HR Tech Providers: It's Time to Become Partners in Compliance

It’s been quite a year for employment law. We’ve seen minimum wage increases, Affordable Care Act implementations, the legalization of marijuana, and the more recent and anticipated announcement by the Department of Labor regarding overtime exemption. Not to mention rulings and regulations that, while not directly related to employment law, will affect HR strategy and corporate policies, such as the Supreme Court decision to legalize same-sex marriage.

In the early 20th century in the United States, it was primarily common law and case law that governed employers. Revolutions in technology, globalization, and human rights have brought us to the complex alphabet soup of agencies and regulations we must answer to today. The Department of Labor (DOL) alone manages and enforces nearly 200 federal laws, but in addition to that, there are many widely varying state and local laws to consider as well. While it is often a struggle for an organization to stay in compliance, it cannot be ignored, and must be addressed as a prerequisite to pursuing strategic initiatives. Even with extreme attention to these regulations, there’s a black-or-white outcome: you’re either compliant, or you aren’t.

The cost of noncompliance is greater than ever. While the volume of Immigration and Customs Enforcement (ICE) audits has dropped since 2013, the fines have steadily increased. Over $16 million was collected from 642 US employers in 2014, with one noteworthy 2013 settlement topping $30 million. 80% of that company’s I-9s were materially out of compliance. Fair Credit Reporting Act (FCRA) Class Action lawsuits are rising to an all-time high, with focus shifting to technical interpretation of the statute and specifically to employer obligations such as background check disclosure, authorization and the adverse action process. Between January 1 and July 31, nearly eleven percent—198 of the 1,828 total FCRA cases—were Class Action lawsuits, many entering seven figures. A multi-million dollar settlement is a huge financial burden, but that’s just the tip of the iceberg when you consider the time and expense required to correct errors or implement policy changes, not to mention potentially irreparable damage done to your brand when faced with bad publicity.

So what can HR do to keep up with the growing, changing complexities of employment law? And how can expanding businesses expect to manage not only domestic compliance, but entirely new realms of regulations with compounding complexity as their business enters the global market? HR technology providers can help, and should. HR organizations have long been reliant on utilizing their technology to simplify process and boost efficiency. This is a natural opportunity for the technology industry to solve a very real and timely business challenge, up-level its value proposition, and for HR buyers to amplify their ROI through risk reduction and peace of mind. Although compliance adherence ultimately rests with the employer, I see at least three ways technology providers can lend a stronger helping hand.

First, tech partners can help HR navigate compliance through process consistency. Highly configurable and extensible software allows system administrators to define workflows that map to company policy, and update them on the fly as requirements change. Smart field validation is another example, helping companies minimize missing or incomplete data. Some technology systems can serve as compliance system of record, centralizing the storage of forms and sensitive data. When coupled with a detailed audit trail, HR organizations can be more prepared if and when a regulator comes knocking.

Secondly, compliance can be built into the technology itself. For example, the required Form I-9 version is constantly changing, as are required disclaimers and notifications associated with the FCRA-governed background checks. These changes are more easily tracked and implemented by a technology partner than by each and every HR department. HR buyers should look for companies that will keep them informed of changes within the compliance landscape, and update wherever possible the technology configuration. This plays to the strengths of SaaS, right?

Finally, to transcend the business relationship from a vendor to a true partner is to marry smart technology with exceptional service. One way is to provide assistance and service to both organizations and their candidates. For example, at TalentWise we offer a support number that a candidate can call for help when completing Section 1 of their Form I-9. We also pride ourselves in our dedication to settle background screening disputes quickly, so both the employer and their candidate can move forward without the service provider bottlenecking their ability to make a confident hiring decision. We’ve come to realize that by being responsive and transparent with candidates, while treating them with the respect they deserve, is a most certain way to reduce risk of legal intervention.

We all understand the need for organizations to operate in compliance and we’re feeling the heat more than ever. There is room for improvement for technology providers to bring not only process efficiency and highly valuable data-driven insights, but also compliance. After all, HR organizations that aren’t both efficient and compliant won’t have the opportunity to recruit, develop and engage top talent—which I presume we all agree is “true north” for most talent organizations. Let’s strengthen our client relationships and value proposition by providing more fulsome compliance solutions whenever and wherever possible. Whether it’s built into your product or provided via human support, it’s clear that HR could use a helping hand now more than ever, so they can focus on the most important task of building high-performing teams within their organization.


TalentWise is a client of TalentCulture and sponsored this post.