Posted tagged ‘HR regulations’

The Compliance Times are a Changin’, and your HRO Provider can Help

June 15, 2010

Keeping up with changing regulations, laws and reporting requirements across many jurisdictions is hard to do. In fact, it is far too easy to inadvertently fall afoul of the latest changes. And one of the benefits of HRO is to have a vendor partner in your corner on compliance issues.

Although some HRO contracts place some level of responsibility for certain regulatory oversight – with included liability and damage clauses – in the hands of the provider, at the end of the day the client remains responsible and accountable when grievances, law suits or governmental audits concerning the company occur. So who better to warn the buyer of changes in wage and hour laws in California, or deduction rules for social benefits in China, than an expert payroll service provider?

HRO buyers should, if not already doing so, make it a practice to have regular vendor conversations on trends and pending regulatory changes and discuss how they might impact their company, its PR policies and the outsourced HR services. Also discuss who will need to do what, at what cost and what lead time, if the changes do occur.

Some trends are so large and visible it is easy to have the conversations. For example, in the U.S., aren’t we all talking about, assessing and planning for the impacts of health care reform? Other changes can sneak up on you and it is important to know the areas the vendor monitors as part of its provided service, where you may need separate consulting, or simply know that you must address some areas on your own.

Everyday interactions and governance activities are often at the operational team level. Changes that may impact client policy, as well as processes or technology, need to include the appropriate HR leadership strategy and planning experts. Depending on the client culture, employment brand and risk tolerance, some may want to adapt to changing trends, while others prefer to wait until required to change.

Background checks are a current example of a trend that may lead to changes in regulations. Almost 60 percent of employers are having credit background checks run on candidates for at least some positions, according to a recent Society for Human Resources Management (SHRM).  Although use of credit checks for even positions without financial or fiduciary responsibilities has been growing, it remains a controversial practice. Due to the economic downturn the practice has now risen to lawmaker scrutiny in more than 15 states in the U.S. Yet, what evidence is there that a less than stellar credit report is a relevant hiring criteria compared to the duties of the position? With millions out of work for an extended period of time, combined with more millions caught up in the housing crisis, should a downgraded credit rating be another block on the road to getting a job?

Of course we don’t have the time or space here to tackle this particular issue in full. The bottom line – credit  checks aside –is that being proactive as a client/HRO service provider team is one of the advantages in the ever changing compliance landscape. When was the last time you had a trend summit? Head’s up, the times they are a changing!

Linda Merritt, Research Director, HRO, NelsonHall