Your human resources team is your first defense against penalties for non-compliance. HR professionals are skilled at navigating employment laws, fostering healthy employee relations, and addressing compliance issues. But even the most experienced HR teams can struggle to keep up with leave laws and other compliance requirements.
Small business owners, HR leaders, and other decision-makers need to weigh the costs of doing business as usual vs. investing in HR software so you can reduce your compliance risk and protect your bottom line. Here’s how HR automation can reduce your administrative burden and result in clear HR compliance costs savings.
HR compliance cost savings are the dollars you save by complying with labor laws and other regulations, rather than dealing with penalties. It’s typically more cost-effective to invest in HR compliance software than it is to pay the fines and legal fees that accrue when you fail to honor your obligations as an employer.
The costs of non-compliance include:
You may also incur increased hiring costs due to poor employee retention and the loss of lucrative deals or government contracts.
A strong in-house compliance process is an important part of risk mitigation. In addition to cost reductions, it can give you peace of mind that your organization is prepared for compliance audits and inspections.
Determining which compliance issues are most likely to be a problem for your HR team is the first step to remedying them. These five compliance issues are some of the most urgent issues for HR departments to address through software or HR outsourcing.
The Internal Revenue Service (IRS) has strict rules around employee classification. An employer who misclassifies an employee can face fines for each misclassified worker and may be liable for unpaid taxes and employee benefits.
The most common error is to classify an employee as an independent contractor, but changes to an employee’s role can also cause compliance issues. Part-time, full-time, and temporary employees may have different rights under labor laws. HR teams can use workforce analytics software to track employment trends over time and adjust worker classifications and staffing levels as needed.
The onboarding process can involve more paperwork than almost any other stage in the employee lifecycle. There are work authorization (I-9) forms, tax withholding forms, and employee benefits enrollment to deal with. Employers are required to maintain records for each employee and can be penalized if they lose or misplace them.
With Pulpstream, you can use HR automation to deliver onboarding documents to new hires and store them safely and securely in the cloud. Plus, you can use our benefits administration tool to manage your healthcare plan, wellness perks, and more.
Leave laws are notoriously complex, and the fact that they vary from state to state can magnify the pressure on your HR staff. Employers need to comply with the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), as well as paid parental leave laws in states like New York and California.
Leave of absence automation software supports compliance by running each request through a custom rule engine, verifying that the employee meets the eligibility criteria even before a member of your HR team reviews it.
According to the Occupational Safety and Health Administration (OSHA), penalties for serious violations range from $1,221 to $16,550, while “willful or repeated” violations can result in fines of up to $165,514 per incident. Not only that, but an unsafe work environment can reduce employee satisfaction and drive away top talent.
A robust incident management process should play a key role in any risk management initiative and can result in clear HR compliance cost savings.
Despite being a recurring HR function, traditional payroll processing is prone to human error and inefficiencies. Employers need to calculate accrued leave, overtime pay, and and more, while integrating payroll records with other HR processes.
Some small businesses use a professional employer organization (PEO) to outsource this work. You can handle it in-house by using an employee attendance tracker to log hours worked, and payroll automation to optimize inefficient workflows.
The real question facing HR management is this: Is it better to invest in HR compliance software upfront or to deal with compliance issues (and their associated penalties) as they come? While the return on investment (ROI) of HR tech can vary, HR compliance cost savings are one of the surest ways to rein in your overall HR costs.
Let’s assume that in a single month, you face a compliance issue in each of the five categories we’ve looked at:
That’s $10,326 in non-compliance penalties in a single month — and that’s assuming you’ve only misclassified one employee! Most penalties are applied per violation, and increase for repeated and willful violations. In addition to fines, you may have to pay back wages, back taxes, and court settlements or legal fees.
Of course, once you’ve identified a compliance issue, you can make changes to your HR workflows to prevent it from happening again. But if you’re still relying on manual HR processes, errors are bound to happen.
HR compliance software requires an upfront investment, but it can reduce your total HR costs by minimizing the risk of penalties and legal fees. Instead of facing unpredictable compliance costs every month, you’ll pay a flat fee per employee or per user. (Pricing models can vary; contact Pulpstream to request a custom quote.)
Along with HR compliance costs savings, there may be other benefits. You’ll:
HR compliance isn’t just about meeting the bare minimum of your legal obligations but also about providing a safe work environment and maintaining a healthy workforce. With an HR automation platform like Pulpstream, you can save time, money, and stress while reducing the cost of compliance.
The cost of HR non-compliance can have an outsized impact on your bottom line. Some of the most common compliance issues for HR teams are worker misclassification, poor recordkeeping, and leave law violations. Penalties for paperwork and payroll violations can be as high as $2,789 — and increase for intentional or repeated violations.
HR automation tools like Pulpstream help organizations achieve HR compliance cost savings by streamlining workflows and reducing compliance risk. HR teams can use automation to standardize the onboarding process and provide a self-service portal where employees can access HR services.
Plus, you can integrate Pulpstream with your time-tracking and payroll management software to save time and reduce human error.
Request a demo today to see how it can have an impact!