Compliance Challenging In A Complex Regulatory Environment

Today, employers are facing a complex and evolving regulatory and enforcement environment during a time of weak economic recovery. Concerns related to these challenges were confirmed by the findings of a global survey of business leaders. According to the survey, The Conference Board CEO Challenge 2012, top executives in Europe and the United States say global political and economic risk and government regulation are their most pressing concerns. CEOs in the U.S. say government regulation is their most critical challenge, followed by global political and economic risk, innovation and human capital.

The current activity level of a number of federal agencies that deal with employment issues reinforces the concerns of American business. Insights can be found by examining the focus of agencies such as the Equal Employment Opportunity Commission, National Labor Relations Board and Department of Labor.

The NLRB has expanded its oversight of the workplace and taken additional steps to educate employees about their rights to act together for their mutual aid and protection, even if their work forces are not unionized. In May 2012, the board’s acting general counsel issued a third report on the legality of policies governing social media use, cautioning that certain clauses, such those prohibiting discussions of confidential information, could be unlawful. In June 2012, the agency launched a web page,, which describes employees’ rights and cases brought against employers in a range of industries.

The EEOC announced that its combined enforcement, mediation and litigation programs in 2011 resulted in a record $455.6 million in relief for private sector, state and local employees and applicants. This amount represented an increase from the past fiscal year and continued the upward trend of the previous three years. In April 2012, the agency issued enforcement guidance on using background checks in employment decisions. Employers, with the assistance of legal counsel, are evaluating and revising policies and practices to ensure consistency with the guidance and applicable laws.

The DOL has been aggressive in its pursuit of wage and hour violations under the Fair Labor Standards Act. One of its primary efforts, an employee misclassification initiative, is designed to crackdown on instances of employers misclassifying workers as independent contractors when in fact they are employees.

It is essential in today’s environment that employers stay abreast of legal developments and continuously examine their policies, procedures, processes and personnel actions for compliance purposes. A “head-in-the-sand” approach is not a viable alternative.

The following are tips regarding actions that employers can take to safeguard their organizations:

1. Determine which federal, state and local employment laws are applicable to the organization. Applicability depends on factors that include number of employees, nature of the business, status as a public- or private-sector employer, designation as a federal contractor, and business locations.

2. Identify common sources of current employment charges and litigation. Legal updates, advertisements of plaintiffs’ attorneys, websites of federal agencies, and similar communications often highlight areas of contention. Knowledge of specific sources, such as increasing EEOC charges alleging retaliation, can be a signal for management to take preventive action.

3. Stay abreast of new and revised laws and regulations and of timeframes for compliance. In accordance with the Patient Protection and Affordable Care Act, employers must implement health reform requirements at established intervals throughout a phase-in period. It will be necessary for employers to monitor effective dates to ensure compliance.

4. Provide information and/or training for supervisors and employees on the organization’s expectations for compliance. For example, supervisors need to understand their responsibilities for harassment prevention, adherence to organizational policies and avoidance of actions that can create liabilities for their employers.

5. Train supervisors to document effectively. Accurate, objective and timely documentation is essential in making well-founded decisions about an employee’s performance and conduct. The organization can be exposed to risks if management’s actions are challenged and deficiencies in documentation are identified.

6. Write employee handbooks in a manner that establishes expectations for employees and management and provides a defense for the employer in the event of litigation or scrutiny by a federal or state agency. Cover topics that address areas of compliance, such as harassment, retaliation, military leave, overtime for non-exempt employees, electronic communications and social media, and reasonable accommodations for disabilities.

7. Administer discipline in an objective, timely and consistent manner. Prior to deciding upon any action, conduct an investigation and consider the seriousness of the violation and other relevant factors. Also, ensure that an employee’s legally protected status or involvement in protected activities does not influence the decision and subject the employee to potential retaliation or other forms of discrimination.

8. Conduct a human resource audit of employment policies, processes and practices on a periodic basis. An audit is an objective tool that can be used to examine the human resource function and pinpoint gaps in compliance that require the attention of management. Areas to consider in determining the scope of the audit include recruitment and hiring processes, disciplinary procedures, use of independent contractors, exempt and non-exempt employee classifications, training, performance management and employee handbooks.

Article originally published in the Memphis Business Journal.

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Written by

BARBARA RICHMAN, SPHR is a senior consultant with HR Mpact, a Memphis human resource consulting firm. She can be reached at (901) 685-9084, (901) 496-0462 or

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