HR Compliance—Key Laws for Fairness, Diversity, and Inclusion

There’s a lot you need to keep track of as an HR professional with regards to the laws and regulations for hiring and employment. While it’s essential to follow legislation to avoid costly penalties and liability, HR compliance isn’t just about crossing your t’s and dotting your i’s. These rules help keep your employees safe by protecting them from discrimination, harassment, and other unfair or dangerous treatment.

Don’t think of labor laws and HR regulations as all that red tape that makes things harder for you and your organization. Instead, think of HR laws as a way to ensure your employees have guaranteed access to certain rights and protections.

This chapter will cover the basic definition for the most relevant and important HR laws (but be sure to keep up to date as HR regulations and labor laws may change over time). We’ll discuss:

While not a labor law per se, diversity, equity, and inclusion principles will help you grow a culture where anti-discrimination, HR compliance, and workplace safety aren’t just afterthoughts but integral parts of your values.

Workplace Discrimination

What Are the Main Federal Anti-Discrimination Employment Laws?

Employers need to follow federal anti-discrimination laws in order to protect their employees and remain compliant.

Here are some of the main HR laws:

Title VII of the Civil Rights Act of 1964 (Title VII): Employers cannot discriminate on the basis of race, color, religion, national origin, or sex. Based on the June 2020 Supreme Court ruling, this law also protects gender identity and sexual orientation. Reasonable accommodations must be made for candidates or employees with sincere religious beliefs, unless it would impose “undue hardship” on the employer’s business.

— Note: This law also prohibits sexual harassment as it a form of sex discrimination.

The Pregnancy Discrimination Act, Amended to Title VII (PDA): Employers cannot discriminate against a woman because of pregnancy, childbirth, or medical conditions related to either.
The Equal Pay Act of 1963 (EPA): Employers must pay men and women an equal wage for equal work performed at the same organization.

— Lilly Ledbetter Fair Pay Act of 2009: An amendment to the EPA, this law makes it easier for employees to file equal-pay lawsuits; an employee has 180 days after a discriminatory paycheck to file an equal-pay lawsuit, and this period renews with every paycheck that is discriminatory.

Title I of the Americans with Disabilities Act of 1990 (ADA): Employers cannot discriminate against someone who is qualified for a job but also has a disability, whether as an applicant or employee. Reasonable accommodations must be made to allow a qualified, disabled person to do their job, unless it would impose “undue hardship” on the employer’s business.
The Age Discrimination in Employment Act of 1967 (ADEA): Employers cannot discriminate against someone due to their age if they are 40 years old or older.
The Genetic Information Nondiscrimination Act of 2008 (GINA): Employers cannot discriminate against someone because of their genetic information or family medical history, including genetic tests.

Each of these HR laws also protects anyone from retaliation for making a complaint or participating in an investigation relating to discrimination based on any of these laws. For more details on these laws and other discrimination laws relating to employment, visit the Equal Employment Opportunity Commission (EEOC) website.

How Many Employees Does a Business Need to Have for Federal Anti-Discrimination Laws to Apply?

Small and medium businesses in the private sector have different requirements for following federal anti-discrimination laws, depending on how many employees they have.

The following federal anti-discrimination laws apply if you have:

At least one employee: EPA
15-19 employees: EPA, Title VII, PDA, ADA, and GINA
More than 20 employees: EPA, Title VII, PDA, ADA, GINA, and ADEA

An employee is defined as anyone who is:

Full-time
Part-time
Seasonal
Temporary
Under a work program
Volunteering
Any of these categories and not a citizen, even if undocumented

Federal law also requires employers to display the relevant anti-discrimination laws with a poster, informing employees of their protections and rights. For more information on the HR compliance requirements for small and medium-sized business, visit the EEOC website. Be sure to also check if there are any additional state or local anti-discrimination laws you need to follow.

Wages and Hours

What Are the Main Federal Laws Governing Wages and Hours?

There’s more that needs to be said about payroll and time tracking than can fit in this chapter, so go to our chapters about payroll and time tracking to read about best practices, software, and how to create time-off policies.

In terms of HR legislation that affects these responsibilities, here’s an overview of the two most important laws that have to do with how employees are paid and how much they work:

The Fair Labor Standards Act (FLSA): This law regulates overtime pay, minimum wage ($7.25 per hour as of July, 2020), youth employment, and recordkeeping. This HR law is especially relevant to hourly workers, since these are eligible for both overtime pay and may receive minimum wage. Learn more about how FLSA affects legal time-tracking requirements in our chapter, Time Tracking and Time Off.
Family and Medical Leave Act of 1993 (FMLA): This law protects job status under qualified conditions and includes protections against retaliation. Employers must give employees up to 12 weeks of unpaid leave for health and family reasons. This frequently applies to employees taking leave after the birth of a child, but it also covers adoptions, care of a family member, and serious health conditions. Learn more about how FMLA affects time off in our chapter, “Time Tracking and Time Off.”

For additional federal laws regarding hours and wages, check the Department of Labor (DOL) website. Also be sure to check your state and local regulations.

How Many Employees Does a Business Need to Have For Federal Wages and Hours Laws to Apply?

