Essential HR Compliance Practices to Follow

One of the biggest issues I see when completing People Operations Organizational Diagnostics for early-stage startups? A lack of foundational legal documents to ensure compliant employment and mutual employer/employee protections in each employee’s country and/or state. Here’s a bare-bones checklist 🦴 of what you must have in place: 📜 Employment & Legal Essentials Team Handbook + location-specific addendums CIAA/PIAA agreement tailored to local laws Compliant I-9, 1099, and W-8 BEN documentation process 💰 Contracts & Compensation Standard consulting/contractor agreement Stock option agreement (if issuing options) Separation agreements (customized by location, supervisor status, RIF/non-RIF, etc.) 🌍 Payroll & Compliance A reputable payroll provider or PEO that handles multi-state compliance Employer of Record (EOR) or a global payroll process if hiring internationally If you don’t have—or don’t know what—some of these are, call an employment attorney. You need one. This isn’t legal advice—just the musings of an HR consultant who’s seen some scary stuff. 🫣 What’s been the hardest compliance challenge for your company? ___ 👋 I'm Melissa Theiss, 4x Head of People and Business Operations and advisor for bootstrapped and VC-backed SaaS companies. 🗞️ In my newsletter, “The Business of People,” I share tips and tricks that help founders, COOs, and Heads of People take their tech companies from startup to scale-up.

Remote work continues to reshape the employment landscape! It's crucial for companies to understand the compliance requirements associated with hiring remote employees and contractors. Here’s a quick guide to help you navigate these obligations effectively: 📌 Employee vs. Contractor - Employees: Regular salary, taxes withheld, eligible for benefits. - Contractors: Self-employed, handle their own taxes, more control over their schedule. - Misclassification can lead to severe penalties, so it’s essential to know the distinctions! ⚖️ Compliance for Remote Employees - State Registration & Taxes: Register your business in each state where remote workers are located and set up state tax accounts. - Payroll & Labor Laws: Comply with state-specific laws regarding minimum wage, overtime, and pay frequency. - Workers' Compensation: Obtain necessary insurance in states where your employees work. - Benefits & Leave Policies: Ensure compliance with state laws regarding benefits and family leave. 🛠️ Compliance for Independent Contractors - Collect W-9 forms and issue 1099-NEC forms for payments over $600. - Stay compliant with state-specific contractor registration requirements. 🇺🇸 Federal Compliance Regardless of classification, ensure you: - Verify employment eligibility (Form I-9) - Report new hires - Comply with federal labor laws and anti-discrimination regulations. 💡 Best Practices - Develop clear remote work policies. - Use written agreements for both employees and contractors. - Implement systems to track work hours and locations. By understanding these compliance requirements, you can build successful remote teams while avoiding legal pitfalls.

Want 38.8 million reasons to care about Wage & Hour laws? In a significant legal ruling, a federal court in Pennsylvania ordered the operators of 15 senior care facilities to pay $38.8 million in overtime back wages and damages to 6,000 current and former employees. This case, one of the largest wage-recovery judgments in the nation, highlights the serious consequences of violating the Department of Labor’s Fair Labor Standards Act. The ruling followed an investigation by the Department of Labor’s (DOL) Wage and Hour Division which uncovered several violations, including: 💲 Failing to Pay for All Hours Worked 💲 Incorrect Overtime Calculations 💲 Misclassifying Employees as Salaried, Exempt 💲 Inaccurate Record-Keeping Here are five tips I've got for you so your organization can avoid the costly consequences of wage violations: 1. First and foremost, never be "willful" about paying your employees less than they have legally earned.  Companies who make honest mistakes but cooperate fully with the DOL to rectify any underpayments will still be ordered to pay back employees, but the damages will be way less severe than this multi-million dollar judgment. 2.  Stay Informed on Labor Laws: The Fair Labor Standards Act (FLSA) – which is the complex, multi-part law that applies to paying employees accurately – is a necessary piece of HR that all business owners should be familiar with. 3.  Conduct Regular Audits: Periodically review your payroll practices to ensure compliance with the FLSA and other relevant regulations. Audits can help identify and correct potential issues before they lead to legal trouble. 4.  Train Management and HR Staff: Ensure that your managers and anyone handling the Human Resources function for your organization are well-trained in labor law compliance. This includes understanding how to properly classify employees and calculate overtime pay. 5.  Implement Accurate Record-Keeping: Maintain precise records of hours worked, wages paid, and any other compensation. Accurate documentation is essential in demonstrating compliance during any investigation.   If you’ve got any doubts about your labor law compliance and want to run something by me so you don't make a mistake, just DM me! This is one of my favorite HR compliance topics.  #hrcompliance #management #humanresources #departmentoflabor #wageandhour

