Today’s business environment is inherently complex. New employment regulations arise frequently, which may necessitate adjustments in processes or technology. These requirements also vary depending on the states in which a business operates. Each location may have different thresholds, reporting standards, time frames and other parameters to keep in mind.
To stay ahead of evolving regulatory requirements, employers of all sizes must embrace technology. HR compliance software, in particular, can help minimize compliance risks, reduce operational costs and improve efficiency.
Table of Contents
What is HR compliance software?
HR compliance solutions help employers manage and understand the full breadth of their company’s compliance activities, such as reporting, tracking work authorization and certifying tax credit conditions. The software may include the following:
- Direct integrations to move data securely and accurately between different systems without the possibility of human error
- Recurring, secure automation that reduces manual intervention, flags errors and prioritizes tasks
- A purpose-built compliance workspace that enables collaboration between staff and outside service providers
Why do businesses use HR compliance software?
Modern employers face many HR compliance challenges, including regulatory pressure, workforce expectations and unforeseen disruptions. Responding to them can be an uphill struggle without the right software.
Regulatory pressure
Regulatory guidelines and legislative changes are increasingly frequent and more complicated. Additionally, organizations have less time to respond to the regulations than previously.
Workforce expectations
Employees today have new expectations for engagement, financial wellness and pay. Meeting these needs can help attract and retain talent, but it also creates new compliance requirements.
Unforeseen disruptions
Unexpected changes – both internal and external – can drastically impact regular compliance processes. Examples of internal disruptions include organizational expansion, hiring surges and business decline. External disruptions include natural disasters, market factors and major legislative changes.
Insight Shield HCM compliance from disruptions
The importance of HR compliance software
As business operations grow in scale and complexity, staying compliant can seem nearly impossible. That’s why many employers swap their manual, labor-intensive processes for an HR compliance solution that supports consistent, scalable operations. The benefits of this approach include:
- Reduced costs from non-compliance
- Less burden on internal resources
- Improved efficiency
- Strategic growth
Who uses HR compliance software?
Many compliance demands are generally consistent across businesses of all sizes. However, organizations that engage in certain activities may be at greater risk than others. Circumstances that might warrant an HR compliance solution include the following:
- Switching payroll or human capital management (HCM) providers
- Experiencing compliance issues, such as penalties
- Adding new business locations
- Merging or acquiring another company
- Hiring an increasingly dispersed and diverse workforce
What features should employers look for in labor compliance software?
The critical components of an HR compliance solution include payroll and tax filing, wage garnishment, multi-state operations, employment verification, tax credits, unemployment claims, and Affordable Care Act (ACA) compliance.
Payroll and tax filing
Ensuring employees are paid in a secure, efficient and timely manner is one of the fundamental roles of an employer. Complying with employment tax payment and reporting rules at the local, state and federal levels is also critical to avoid stringently enforced penalties.
Wage garnishment
As wage garnishment regulations become more complex, the assumption of risk increases for employers. They can be penalized up to the full amount of an employee’s judgment debt for missed or improper calculations, notifications, payments or other errors in processing or responding to a wage garnishment order.
Multi-state operations
Multi-state employers are subject to various wage and hour laws. An HR compliance provider can help them comply with regulations in the states where they operate now or may operate in the future.
Guidebook Navigating multi-state compliance requirements
Employment verification
From loans to mortgages and credit card applications, employees often need to have their employment status and income verified. HR compliance software can help expedite this process and protect employee privacy.
Tax credits
To participate in tax credit programs, employers often must submit documentation showing that they fulfilled all the tax credit requirements. Preparing these reports and performing all the necessary calculations in advance is essential to compliance.
Unemployment claims
Unemployment claims are an inevitable part of running an organization, and responding to them can be complicated and time-consuming. HR compliance software can help employers manage unemployment claims, reducing risks and administrative burdens.
ACA compliance
Efficiently meeting the demands of the ACA’s employer mandate and health coverage reporting requirements can be difficult without an HR compliance solution. Businesses that fail to comply may be subject to steep penalties.
