March 31, 2023
Layoffs, restructuring, and reduction-in-force efforts are happening across the market in multiple industries. As growing concerns about a recession increase, businesses are pulling their purse strings tighter and making difficult decisions about who stays and who goes — but could this cost companies in the long run?
Human Resource departments have historically been the face of termination, responsible for delivering bad news to employees when layoffs occur. A different challenge is emerging now, as HR layoffs represent almost 50% of recent layoffs in tech. Human resource departments are responsible for more than hiring and firing — they are the managers of the employee lifecycle. Their functions include onboarding, training and development, payroll and benefits, performance management, and managing liability. They are the first responders to ensuring compliance with employment laws. Eliminating HR positions is risky, as they are often the ones who have deep knowledge and understanding of both internal policy and local, state, and federal compliance regulations. Since employment laws generally cover matters related to hiring, compensation, benefits, discrimination, harassment, and safety – the essence of an HR department – it is crucial that as companies scale back their resources, they remain dedicated to staying up-to-date with any changes in employment laws and regulations.
What Are Employment Laws?
Employment laws are laws and regulations that govern the employer-employee relationship and set standards for workplace conduct and practices. Employment laws can vary depending on the country, state, or municipality in which an organization operates, but there are several major federal and state employment laws in the United States that most organizations must comply with. These laws cover:
Some of the major employment laws include:
Common Compliance Issues
Discrimination
Discrimination and bias can take many forms, including but not limited to, race, gender, religion, age, and national origin, and is sometimes difficult to identify. Hiring practices are a frustrating problem for job seekers but can be difficult to identify. Even AI technology isn’t perfect – 83% of employers now use some form of AI to recruit new employees, hoping to save time and decrease bias. And yet software algorithms can still prevent qualified candidates from moving forward in a job screening.
Failure to pay employees properly
Employers must comply with minimum wage and overtime laws, pay their employees on time, and accurately record their hours worked. Wage theft affects an estimated 17% of low-wage workers and continues to cost employees billions each year. Employers should establish clear and consistent payroll practices, keep accurate records of hours worked, and ensure employees are accurately classified in the case they may be a contractor. Misclassifying employees can result in legal action and substantial back pay liability for the employer.
Workplace safety violations
Workplace safety violations are a serious issue that can result in injuries or even fatalities. Employers should conduct regular safety inspections, provide adequate training and protective equipment, and address any hazards or violations promptly to prevent accidents and injuries. The Occupational Safety and Health Administration (OSHA) reported a total of 21,123 safety violations during fiscal year 2022, which can carry a penalty of up to 156,259 per violation.
Failure to provide reasonable accommodations
The Americans with Disabilities Act requires employers to provide reasonable accommodations to qualified employees with disabilities, such as modified work schedules or assistive technology. Employers should have clear policies in place for accommodating employees with disabilities and be proactive in identifying and addressing accommodation needs.
Non-Compliance Has Consequences
Legal action
Employers who fail to comply with employment laws subject themselves to lawsuits filed by employees, former employees, or government agencies, such as the Equal Employment Opportunity Commission (EEOC) or the Department of Labor (DOL). As recently as February 2023, the National Labor Relations Board passed a law that prevented companies from being able to silence employees who took severance pay. It’s important to note that in addition to any punitive or legal challenges companies may face by violating this act, this also opens the door for employees to openly criticize their former employers without violating their agreements.
Financial penalties
Violating employment laws is an expensive mistake – companies can face fines, penalties, and legal fees, which can affect the bottom line of financial health. Bloomberg reported that in 2022, workers received a combined net settlement worth nearly $2 billion – a figure that’s expected to increase in 2023.
Damage to reputation
In an age where information is instantly available, news of company wrongdoing can spread instantly and have lasting effects on the reputation of the company. In addition to public perception potentially causing loss of profit, evidence suggests that it is just as important to shareholders. Not only can lawsuits be very expensive, but customers and partners may be hesitant to do business with a company whose reputation has soured due to non-compliance.
