HR Compliance Issues that Can Cost Your Business

HR Compliance Issues that Can Cost Your Business

Posted by HR Division of Propel HR on 4/18/24 1:45 PM
HR Division of Propel HR
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Posted on: April 18, 2024

The cost of HR compliance violations goes beyond penalties and legal expenses, damaging reputation and eroding trust. Here are a few areas to watch.Choosing the Right PEO

What is HR Compliance?

HR compliance includes a wide range of responsibilities and requirements that your company must adhere to under federal, state, and local employment laws, as well as industry-specific regulations. Important laws that employers need to be familiar with include the federal labor laws under the Equal Employment Opportunity Commission (EEOC). EEOC laws protect workers from discrimination, harassment, and retaliation in the workplace. These include: 

💠Title VII of the Civil Rights Act of 1964 (Title VII). This law makes it illegal to discriminate against someone based on race, color, religion, national origin, or sex. It also covers The Pregnancy Discrimination Act, making it illegal to discriminate against a woman because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth. 

💠The Equal Pay Act of 1963 (EPA). Under EPA, it's illegal to pay different wages to men and women if they perform equal work in the same workplace.

AdobeStock_377848537_01💠The Age Discrimination in Employment Act of 1967 (ADEA). This law protects people 40 or older from discrimination because of age. 

💠Title I of the Americans with Disabilities Act of 1990 (ADA). Under ADA, it's illegal to discriminate against someone with a disability. Under ADA, employers must also reasonably accommodate the applicant or employee unless doing so would impose an undue hardship on the employer's business.

💠The Genetic Information Nondiscrimination Act of 2008 (GINA). This law prohibits discrimination against employees or applicants because of genetic information, including genetic tests and genetic tests of an individual's family members, as well as information about any disease, disorder, or condition of a family member or their medical history.

💠The Pregnant Workers Fairness Act of 2022 (PWFA). PWFA requires covered employers to provide a reasonable accommodation to workers with limitations related to pregnancy, childbirth, or related medical conditions. It also makes it illegal to retaliate against the employee due to complaints about discrimination, discrimination charges filed, or participation in an employment discrimination proceeding, such as an investigation or lawsuit. 

⚠️Final Rule Update: On April 15, 2024, the EEOC issued a final rule to implement PWFA, providing important clarity to allow pregnant workers the ability to work and maintain a healthy pregnancy and help employers understand their responsibilities under the law. The final rule will be published in the Federal Register on April 19, 2024 and becomes effective 60 days after publication. 

COSTS & CONSEQUENCES 

Harassment and Discrimination. In 2023, the Equal Employment Opportunity Commission (EEOC) filed 50% more lawsuits and recovered a record $665 million for more than 22,000 workers who experienced workplace discrimination. The majority of the cases involved workplace discrimination and harassment, retaliation, pay equity, accessibility, and the use of technology, including artificial intelligence, in employment decisions. Here are a few examples:

AdobeStock_346861081_01🚩$50,000: Pregnancy Discrimination. An Atlanta-based laboratory must pay $50,000 for sex discrimination and retaliation against a pregnant employee. 

🚩$90,000: Age Discrimination. A diagnostics company must pay $90,000 for age discrimination. A third-party recruiter for the diagnostics company rejected a 49-year-old job applicant for a sales position because he was “overquali­fied” and that the company was “looking for someone more junior that can stay with the company for years to come." Conduct like this violates the Age Discrimination in Employment Act (ADEA) and also applies to employers who use third-party recruiters to screen job applicants. 

🚩$500,000: Racial Harassment and Retaliation. A steel fabrication company was required to pay $500,000 for violating Title VII of the Civil Rights Act of 1964. The company harassed Black and Latino employees and retaliated against employees who complained by firing them or moving them to the night shift.

AdobeStock_355046792🚩$1 million: Recruiting Applicants Based on Medical History. The EEOC fined Dollar General $1 million for violating anti-discrimination laws by using job applicants' medical histories to make hiring decisions. The retailer required job applicants to pass a pre-employment medical exam and disclose past and present medical conditions of family members, such as cancer, diabetes, and heart disease. 

🚩$150,000: Denying a Diabetic Worker Breaks. United Parcel Service (UPS) was ordered to pay $150,000 and provide additional relief, including reinstatement of a discharged employee with diabetes. The UPS employee was fired after requesting an occasional short break to check his blood sugar. 

🚩$175,000: Denying A Service Dog Accommodations Request. A Georgia Papa John’s pizza franchise was required to pay $175,000 for disability discrimination after firing an employee. The employee, who had vision impairments, was denied accommodation for his service dog, and subsequently fired, a violation of the ADA.

➡️➡️Link #1Link #1Link #1Link #1Link #1Read More: Your HR Checklist for Q2 is HERE!

FMLA Leave Violations

🚩$438,625: FMLA Protective Leave Violations. The Department of Labor recovered $438,625 in back wages, unpaid bonuses, and liquidated damages for two former Mercedes-Benz workers after the employer violated their rights to protected leave under the Family and Medical Leave Act.