What to look for in an HR compliance solution provider
Leading HR compliance solutions can help businesses shift from simply meeting compliance obligations to driving opportunities. When evaluating potential providers, employers may want to look for the following:
- Integration with payroll software
- Automated, secure and recurring processes
- Breadth of portfolio
- Government agency relationships – including local, state and federal – where applicable
- Compliance expertise based on specific reporting functions
- Business continuity support
Payroll software integrations
Relying on multiple systems from different vendors to manage HCM compliance needs can be inefficient and error prone. The alternative – integrating post-payroll compliance software with payroll – helps eliminate manual workflows and duplicate data entry, improving efficiency and accuracy.
Automated compliance processes
Optimizing compliance efforts through automation can help reduce costs and minimize risk. It also allows employers to redirect resources where they’re needed most. Regulatory requirements may be built directly into the workflows so HR teams can continue their daily tasks with minimal interruption.
Breadth of portfolio
A comprehensive suite of services lends itself to flexibility. When employers rely on a single provider for all their post-payroll HCM compliance functions, their HR teams can shift focus and address more strategic objectives.
Agency relationships
As businesses evolve, they may encounter unanticipated regulations. HCM providers who have automated interfaces with government agencies at the federal, state, and local levels typically can help them accommodate compliance updates easily and quickly due to the availability of data and established communication methods.
Compliance service experts
As part of their service agreement, employers may have access to support specialists with expertise in every area of HR compliance. These experts can answer complicated questions, saving their clients from time spent on research and troubleshooting.
Business continuity support
Whether it's an unforeseen external event, like a natural disaster, or a planned internal event, like a merger, any change can create compliance headaches. A compliance solution provider can help employers continue to meet their compliance needs during disruptions.
Frequently asked questions about HR compliance management software
What is HR compliance software, and why do companies need it?
HR compliance software integrates with payroll and HCM solutions to transform disconnected manual workflows and ad hoc systems into a unified compliance platform. It also automates key compliance functions, helping reduce errors and improving risk management. Without this technology, it can be difficult for businesses to adapt to the pace of change in today’s regulatory environment.
How does HR compliance software benefit small and medium-sized businesses?
HR compliance software can help small and midsized businesses enter new markets with a better understanding of the employment laws and regulations in the area. Regulatory requirements are built into the workflows, which saves time and allows employers to focus on more strategic, growth-oriented objectives.
How does compliance management software support HR teams in managing compliance risks?
HR teams using compliance software may be able to collect and monitor all the information they need via a single, intuitive dashboard. They can see which tasks are urgent and which can wait, as well as track work being done on the organization’s behalf. With this level of visibility, they can make more informed business decisions in support of compliance.
How can HR compliance software improve HR processes?
Instead of only assigning more people to solve compliance problems, employers can build consistent, scalable processes with the assistance of HR compliance software. This approach may help reduce data integrity issues, automate labor-intensive tasks and gain connectivity and transparency across key compliance functions.
How does ADP compare to other HR compliance software?
ADP offers compliance support across all aspects of the employee life cycle in two key ways. First, employers benefit from the compliance features and security built into our solutions. Second, they’re encouraged to leverage the specialists behind the technology who are focused on staying ahead of the changing regulatory landscape and the potential impact to our solutions. So, whether employers want to extend their existing technology, upgrade from another system or fully outsource the function, we can help.
How do I choose the right workforce compliance software for my business?
Employers can identify the best HR compliance software for them by first evaluating their current state of HR operations. It may help to ask the following questions:
- Is your organization handling HCM-related compliance tasks in-house?
- Are you moving from in-house payroll or HCM to an HCM provider?
- Do you have HR software that isn’t designed to do all the work needed to comply with regulations?
- Does your HCM system have an integrated compliance solution built around it?
- Is there an opportunity for more seamless integrations and automation of manual processes?
This guide is intended to be used as a starting point in analyzing human resources compliance software and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.
