Anyone working in Human Resources (HR) will frequently encounter various federal, state, and local laws, regulations, and rules that create a framework for how businesses needs to be run. It is the role of HR personnel to ensure whatever company they work for is in compliance with these laws.
If not, businesses can face hefty fines, lawsuits, loss of professional status, and other legal and financial ramifications. Since lack of awareness and accidents aren't considered valid justifications for compliance issues, HR must be knowledgeable about these laws and absolute in their application.
The primary laws that require HR compliance can be split into three categories: Equal Employment Opportunity (EEO), Wages and Hours, and Benefit Requirements.
The Americans with Disabilities Act (ADA) is a civil rights law established in 1990 that prohibits discrimination against people with mental and physical disabilities in all areas of public life. This includes education, employment, transportation, and any public and private places open to the general public. If companies interact with the public in any way, they must be ADA-compliant.
The Age Discrimination in Employment Act of 1967 (ADEA) is a U.S. labor law that protects applicants and employees 40 years of age and older from discrimination on the basis of age in hiring, promotion, discharge, and compensation. The ADEA, enforced by the Equal Employment Opportunity Commission, prohibits businesses from making employment decisions based on an adult employee's age.
The Equal Pay Act of 1963 (EPA) prohibits gender-based discrimination in terms of compensation, which means all payments made to employees as remuneration for employment. This includes salary, overtime pay, bonuses, stock options, profit-sharing, bonus plans, life insurance, vacation and holiday pay, gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits. According to the EEOC, it is job content, not job titles, that determines whether jobs are substantially equal.
Title VII of the Civil Rights Act of 1964 is a federal civil rights and labor law that forbids businesses from discriminating against employees on the basis of certain characteristics including sex, race, color, national origin, and religion. This means companies must ensure employment opportunities, working conditions, compensation, and other facets of employment are equally available to people from those protected classes.
The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects the rights of service members to reemployment when they return from a period of service in the uniformed services, including individuals called up from the reserves or National Guard. Furthermore, the law, which is administered by the U.S. Department of Labor's (DOL) Veterans' Employment and Training Service (VETS), prohibits employment discrimination based on military service or obligation.
The Fair Labor Standards Act (FLSA) deals with minimum wage, overtime pay, recordkeeping, and child labor standards across all sectors, including private businesses and local, state, and federal government. To be in compliance, businesses must pay employees the minimum wage and establish regular pay periods. There are also provisions to protect the wellbeing of minors by limiting their hours of work and prohibiting their participation in certain occupations.
The Family and Medical Leave Act (FMLA) is a federal law designed to provide employees with job security if they must temporarily leave their position for qualified medical and family reasons. However, the FMLA only applies to certain employers—those with more than 50 workers—and certain employees. While an employee is away, their job cannot be given away, and they still maintain healthcare benefits.
The part of the Consumer Credit Protection Act (CCPA) that applies specifically to employers is Chapter 16, Title III, which establishes guidelines for wage garnishment. Under this law, an employee's income can only be garnished up to 25% after removing mandatory payroll and income taxes. The law allows up to 50% garnishment if the money is needed to pay for child support, taxes, or bankruptcy judgments. Employers also cannot fire an employee because their wages have been garnished for any one debt.
Federal Insurance Contributions Act (FICA) is a federal payroll tax directed toward both employees and employers. The tax is deducted as a percentage from each paycheck to help fund Social Security and Medicaid, two programs designed to protect retirees.
The Federal Unemployment Tax Act (FUTA) imposes a federal employer tax, which is used to help fund state workforce agencies. Businesses collect this tax by withholding a portion of their employees' paychecks. To report this tax, employers must annually file Form 940 with the Internal Revenue Service (IRS).
Under the Affordable Care Act, employers with 50 or more full-time employees could face penalties if they don't make affordable healthcare available to their employees. That means offering health insurance or sharing the cost. Employers with less than 25 employees may be eligible for the Small Business Health Care Tax Credit to help cover the cost of providing coverage.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is designed so employees and their families have continued healthcare coverage for a limited time if they lose their benefits for qualified reasons such as job loss, involuntary reduction of hours, death, divorce, or other life events. Employers are required to provide notice of the law to their employees.
The Health Insurance Portability and Accountability Act (HIPAA), enacted in 1996, establishes a set of national standards for the protection of certain health information. Employers who are subject to the rule are prohibited from using and disclosing protected health information for the privacy of the individuals in question.
The Employment Retirement Income Security Act (ERISA) sets minimum standards for a majority of voluntary retirement and health plans. For example, employers must provide plan participants with information about plan features and funding. Additionally, ERISA provides fiduciary responsibilities for the entities that manage and control plan assets and gives participants the right to sue for breaches of fiduciary responsibility.
While the above list touches on a number of major federal labor and civil rights laws that pertain to employers, there exist dozens of other laws that HR personnel should be aware of. For example, there are numerous state laws that are equally important. Understanding these laws, how they apply to a specific company, and how to stay compliant—especially as laws periodically change—is enough to be its own job. Professional Employer Organizations (PEOs) like PRemployer are dedicated to helping businesses fill gaps in professional knowledge and implementation strategies so they don't have to worry about being in compliance.