🚩$2.9 million: Paid Leave Violations. The Chipotle Mexican Grill restaurant chain was fined $2.9 million for violating Seattle's Secure Scheduling and paid sick/safe time ordinances, including failure to provide accrued paid sick time, retaliation against an employee for calling in sick and declining shift, and scheduling changes.

⚠️Under FLMA, eligible employees are allowed unpaid, job-protected time off work and continued benefits for qualifying events. Some states also have specific leave requirements. Examples of the common types of FMLA leave include personal illness, birth or adoption of a child, illness of a family member, and military service. 

Wage & Overtime Violations

AdobeStock_410460586_1🚩$22 million: Donning and Doffing Time. Donning and doffing refers to the procedures of putting on and removing PPE properly. A battery manufacturer must pay more than $22 million for failing to compensate employees for time beyond their 8-hour shifts required to put on and remove protective equipment and shower to avoid dangerous exposure. 

🚩$190,730: Overtime Violations. By law, if two or more establishments share the same owner, they are considered a single enterprise. In this case, the Florida restaurant assigned employees to work at two locations they owned. However, the employer failed to total the number of hours worked by each employee at both locations and did not pay overtime when the combined hours exceeded 40 hours in a single workweek. 

Child Labor Law Violations

In addition to overtime pay, minimum wage, and recordkeeping, FLSA also oversees guidelines for employing youths. In 2023, the Department of Labor investigated 955 cases of child labor violations involving 5,792 children, including 502 children employed in violation of hazardous occupation standards.

🚩$1.5 million: Employing Children in Dangerous Jobs. A Tennessee parts manufacturer was ordered to pay $1.5 million after the DOL discovered children working in dangerous jobs. The company was also fined $296,951 for subjecting ten children to oppressive labor and operating a power-driven hoisting apparatus, an occupation prohibited for workers under 18.

AdobeStock_391940434_01-1🚩$49,833: Violating Federal Child Labor Laws. A Baskin Robbins franchisee violated federal law by allowing minor employees, ages 14 and 15, to work beyond the legal time limits set while school was in session. The employer was unaware of federal child labor laws and only followed state guidelines. In addition, the franchisee was also fined for recordkeeping violations. 

⚠️Before You Hire Young Workers: Review the Wage and Hour Division’s Seven Child Labor Best Practices for Employers to learn more about legal compliance and employer responsibilities. 

Misclassifying Workers

Misclassifying employees denies workers access to benefits and protections, including overtime, minimum wage, and family and medical leave. 

🚩$37,340: Misclassifying Caregivers as Independent Contractors. A South Carolina home healthcare provider must pay $37,340 in back wages for misclassifying workers as independent contractors instead of employees. The company paid workers straight-time rates for hours worked over 40 hours instead of the time-and-a-half as required by the Fair Labor Standards Act

⚠️Employers are responsible for complying with laws regarding pay practices, including classifying workers correctly, recording and paying employees for all time worked, and understanding the wage and hour laws in the states where employees are working. 

Industry-Specific Violations 

AdobeStock_653210959_01🚩$294,657: Safety Violations. A Dollar Tree subsidiary was fined $294,657 by the Department of Labor’s Occupational Safety and Health Administration (OSHA) for safety violations, including blocking exits and walkways, stacking boxes at unsafe heights, and failing to ensure quick access to fire extinguishers. 

⚠️In addition to federal requirements, many state and local governments have their own rules. And employers in certain industries must also follow industry-specific regulations, such as OSHA, HIPPA, and the SEC.

HOW TO AVOID 🚩AND STAY COMPLIANT     

The consequences of getting it wrong are steep. Here are a few ways to stay ahead: 

💠Invest In Compliance Training and Workplace Safety. According to a recent study, only half of employers continually educate their workers on workplace policies. Understand your responsibilities and seek guidance from regulatory and legal experts in your industry. 

💠Establish HR Policies and Procedures and Educate Workers. Studies show that workers failing to comply with employment laws cost businesses close to $1.6 million annually. Most employers surveyed believe establishing accountability measures would help mitigate risks. Start by implementing workplace policies and procedures and ensure your employees understand their responsibilities. An employee handbook can help with with outlining expectations and company policies and procedures related to compensation, benefits, paid leave, remote work, employment, termination, federal, state and local labor laws, safety, standards of conduct, sexual harassment, and other areas specific to your business. 

💠Seek Expert Guidance. With so many responsibilities, it's easy to see how small businesses, even those with a dedicated HR staff, can face unexpected compliance costs. One way to prevent a compliance misstep is by working with an IRS-certified PEO, like Propel HR. A PEO's team of experts stays up-to-date on HR compliance and helps employers comply with federal, state, and local employment laws.

PLEASE NOTE: This information is for general reference purposes only. Because laws and regulations are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your company may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated April 18, 2024)

Choosing the Right PEO

About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for more than 25 years. Propel partners with small to midsized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. For more information, visit www.propelhr.com.

Topics: Featured, Compliance

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HR Division of Propel HR

The HR Division is made up of a team of professionals with a vast level of experience and HR expertise, assisting organizations of all sizes and within a wide variety of industries. They readily partner with clients to address strategic and compliance challenges surrounding the employment life-cycle and the ever-changing laws that regulate it. Inquire below about how they can help you!