How HR Rules and Regulations Affect Your Business

The importance of human resources regulatory compliance within businesses cannot be stressed enough, especially in today’s legal environment. HR regulations and compliance is a process that serves to define proper individual and group behaviors, while assuring that laws and policies are clearly understood and followed. It’s crucial for companies to not only know the laws, but develop appropriate policies in relation to them. Human resources compliance also means that owners and managers need to communicate these policies to the employees, as well as their expectations for adherence and the penalty for non-adherence.

In order for businesses to practice effective compliance management, they need to understand the laws that govern HR compliance. The following are some popular regulatory statutes in the United States:

HIPPA

HIPPA is an acronym for the Health Insurance Portability and Accountability Act. It was originally signed into law by the U.S. Congress in 1996 in order to establish health insurance reform and make healthcare administration simpler for various entities such as health plans, billing services, community health information systems, and healthcare providers that transmit important data. HIPPA Title I supports ongoing health insurance coverage for employees and their families when they change or lose their jobs.

Title II identifies different offenses relating to healthcare and healthcare-related information and is responsible for setting civil and criminal penalties for agencies that fail to adhere to HIPPA regulations. Penalties can range from general fines of up to $25,000 per incident, as well as $50,000, imprisonment for a period of one year, or both in the case of wrongful disclosure of health information.

COBRA

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. The purpose of this regulatory statute is to provide emergency coverage for workers who receive health insurance through their employers, but due to certain circumstances (such as being laid off) lose their job and find themselves uninsured. What COBRA does is allows these employees to continue their group health insurance coverage if they chose to, even once they leave their position.

After being terminated, employers are required to provide details as to how workers can obtain COBRA coverage. It’s also important to know that coverage extends to the employee’s family. However, it can only last for a limited amount of time, usually around 18 months. This time frame is generally sufficient for individuals to obtain a different source for health insurance.

OSHA

OSHA, also known as the Occupational Safety and Health Administration is responsible for worker safety and health protection. Administered through the Department of Labor, OSHA determines which standards apply to the workplace and requires employers to follow these rules and regulations. Under the Federal Government authority, all employers and their employees are covered by OSHA. However, OSHA does not provide coverage for self-employed or immediate members of farm families that do not employ outside workers.

FMLA

The Family and Medical Leave Act or FMLA was originally signed into law in 1993 by former President Bill Clinton. It relates to acknowledging the health issues of employees outside of work, and enables them to address these concerns without fear of losing their jobs. The FMLA applies to all organizations with fifty or more employees, as well as all government programs. Qualified employees are identified as those who have worked at least 1250 hours for the employer within the last twelve months.

The FMLA guarantees eligible employees up to 12 weeks of medical leave per year. While this time off does not have to be paid by the employer, the employee does need to be guaranteed a job when they return to work. If the company is not able to keep the employee’s job unfilled for that duration, they can opt to offer him/her a different, but equivalent job upon return.

SOX

SOX stands for the Sarbanes Oxley Act, a law which was passed by the U.S. House of Representatives in 2002. The SOX is designed to improve the principles and accountability in the operations of companies in the United States. The overall purpose is to prevent large businesses from financial deception, as well as misleading investors and shareholders. This regulatory law contains eleven major sections, addressing areas from extra corporate board duties to penalties for failure to comply.