Criminal charges
In some cases, violations of employment laws can result in criminal charges and prosecution, particularly in cases involving serious offenses such as wage theft or workplace safety violations. Historically, wage theft was often mitigated in civil cases or private lawsuits, but it is punishable by criminal prosecution.
Steps to Ensure Compliance
Know the laws
All businesses must understand the employment laws that apply to them. These laws include federal regulations, but also vary among states. Hybrid and remote work arrangements make state law applicable to any employer whose employees may work offsite. Businesses who want to hire candidates in California for example must provide salary information on their job descriptions and provide information on the hourly pay scale.
Develop policies, procedures, and documents
Developing policies and procedures that can be easily shared is essential to making sure your business is compliant. This could include creating an employee handbook that outlines your company’s policies on issues that may not have defining laws. Maintaining accurate records of employee hours worked, wages paid, and other employment-related information can help establish both policy and compliance demonstration in the event of an audit or legal case.
Train managers and employees
Make sure your managers and employees are trained on employment laws and company policies. This training should cover topics such as workplace safety, anti-discrimination laws, and wage and hour laws.
What Type of Training is Available?
Employer compliance training is designed to provide employers and their employees with a comprehensive understanding of the legal requirements related to employment and to help them avoid violations and legal problems. Training can be delivered through:
Training can be just as effective outside of a formal classroom setting, especially when it comes to safety training. According to OSHA, “Peer-to-peer training, on-the-job training, and worksite demonstrations can be effective in conveying safety concepts, ensuring understanding of hazards and their controls, and promoting good work practices.” Additionally, online and virtual training offers employers a cost-effective way to personalize the learning process, facilitate community among staff, and increase employee retention of skills.
Employer compliance is meant to offer employees a comprehensive understanding of the legal requirements related to employment and to help them avoid violations and legal problems. Training covers a wide range of topics related to employment laws and regulations and may vary depending on the industry, location, and size of the business, but some common topics include:
Anti-discrimination and harassment
This type of training is designed to prevent discrimination and harassment in the workplace based on protected characteristics such as race, gender, age, and religion. Diversity training has been shown to improve how employees relate to each other, and is tied to better conflict resolution in the workplace.
Wage and hour laws
Since this is such a common violation, training covering wage and pay laws can prevent employers from mismanaging their payroll, providing fair compensation, and preventing conflict due to wage theft.
Workplace safety
Workplace safety training can be a crucial step in preventing fatal accidents and can be delivered in informal settings like on-the-job-training. Studies show safety training can save employers as much as $4-6 for each $1 spent on training.
Leave and benefits
Life can have unexpected challenges, and having to take unexpected leave can be an additional stress. Training can educate employers on employee leave entitlements, such as family and medical leave, as well as other employee benefits, such as healthcare and retirement plans so that they can manage their needs proactively.
Recordkeeping and reporting
Companies need to create systems and common practices for maintaining accurate records of employee hours worked, wages paid, and other employment-related information, as well as requirements for reporting to government agencies. Training allows people to understand programs and policy related to OSHA record keeping, and even make suggestions to streamline the process.
Data privacy and security
The increase of phishing attacks poses a huge threat to organizations and individuals, which means regular cybersecurity training on preventing security issues can be an effective preventative measure.
Employment Law has been around for decades, but the stakes are higher than ever. Drastic changes in the workforce, recession-related layoffs, employee outlook, and the rapidness with which information can be shared present pressing challenges to employers. They must be well-equipped to face compliance-related issues.
Atlantic Training can provide your business with the right training to be successful. We are equipped to help you navigate the challenges of employment law compliance, and can help you create a program to address any of the following issues or knowledge gaps:
We also understand that managing your team’s Human Resource needs can be a challenge, especially in a time of budget cutbacks and uncertainty. Let us help you prevent legal challenges and costly mistakes by delivering the solution you need.
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