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How Best in Class Staffing or Payrolling Companies Manage HR Compliance Responsibly – Part I

Posted on May 20th, 2016 Read time: 3 minutes

Tania Fiero, PHR, SHRM-CP, Vice President, Human Resources

It’s no secret that employment laws and regulations have seen an increase in activity in the last 10 years, most notably with the signing of the Patient Protection and Affordable Care Act. However employers have not only seen an increase at the federal level, but also at the state and local level. If your company utilizes the services of a staffing or payrolling firm, regulatory agencies are increasingly making it possible to hold your company accountable in the event the staffing or payrolling firm are found to be negligent. It’s more important than ever to have a strong internal compliance program and ensure that your staffing vendors do too. But what does a strong HR compliance program look like in the staffing industry?

As in any industry, a strong HR compliance program in the staffing industry should have a proactive and a reactive component. Staffing and payrolling is only different because these firms also enter into contractual arrangements with their clients promising to perform certain HR services that are custom for that client. Obviously, the stronger the proactive components, the less frequently the reactive components will be needed. This two part article will take a look at what best in class staffing and payrolling companies do right when it comes to HR compliance risk mitigation.

Proactive Compliance

A proactive compliance program should be managed by someone in the company that has the responsibility of keeping informed of employment laws and regulations as well as safety. For some companies that may be corporate counsel or external counsel. For others it may be the human resources team.

Following are some best practices:

  1. Use Resources that Educate about Laws and Regulations – There are many resources available to companies, some are free, and others require memberships or fees for their publications.
    1. Law offices – Most large employment law firms have a newsletter subscription that is free and provides general employment law updates frequently. Many of these law firms have added webinars as another way to get their message to prospects and clients. These may have a small fee to participate.
      1. Littler Mendelson – https://www.littler.com/publications
      2. Sheppard Mullin – https://www.laboremploymentlawblog.com/
      3. Ogletree Deakins – https://www.ogletreedeakins.com/our-insights/blogs/
    2. Industry Associations – The staffing industry has its own industry associations. Membership may be required to receive the full benefit of newsletters and webinars.
      1. American Staffing Association – www.americanstaffing.net
      2. Staffing Industry Analysts – www.staffingindustry.com
    3. Human Resources Associations – HR related professional organizations vary at the local, state and national level. Most are membership based.
      1. Society for Human Resources Management (SHRM) – www.shrm.org
      2. National Human Resources Association (NHRA) – www.humanresources.org
  2. Publish a Legislative Action Pipeline – This is a list of all federal, state and local laws and regulations that have been proposed or have been passed and their effective date. This is published internally and distributed to stakeholders at the staffing firm routinely. The list acts as a method to keep all parties informed about how the laws and regulations impact the business and the employment relationship between employees and clients.
  3. Conduct Half Yearly Audits – Audits are routinely conducted to review client contractual obligations, federal and state laws, agency guidelines and company insurance coverages. The objective is to identify areas that are not performing or are at risk. The results of these audits are shared with the company’s executive team along with recommended corrective actions and agreement to the actions and timeframes. Training is often a remedy for items discovered in the audit.
  4. Conduct Training – Compliance training is frequently calendared for the staff to include items such as FLSA exemptions and wage and hour, benefits and the Affordable Care Act, OSHA and workplace safety, co-employment concepts, discrimination and harassment training.
  5. Develop a Strong Safety Program – Partnerships are created with insurance brokers, safety consultants, or agencies like OSHA or the National Safety Council to get the information needed to implement a sound safety program. Educating clients on their unique role as a user of temporary employees is another key aspect. OSHA has published Temporary Workforce Initiative (TWI) to help facilitate these conversations.

With a strong proactive compliance program in place, companies can expect that activity on the reactive side will decrease. If a company is implementing a new proactive compliance program or making improvements to a program in place, it will take some time and patience for the benefits to be realized.

If you’d like to learn how staffing and payrolling companies manage claims responsibly, click on part II of this article here. Or contact Innovative Employee Solutions to find out their best practices for staying compliant.

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