QUESTION
Our
bank is undergoing an internal review of its human resources department. I know
you conduct such reviews and would like to know some of the primary regulations
involving human resources compliance. There are experts in this kind of compliance;
however, they seem to be mostly interested in handling litigation issues, while
we are looking for a way to draft policies and procedures. What are some
important federal regulations involving human resources? What review issues should we
consider in our policy statements?
ANSWER
Human
Resources (“HR”) compliance is a specialization that very few risk management
firms offer. Ours does! Unfortunately, the legal community tends to focus on
the litigation arising from compliance failures involving human resources,
rather than providing reasonably-priced, compliance reviews of the HR function.
Our firm actually has a Director of Human Resources Compliance, an expert in the
regulatory requirements of human resources. We focus on guidance and reviews that seek to prevent litigation!
HR
is the term that describes individuals who comprise the workforce of an
organization. Human resources compliance, or "HR compliance," or sometimes colloquially referred to as "HR," is the term that applies to the department and functions within an organization, the administrative responsibility of which is charged with implementing
strategies and policies relating to the management of individuals associated with the organization.
In
many ways, human resources compliance is a central feature of a financial
institution’s overall compliance function. This is intuitively obvious, given that local,
state, and federal employment laws all play a role in human resources. Indeed, HR
must be familiar with a wide array of different statutory and regulatory
authorities to effectively and lawfully deal with company personnel.
Here
are just two of the many federal regulations that affect HR compliance. Local
and state statutes should also be included in any HR policy statement.
- Fair Labor Standards Act (FLSA): This is a federal statute that applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce (unless the employer can claim an exemption from coverage).
- National Labor Relations Act (NLRA), sometimes called the Wagner Act, which, as amended, is known as the Labor Management Relations Act (LMRA).
The
foregoing regulations are but two of the vast array of regulations, at all
levels of government, that involve HR.
HR
compliance takes into consideration virtually all work functions amongst an
institution’s rank and file. For instance, HR’s responsibilities in an
institution include overseeing and managing duties related to hiring, firing,
employee benefits, wages, paychecks, and overtime.
A compliance review of the
HR function should include how its many authorities extend to the oversight of workplace
safety, privacy, preventing discrimination, prohibiting harassment, minimizing
legal liability in the hiring and firing process, worker complaints, job
protection, compensation, benefits, pensions, employee training, and labor
relations.
Jonathan
Foxx
Managing
Director
Lenders Compliance Group
