4 Pitfalls to Avoid in HR Compliance

While you’re taking care of your clients and caregivers, who’s tending to your company’s human resources (HR) compliance? Taking the necessary steps to ensure your home medical equipment (HME) business is HR compliant might seem like a no-brainer, but with all of the responsibilities you hold as a business owner, compliance can easily slip through the cracks. HR noncompliance is costly in many ways, and a minor error can escalate into inaccuracies and oversights that jeopardize your entire operation. That’s why identifying opportunities for proper compliance management is a top priority for successful homecare businesses. In this line of work, HR compliance is just as important as making sure your employees are taking care of your clients. To check the health of your HR compliance practices, review a few areas where homecare businesses are often most vulnerable.

1. Misclassifying Workers

Worker classification is an area employers commonly misunderstand. A worker’s classification refers to whether the individual is an independent contractor, an exempt employee or a nonexempt employee under the Fair Labor Standards Act (FLSA). Misclassifying an employee as an independent contractor or misclassifying a nonexempt employee as exempt can result in serious liability for the company. The federal FLSA requires that nonexempt employees must receive at least minimum wage and may not be employed for more than 40 hours in a week. (In cases where an employee is subject to federal, state and local minimum wage laws, the employee is entitled to the higher wage.) If they exceed 40 hours in a workweek, they are legally entitled to receive at least one and a half times their regular rate of pay for overtime hours. The U.S. Department of Labor is on high alert for homecare companies that misclassify workers to avoid paying for overtime. Businesses suspected of misclassifying workers may be subject to a review of wage payments for the previous three years, and noncompliance can result in mandatory payment of owed wages and stiff penalties. Given that most liability insurance policies do not cover wage and hour claims, the tally for owed wages and penalties can be devastating financially. To avoid this pitfall, confirm that all employees and contractors are properly classified.

2. Wage & Hour Overtime Disputes

With government agencies intensifying their scrutiny of compensation practices, properly tracking hours worked by nonexempt employees is critical. This increases the importance of having a reliable system to accurately account for each hour worked by an employee. State laws may impose more stringent wage and hour requirements than the FLSA, so it’s important for homecare companies to be aware of the wage and hour laws in each state in which they operate. Vigilance is essential, because these laws can often change with little notice.

3. Not Having an Employee Handbook

Many businesses lack a formal employee handbook. This is a potentially dangerous mistake. Employee handbooks are meant to secure the employee-employer relationship by outlining company policies and procedures in a way that aligns with federal and state employment laws. Simply following the handbook helps guarantee HR compliance. The handbook also serves as a cornerstone for your company’s culture. The more employees feel they work in a fair, professional and safe environment, the more likely they will be to stay with your company. A company handbook should not only present workplace rules, but also specify procedures for dealing with violations such as tardiness, absenteeism, unauthorized postings on social media and revealing classified or medically sensitive information. Having a clearly written, regularly updated employee handbook protects your business by ensuring compliance and preventing litigation against you or your employees.

4. I-9/Immigration Audits

An important aspect of maintaining compliance is making sure that your company’s employees can work legally in the United States. It’s imperative that you maintain properly completed I-9s for all employees. Likewise, if the state in which your company operates requires the use of the Department of Homeland Security (DHS) E-Verify program, you must comply with E-Verify requirements. DHS and Immigration and Customs Enforcement have been known to conduct unannounced compliance audits. These audits are extensive, and violations can potentially cripple your company with penalties and legal expenses while also ruining your reputation. It’s easy to overlook compliance updates and make mistakes, even when you’re taking the necessary precautions. Ensure that your HR or payroll vendor has experts on staff who can help you navigate the waters of compliance, or that you have good employment counsel on hand to prevent potential mishaps and lift unnecessary burdens off your shoulders.