Human resources (HR) managers play an integral role in ensuring the success of any organization. With such an important title, however, comes a great deal of responsibility. HR managers are required to oversee organizational activities like recruitment and hiring, administration of pay, coordination of benefits, and enforcing company policies and processes.
In any sector of a corporation, compliance with the law is extremely important – and HR is no exception. If any HR duties are executed unlawfully, the company could face severe repercussions, such as legal action. Not only would such consequences be dire for the company’s reputation, but it could be incredibly costly, thereby threatening the organization’s financial well being.
What Are the Costs of Noncompliance?
According to the Society of Human Resource Management (SHRM), the financial impacts of noncompliance with HR laws can be extremely costly. In many cases, the costs are so significant that they affect the company’s bottom line, particularly if the affected company is a small business. Some of the approximate costs for various noncompliance offences are as follows:
Wrongful Termination – Average costs for a defense attorney total at $85,000. In most wrongful termination lawsuits, the jury decides to provide the plaintiff with $500,000 in damages.
Sexual Harassment – While the amounts awarded to plaintiffs in sexual harassment cases vary drastically case to case, such lawsuits can cost companies millions of dollars. For example, in 2011, an Illinois employee was awarded $95 million because the employer did not manage the sexual harassment complaint properly.
Discrimination – Whether it is on the basis of age, race, sex, physical disability, or nation of origin, a discrimination lawsuit can cost a company millions of dollars if it is found guilty of violating any of the acts in place to protect employees’ rights, such as the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act. In one past case, a former employee who was 37 years of age was awarded $4.2 million by a jury who decided that age was a determining factor in his termination. Another example is a case in which the plaintiff was awarded $18 million after the jury determined that the employer discriminated against them on the basis of national origin.
What Types of Law Do HR Managers Need to Know?
To adequately perform the various functions of their jobs, HR managers must do their research on various types of law. In doing so, they will prepare themselves and their organizations to better meet the needs of employees and avoid costly legal errors. The most pertinent types of law for HR managers to understand include:
Wages and Hours Law
Given that HR managers are responsible for coordinating employees’ pay, they should all be familiar with the Fair Labor Standards Act (FLSA), which is the main statute outlining the following:
- National minimum wage
- Framework for work hours (i.e. the establishment of the 40-hour work week)
- Requirements and procedures for administration of overtime pay
Another critical component of wages and hours law is understanding employees’ entitlement to leave, as outlined by the Family and Medical Leave Act (FMLA). Under this act, employees are entitled to:
- 12 weeks of leave within a 12-month period in an eligible circumstance (i.e. birth of a child; adoption or foster care placement of a child; to care for a spouse, child, or parent with a serious health condition; a health condition that prevents the employee to perform their job; any qualifying exigency arising from an employee’s spouse, child, or parent who is a covered military member on “covered active duty”)
- 26 work weeks of leave during a single 12-month period to care for a covered servicemember suffering from a severe injury or illness (if the eligible employee is the service member’s spouse, child, parent, or next of kin)
Through educating themselves on the regulations set by the FMLA, HR managers will be better equipped to handle employee leave requests in a lawful and efficient manner.
Workplace Discrimination Law
As previously mentioned, discrimination lawsuits can be incredibly costly for corporations. This is why it’s essential for HR managers to familiarize themselves with workplace discrimination laws and the acts currently in place to protect employees. These acts include:
- American with Disabilities Act (ADA) – prohibits employer discrimination against persons on the basis of disability
- Age Discrimination in Employment Act (ADEA) – prohibits age discrimination in the employment space
- Equal Pay Act (EPA) – forbids discrimination on the basis of sex
- Pregnancy Discrimination Act (PDA) – prohibits discrimination on the basis of pregnancy, childbirth, and/or a medical condition linked to pregnancy or childbirth
Employment and Employee Benefits Law
This type of law refers to the compensation provided to employees by their employers, to supplement wages or salaries, such as health insurance, life insurance, paid vacation, and childcare benefits. Although it is not legally necessary for organizations to offer benefits, there are legal requirements that need to be met if an employer decides to do so.
Additionally, the federal Employee Retirement Income Security Act (ERISA) sets minimum standards for the majority private industry pension and healthcare plans that organizations provide voluntarily.
HR managers should also be well-versed in the contents in the following acts:
- Affordable Care Act (ACA) – also known as Obamacare
- The Consolidated Omnibus Budget Reconciliation Act (COBRA)
- The Health Insurance Portability and Accountability Act (HIPAA)
Workplace Safety Law
It is vital for HR managers to familiarize themselves with workplace safety laws and practices for an array of reasons: it reduces absenteeism among employees, improves the organization’s reputation, and reduces the number of compensation claims (which will be explored in greater detail in the following section). This is because, in maintaining a thorough understanding of workplace safety laws and implementing practical processes, HR managers can effectively manage employee risk.
While every occupation comes with a degree of risk, every company has an obligation to mitigate these risks as much as possible to ensure the health and safety of employees. Companies are required to do this by following the laws, regulations, and standards set by the Occupational Safety and Health Administration (OHSA). The OHSA has an array of standards in place for a variety of industries, including construction, agriculture, and general industry, which can be found here. HR managers should read through these standards and consult other OHSA resources to find and implement safer measures for employees to complete their job functions.
Compensation law is closely linked to workplace safety law. When an employer fails to abide by workplace safety laws, an employee could be adversely impacted (i.e. they could suffer a personal injury, they may be subject to discrimination or harassment, etc.)
In such circumstances, an employee is well within their rights to pursue legal action and make a compensation claim. Oftentimes, workers who decide to make a claim seek the assistance of legal professionals, such as Albany workers compensation attorney Paul Giannetti. HR managers should be aware of both the organization’s and the worker’s rights in the case of such proceedings.
Understanding legalities and abiding by is an extremely important part of any HR manager’s job. In ensuring that the organization complies with the standards set by wage laws, workplace discrimination laws, employee benefits laws, workplace safety laws, and compensation laws, an HR manager will not only preserve the company’s reputation but improve the overall functionality of the workplace.