attributes, naturally, those skills should be nurtured. This is even more important in today’s competitive environment, where good employees may be wooed away by competing companies or professional recruiters. Therefore, companies look to HR managers to ensure that good employees are recognized and – when appropriate – groomed for growth.

HR managers should facilitate growth by creating education and training programs to allow employees to fulfill their potential. They may also want to work with the communications arm of an organization to promote advancement opportunities. All of this must be done with regulatory compliance in mind, to ensure that promotions are free from the perception of favoritism or cronyism.

7. Employee Discipline and Termination

Just as good employees should be cultivated, if an employee is causing trouble for a business, human resources managers often intervene to discipline or terminate the person. However, there are rules that employers must follow for discipline and termination. OSHA provides protection for employees who report illegal or unsafe activities within an organization. Employees under this category, known as “whistleblowers,” may not be fired, harassed, intimidated, demoted, reassigned, denied overtime, or suffer a reduction in pay or hours.

At times, employers may need to lay off a large number of employees at once, and there are guidelines for this, as well. The Worker Adjustment and Retraining Notification (WARN) Act of 2003, enforced by the Employment and Training Administration of the Department of Labor, requires businesses to give at least 60 days notification to employees who will lose their jobs. WARN provides assistance to companies and employees to utilize resources that will allow them to pursue other employment opportunities prior to the closing a plant or the termination of their employment.

There is no single standard to which employers are held to ensure their regulatory compliance. A compliance definition comprises thousands of individual statutes and obligations in the day-to-day function of a business. People earning a master’s degree in human resources can start the process with a search of the U.S. Department of Labor for more information about what compliance is and how they can help businesses to achieve it. A human resources professional with education in the complex details of regulatory compliance with current data on all standards, makes the difference between a company that thrives and one that is fined or even shut down. The constant work of human resources professionals to assure compliance standards are met in all areas creates a more secure future for the company.