What is Employee Compliance and Why Does it Matter?

Compliance in the workforce today is not a buzz word; it is the foundation behind risk management and company culture. Whether you are a young company in its start-up phase or a company with an established brand identity, compliance in the workforce is a large factor behind protecting both the business and its workforce.

What Is Employee Compliance?

Employee compliance is an aggregate measure of how closely your workers are adhering to laws, regulations, and internal policies governing their employment. That is everything from wage laws and safety procedures to anti-discrimination policies and industry regulations. It is less about rule-following; it is more about having a workplace environment in which workers are not confused about what is demanded of them, in which boundaries are clearly set, and in which accountability is a daily occurrence.

Examples Of Employee Compliance Are:

Accurately documenting hours worked and watching for required breaks
Compliance with confidentiality agreements and data privacy policies
Completion of required training on such subjects as harassment, cybersecurity, or HIPAA (in a healthcare environment)
Compliance with industry laws like OSHA, FLSA, or SEC reporting laws

Compliance isn’t optional. From the first day you employ someone, it’s a responsibility you cannot afford to overlook..

Why is Employee Compliance Significant?

The results of faulty compliance practices are disastrous, ranging from fines and lawsuits to employee departures and loss of reputation. But when done correctly, employee compliance is more than risk prevention. It's what makes a company more efficient, more successful, and more respected.

1. Legal Protection

Compliance with state and federal laws protects your company from fines, lawsuits, and investigations. Your company can still face punishment even though it's not an intentional act when its workers are not in compliance with wage-hour laws.

2. Workplace Safety and Ethics

From OSHA standards to anti-harassment policies, compliance by employees directly leads to a safe and ethical workplace. When expectations are clearly spelled out and consistently enforced, employees are more likely to speak up, report problems, and take ownership.

3. Operational Efficiency

Effective compliance systems clarify confusion and make it easier to operate. When you make it simple for workers to know which forms are used, which procedures are filled out, and to which person you report, operations flow more smoothly.

4. Reputation Management

Customers, investors, and potential hires all pay attention to how companies treat their people. Failure to be in compliance can lead to damage to your reputation, which can be several times greater than the fine itself. Effective compliance is an indicator of professionalism and creates credibility.

Common Employee Compliance Points to Track

Workplace compliance extends throughout your company. These are some of the most common areas in which businesses run into trouble and where the right systems can make an actual impact:

Wage & Hour Laws: Monitoring hours, compensating for overtime correctly, and correctly designating workers as exempt or non-exempt.
Time Off/Leave Management: Administration of FMLA, family leave, and sick time consistent with federal and state laws.
Workplace Conduct: Maintaining policies around harassment, discrimination, and workplace behavior.
Safety Procedures: Compliance with OSHA and sector-specific safety requirements.
Data Security: Training employees in cybersecurity best practices and protecting sensitive employee or customer information.
Licensing & Certifications: That employees should have appropriate certifications in positions which are regulated.

Setting Up a Comprehensive Employee Compliance Program

It is not enough just to issue a manual. Compliance is successful when it is incorporated into everyday activity. Here are five ways to develop employee compliance in your organization:

1. Establish Written, Up-to-Date Policies

Your employee handbook should use simple English and be updated for current federal, state, and industry laws. If policies are outdated or ambiguous, confusion results, as does increased risk for your business.

2. Routine Training and Documentation

A one-time training is not enough. Workers should also receive periodic training in anti-harassment, wage/hour laws, safety policies, and any occupation-specific laws. Keep accurate records of when each training was administered.

3. Set the Tone at the Top

Leaders must show adherence. When managers disregard policies or cut corners, employees take notice. Culture starts at the top.

4. Make it Simple to Report Issues

Set up a confidential, safe way for workers to report their issues. Reports are seriously considered and addressed properly.

5. Review and Audit Regularly

Do not wait for there to be an issue. Conduct periodic compliance reviews and audits to uncover and fix potential weaknesses before they become greater issues.

When To Call in Outside Help

For midmarket businesses and small organizations, in-house administration of employee compliance issues is a daunting venture. With shifting laws, complex report submissions, and daily business operations, businesses lack the time or expertise for keeping up. That's where we can help. Working in alliance with businesses in any line of business, we create efficient HR systems that reduce risk and support sustainable business growth. Whether you need help in developing policies or training staff members, we enable you to better organize and make educated decisions about your compliance program without the expense of a full-time HR department.

Compliance is Culture

Compliance at its best is a part of your company's culture, not a box you can check. When expectations are clearly communicated and reinforced by leadership, it builds trust, minimizes risk, and establishes the foundation for a strong and healthy workplace culture. If you are uncertain about your compliance status or have delayed a review, now is the time to take action. Contact us at Reynolds + Rowella and find out how we can support you in strengthening your compliance program and empowering your team.

INSIGHTS What is Employee Compliance and Why Does it Matter?