The Business Case for HR Compliance Software: Is it Worth It?

Every business has employment laws to adhere to — and the larger your organization, the more complex it can get. Human resources teams have to keep up with leave laws, minimum wage laws, and other labor laws that vary from state to state. Penalties for non-compliance range from fines to lawsuits and can damage your reputation.

HR compliance software can aid your compliance efforts by streamlining HR processes, tracking employment law changes, and maintaining a paper trail of HR tasks.

But is HR compliance software worth the cost? Here’s what HR professionals need to know and how to calculate the ROI of HR tech.

What Is HR Compliance Software?

HR compliance software refers to computer programs that HR teams use to perform compliance tasks and address compliance issues. Modern HR software tends to be cloud-based, making them accessible from desktop or mobile devices, in contrast to legacy systems which were installed directly on a device. 

Compliance tools may include some of the following features:

• HR automation to perform repetitive tasks
• Templates and checklists to standardize workflows
• Reporting tools to monitor trends and identify issues
• Integrations to share employee data across systems

HR compliance software saves your HR team time and money, and gives you peace of mind that you’re meeting your compliance needs. It can also provide the compliance training that your HR team needs to get it right the first time as well as an audit-ready paper trail should you face employee complaints or an investigation.

HR teams may use a dedicated compliance management system, or use compliance tracking tools that are integrated into other HR systems.

Key Components of HR Compliance Management

Compliance management is a broad responsibility that includes everything from abiding by labor laws to creating and enforcing your company policies. Here are a few areas of focus that are especially prone to HR compliance issues:

• Talent management and recruiting: HR teams need to ensure their job postings and hiring practices comply with the Equal Employment Opportunity Commission (EEOC) and other regulatory guidelines. They may also need to confirm employment eligibility using the E-Verify system.

• Payroll: From minimum wage laws to the Fair Labor Standards Act (FLSA), HR teams can use time tracking tools and payroll automation to record hours worked, calculate accrued sick time, and withhold applicable income taxes.

• Leave management: Leave laws range from the Family and Medical Leave Act (FMLA) to state laws providing paid parental leave or sick time. HR compliance software can help you track multiple leave laws with a custom rule engine.

• Benefits administration: Employee benefits aren’t just an optional perk. Some benefits may be required by law, such as group healthcare coverage under the Affordable Care Act (ACA) or workers’ compensation coverage. Use workers’ comp case management to streamline cases and ensure HR compliance.

How HR Compliance Software Reduces Risks

HR experts may have years of experience addressing compliance risks — so how does  HR compliance software help them do their job? In short, moving from legacy systems to modern, user-friendly software allows you to scale your operations without adding to your headcount. Plus, you can use the latest HR tech — like AI-powered data analytics and real-time alerts and notifications — to modernize your compliance initiatives.

Here are key features HR compliance software brings to the table.

Custom Rule Engine

Navigating labor laws can be more complex than ever, especially if you have a remote work policy with employees in multiple states. Many leave laws apply concurrently, so multiple laws may apply to a single leave of absence request.

A custom rule engine helps you navigate labor laws throughout the employee lifecycle. For example, Pulpstream’s leave management platform automatically runs each leave request past the eligibility requirements for FMLA and other leave laws, reducing the likelihood of compliance issues.

Improved Data Security

Cybersecurity is a growing concern for many HR teams, with employees and regulators alike taking an interest in how you handle employee data. Many employment laws have data protection and confidentiality requirements, and legacy systems may not adhere to the same standards, resulting in data breaches and data silos.

HR compliance software can help you comply with HIPAA, GDPR, and other modern security standards. Pulpstream’s role-based permissions ensure that only authorized users can access employee data, while making it available to them on-demand via a secure, cloud-based portal.

Accurate Recordkeeping

Manual HR processes are prone to human error, and the lack of an audit-ready paper trail can open you up to legal issues. New hire onboarding, performance management, and corrective action all require extensive documentation to avoid non-compliance.

With HR compliance software, you can use dashboards to flag compliance issues in real time, and be prepared to justify your actions in the case of a regulatory audit or lawsuit. Pulpstream makes it easy to conduct your own audits and inspections, and track changes to your company policies or your employee handbook.

3 Ways to Benefit from HR Compliance Software

Digitizing HR processes has practical benefits for HR teams, but getting buy-in from HR management and other decision-makers can be a challenge. The time required to learn a new system, not to mention the financial investment, can be a barrier to change. But what if the financial benefits of compliance software outweighed the cost? Here’s why choosing the right compliance software may be a net positive for your organization.

1. Leave Behind Legacy Systems

Legacy systems have their uses, but HR leaders are feeling the pressure to switch to new, market-leading alternatives that provide more functionality at a better price point. Even organizations with custom HR systems can benefit from new cloud-based tools that offer a broader range of integrations.

Legacy systems typically have higher maintenance costs than Software-as-a-Service (SaaS) tools, and offer less flexibility and scalability. Once you get past the switching costs, you can escape vendor lock-in and reduce reliance on stagnant providers.

2. Only Pay for What You Need

Modern HR software providers offer cost-effective pricing plans, usually based on the specific modules you need to use or the number of employees or users. Some tools may offer add-ons for advanced features like international regulatory compliance.

Pulpstream’s comprehensive suite of tools includes leave of absence management, employee relations management, claims management, and more. Pulpstream offers custom pricing options tailored to your business size and use cases, and supports integrations with existing tools like your HCM or payroll platform.

3. Reduce Fees and Penalties

The clearest business case for using HR compliance software is that it can reduce your exposure to fines, penalties, and legal issues. These include but are not limited to:

• Penalties for non-compliance
• Fines for employee data breaches
• Legal fees, court costs, and back pay
• Lost revenue due to reputational damage

Depending on the severity, a single compliance failure can cost millions — more than the cost of HR compliance software. By prioritizing compliance training and tracking benchmarks, you can ensure a clear return on your investment.

Streamline HR Compliance With Pulpstream

HR compliance software can help you expand your compliance efforts without resorting to outsourcing or increasing your headcount. Modern HR tools help you save time and money by streamlining workflows and automating recurring tasks. Use them to ensure recruiting compliance, leave of absence compliance, payroll compliance, and more.

Cloud-based tools like Pulpstream provide several advantages over legacy systems, including cost-effective pricing and integrations with existing tools and apps.

Request a demo today to see how Pulpstream solves compliance issues!