Ensuring Compliance in HR: How the Right HRIS System Can Help

HRIS systems streamline HR compliance, reducing risks. OutSail helps choose the right HRIS for effective compliance management

Brett Ungashick
OutSail HRIS Advisor
July 24, 2023
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Introduction: The Challenge of HR Compliance

The challenge of HR compliance isn't just about keeping up with changes. It involves a continuous effort to understand, interpret, and implement regulations within the business framework, which poses significant difficulty for businesses of all sizes. Non-compliance isn't an option, as this could lead to fines, legal issues, and substantial damage to an organization's reputation.

Therefore, it is crucial to keep the pulse on the latest regulatory changes and appropriately translate them into internal company policies. In this context, technology, specifically Human Resource Information Systems (HRIS), has emerged as a vital tool for managing HR compliance more effectively and efficiently.

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Understanding HR Compliance Requirements

HR compliance is a multifaceted aspect that covers a wide range of areas crucial to managing human resources effectively. These areas include employment law, tax obligations, employee benefits, data security, and privacy. Local, state, federal, and sometimes international laws govern compliance requirements in each domain. Organizations must navigate a complex web of regulations to ensure they adhere to the applicable laws and avoid legal issues.

For example, the Fair Labor Standards Act (FLSA) sets guidelines for minimum wage, overtime pay, and child labor standards. At the same time, the Family and Medical Leave Act (FMLA) establishes provisions for employee leave entitlements. If an organization operates within the European Union, it must also comply with the General Data Protection Regulation (GDPR), which regulates the protection and privacy of personal data.

Achieving compliance requires diligent record-keeping, policy enforcement, and regular reporting. HR teams are responsible for ensuring that the organization adheres to these regulations, which can be daunting. Staying current with legislation changes and implementing the necessary measures to maintain compliance is crucial to safeguarding the organization and its employees.

How HRIS Helps Maintain Compliance

A Human Resource Information System (HRIS) is a powerful tool that aids businesses in ensuring compliance with regulatory requirements in the following ways:

Centralization of Employee Data

One of the primary ways an HRIS helps maintain compliance is by consolidating all employee data into a single platform. This centralized approach allows for efficient storage, access, and management of employee information. By having all data in one place, businesses can easily ensure consistency and accuracy, reducing the risk of non-compliance caused by data inconsistencies.

Automation of Compliance Tasks

An HRIS system automates various compliance-related tasks, improving efficiency and reducing human errors. For instance, the system can generate reports required by regulatory bodies, ensuring timely submission and adherence to regulatory guidelines. These reports may include information related to workforce demographics, compensation, and hours worked.

Tracking Employee Benefits

Compliance with laws and regulations related to employee benefits can be complex. An HRIS simplifies this process by automating the tracking and management of employee benefits. The system can monitor eligibility, enrollment, and any changes in benefits, ensuring that businesses remain compliant with applicable laws and regulations. This automation also enables accurate record-keeping, facilitating audits and inspections.

Maintaining Training Records

Compliance often necessitates employee training on various topics, such as safety, diversity, and harassment prevention. An HRIS can maintain comprehensive training records, ensuring employees receive the required training and certifications. The system can track training completion, send reminders for renewals, and generate reports demonstrating compliance with training requirements.

Addressing Data Protection Regulations

In the context of data protection regulations, such as the General Data Protection Regulation (GDPR), an HRIS plays a crucial role in maintaining compliance. The system can help businesses track and manage employee consent for data processing, ensuring that data is only processed with proper authorization. Additionally, an HRIS can assist in responding to data subject access requests, managing data breaches, and ensuring compliance with data minimization principles.

The Role of HRIS in Audit Preparation

When it comes to audit preparation, an HRIS system can be a lifesaver. Audits require comprehensive and accurate data, and without an HRIS, this data might be scattered across different databases, spreadsheets, and paper files, making the preparation process time-consuming and prone to errors.

An HRIS centralizes all employee data, making compiling the necessary information for an audit easier. It also keeps a detailed history of actions taken, which can be crucial for demonstrating compliance in an audit. Additionally, with an HRIS, companies can perform internal audits more regularly and easily identify and address compliance issues before they escalate.

Best Practices for Using HRIS in Compliance Management

While an HRIS system is a powerful tool, it must be used effectively to achieve the desired compliance outcomes. Here are some best practices for using an HRIS in compliance management:

  1. Regularly update the system: Laws and regulations frequently change, and businesses must ensure that their HRIS system is updated to reflect these changes.
  2. Train your HR team: An HRIS system is only as good as those using it. Regular training for HR personnel on the system’s features, updates, and best practices can ensure optimal utilization.
  3. Maintain data security: Compliance often involves handling sensitive data. Organizations must have robust data security measures, like encryption, access controls, and regular audits, to protect this data.
  4. Leverage analytics: Many HRIS systems come with analytic capabilities. Organizations can leverage these features to identify trends, track compliance metrics, and make data-driven decisions.

Conclusion: Choosing an HRIS System for Better Compliance

Ensuring HR compliance can be a significant challenge in today's complex regulatory environment. However, with the right HRIS system, organizations can simplify and streamline their compliance processes, reduce non-compliance risk, and focus more on their core operations. When choosing an HRIS system, businesses should consider factors like the system's features, ease of use, data security measures, and scalability. By leveraging the power of HRIS, businesses can turn the daunting task of compliance management into a manageable and efficient process.

What is HR compliance, and why is it important?

HR compliance refers to adhering to laws, regulations, and company policies related to employment, taxation, benefits, data security, and privacy. It is important to avoid legal issues, fines, and damage to an organization's reputation.

How does an HRIS system help maintain compliance?

An HRIS system helps maintain compliance by centralizing employee data, automating compliance tasks, tracking employee benefits and training records, and addressing data protection regulations.

What are the key areas of HR compliance covered by an HRIS system?

An HRIS system covers key areas of HR compliance such as employment law, tax obligations, employee benefits, data security, and privacy.

How does an HRIS system assist in audit preparation?

An HRIS system assists in audit preparation by centralizing employee data, maintaining a detailed history of actions taken, facilitating internal audits, and easily compiling necessary information for audits.

What are some best practices for using an HRIS system in compliance management?

Some best practices for using an HRIS system in compliance management include regularly updating the system, training the HR team on system usage, maintaining data security, and leveraging analytics for compliance tracking and decision-making.

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Meet the Author

Brett Ungashick
OutSail HRIS Advisor
Brett Ungashick, the friendly face behind OutSail, started his career at LinkedIn, selling HR software. This experience sparked an idea, leading him to create OutSail in 2018. Based in Denver, OutSail simplifies the HR software selection process, and Brett's hands-on approach has already helped over 1,000 companies, including SalesLoft, Hudl and DoorDash. He's a go-to guy for all things HR Tech, supporting companies in every industry and across 20+ countries. When he's not demystifying HR tech, you'll find Brett enjoying a round of golf or skiing down Colorado's slopes, always happy to chat about work or play.

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