Most U.S. employers are out of compliance with compensation-related laws. That may sound like an exaggeration, but it isn’t. Whether it’s the Fair Labor Standards Act (FLSA), pay equity laws, or the rapidly expanding patchwork of pay transparency requirements, the truth is clear: compliance has never been more complex, and most organizations are falling short. Over the past decade, the compliance landscape has shifted dramatically: ** FLSA continues to be a minefield with evolving overtime thresholds, exemptions, and classification challenges at the federal and state levels. ** Pay equity laws now require not just analysis but demonstrable action to address disparities. And some have employer reporting requirements. ** Pay transparency laws are expanding state by state, requiring job postings and pay ranges that stand up to both regulatory and employee scrutiny. The challenge isn’t just that the laws have multiplied. It’s that they differ across jurisdictions and are constantly evolving. Even the most sophisticated organizations are struggling to keep up. And falling behind isn’t simply a compliance risk; it’s a reputational and talent risk. Think about it: employees and candidates have unprecedented access to pay information, and regulators are better equipped than ever to hold employers accountable. If you can’t explain your pay practices clearly and prove they are both compliant and equitable you’re at risk. The organizations that will thrive in this environment are those that move beyond “checking the box.” Compliance is the floor, not the ceiling. Leading employers are building job architectures, governance processes, analytics capabilities, and pay communications that not only ensure compliance but also strengthen trust and competitiveness. For the C-suite and total rewards leaders, the takeaway is simple: don’t assume compliance. Audit it. Fix what is broken. Repeat. Because odds are, you’re not as compliant as you think. Now is the time to audit your pay practices. Partner with your HR, legal, and compensation experts to identify risks, close compliance gaps, and strengthen your organization’s position as a trusted employer. And if you need help, send me a DM. #PayEquity #PayTransparency #Compensation #CompensationConsultant #TotalRewards #FutureOfWork #FLSA #HR #Compliance #WorldatWork #FairPay #SHRM #HumanResources

Did you know even well-meaning companies often make costly compliance errors? In my consulting work, it never ceased to amaze me just how common wage and hour compliance mistakes were. Let me help you avoid a similar fate. Let’s explore 14 of the most common wage & hour compliance mistakes handled by HR: 1. Misclassifying Employees ↳ Incorrectly labeling employees as exempt vs. non-exempt or contractors vs. employees. 2. Failing to Pay Overtime Correctly ↳ Not paying 1.5x the regular rate or excluding bonuses/commissions in calculations. 3. Inaccurate Time Tracking ↳ Failing to properly track hours worked, leading to wage discrepancies. 4. Unpaid Work ↳ Including missed breaks, or unpaid mandatory training. 5. Meal and Rest Break Violations ↳ Not providing legally required breaks or deducting for breaks employees never took. 6. Improper Deductions ↳ Making illegal deductions for uniforms, damages, or other expenses. 7. Minimum Wage Violations ↳ Paying below federal, state, or local minimum wage rates. 8. Incomplete Payroll Records ↳ Failing to maintain or retain accurate payroll records as required by law. 9. Ignoring Local Laws ↳ Overlooking stricter state or local wage and hour requirements that differ from federal law. 10. Late Final Paychecks ↳ Delaying or underpaying final wages for departing employees. 11. Outdated Policies ↳ Failing to update wage and hour policies as laws and regulations change. 12. Off the clock work ↳ Allowing employees to work off the clock 13. Ignoring Complaints ↳ Failing to address employee wage and hour concerns, which could lead to costly disputes. 14. Paystub issues ↳ Incomplete or uncompliant pay stubs missing key details such as sick leave or PTO balances. 💸 What’s the cost of ignoring compliance? Compliance issues don’t just cost money—they damage trust and morale. Spot these mistakes before they hurt your business. 📩Want Help? Is your HR department compliant, scalable, mistake-free, and optimized? If not, book a call with me and let’s discuss how I can help you. ✅ Bonus: Want a free Federal employment law compliance checklist? Follow my link in the comments and get it delivered right to your inbox. ♻️ Repost to help your network. ➕ Follow Ricardo Cuellar for more content like this.