The FLSA isn’t limited by the number of employees per se. There are two types of coverage that qualifies who gets covered by the law:

Enterprise Coverage: Applies if the business has an annual dollar volume of sales or business done of at least 500,000 dollars, or if it’s a hospital, school (including higher learning), preschool, nursing/medical care home, or government agency.
Individual Coverage: Applies if engaged in interstate commerce.

For more detailed information, consult the DOL website on who is covered under FLSA.

The FMLA, on the other hand, is a little easier to figure out. Employers in the private sector who have 50 or more employees for at least 20 workweeks a year are required to provide coverage under the law. All government agencies and schools need to provide coverage.

However, there are further requirements that employees need to fulfill before they can be eligible for FMLA leave.

On top of working for a qualified employer, employees need to:

Have worked 1,250 hours during the last year
Work at a location that has 50 or more employees within 75 miles
Have worked for the business for 12 months (doesn’t have to be consecutively)

For more detailed information, consult the DOL website on employee eligibility for FMLA leave.

Health Insurance and Benefits

What Are the Main Federal Immigration Laws Relevant to Employment?

As an HR professional, you’ll be fielding many questions about plan eligibility and coverage, and you’ll be handling incredibly sensitive information about employees. It’s vital that you understand both your organization’s responsibilities towards employees and how to protect their benefits and information.

The main HR laws to know are:

The Affordable Care Act (ACA), Patient Protection and Affordable Care Act (PPACA), or “Obamacare”: From an HR compliance standpoint, this law requires employers with 50 or more employees to offer “affordable minimum essential coverage” to employees. All employers have certain reporting responsibilities. For more details on reporting, consult the Internal Revenue Service (IRS) website on the ACA.
The Consolidated Omnibus Budget Reconciliation Act (COBRA): This law gives employees the right to continue health insurance coverage for a time, 18 months in most cases, in the event that they lose coverage, usually after quitting or termination. The employee is responsible for paying the premiums. This only applies to group health plans maintained by state/local governments or by private-sector employers with 20 or more employees.
Employee Retirement Income Security Act (ERISA): This law helps protect individuals in the private sector with retirement and health plans by setting requirements for the plan managers and fiduciaries. For example, plans need to give participants important information about features and the appeals process, and participants have the right to sue in case of breach of fiduciary duty.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA): The HIPAA Privacy Rule protects an individual’s health information and gives them certain rights about how it’s used and communicated by healthcare providers, insurers, and employers. The HIPAA Security Rule specifically deals with protecting electronic health information.
The Families First Coronavirus Response Act (FFCRA): A response to the coronavirus pandemic, this law expands paid sick and family leave requirements for private employers with less than 500 employees and some public employers. Mainly, it requires these employers to give two weeks of additional paid sick leave if an employee is quarantined or has COVID-19 symptoms. Additional paid leave for caring for family is also included but at two-thirds an employee’s regular rate.

There are also many best practices surrounding benefits that you should consider in combination with these HR regulations. For more details, read our chapter on compensation and benefits.

Immigration Laws

What Are the Main Federal Laws Governing Health Insurance and Benefits?

While immigration laws contain restrictions with regards to citizenship and legal residency, it’s important to note that immigration laws and regulations also include protective measures for employees and candidates. When thinking about HR compliance from an immigration legislation point of view, remember to not just protect your organization but workers as well.

The most relevant laws are:

Immigration and Nationality Act of 1952 (INA): Among many other regulations, this law requires employers to only employ people who are legally allowed to work in the U.S., meaning citizens, nationals, and legal aliens. It also protects those legally allowed to work from discrimination based on their status and national origins.
Form I-9, Employment Eligibility Verification: Also under INA, employers are required to verify the identity and employment eligibility of employees, which includes completing form I-9. Employers need to keep I-9s on file for at least three years (or for one year after an employee is terminated, whichever comes first). Employees are protected from employer retaliation and discrimination based on citizenship status.
Deferred Action for Childhood Arrivals (DACA): This program allows certain individuals who were brought to the U.S. without legal documentation as children to remain in the country, work, and attend school.

All businesses, regardless of size, need to adhere to these laws. Be sure to check for any additional state and local laws, e.g., rules regarding sanctuary cities.

Workplace Protection

What Are the Main Federal Workplace Safety Laws?

There are many regulations on workplace safety, so what you need to follow and be aware of will depend on your industry. However, there is one main source for these regulations that you will need to consult:

The Occupational Safety and Health Administration (OSHA): OSHA is a government agency tasked with enforcing regulations that ensure worker safety and protection in the workplace. It covers most private- and public-sector employees, protecting their right to a safe workplace, to receiving clearly communicated information on workplace conditions and safety procedures, and the ability to file confidential complaints without fear of retaliation.

How Do You Maintain a Safe Workplace?

When it comes to your employees’ safety, it’s important to be proactive and to prevent issues from arising in the first place. OSHA offers an on-site consultation program to help businesses, especially new and small businesses, identify potential hazards. This is separate from official OSHA inspections and doesn’t result in any penalties. It’s a free program, but you have to be the one to request it. Visit the OSHA consultation web page for more information.

If you’re not interested in a consultation, OSHA has a few general recommendations for all employers to remain compliant and keep a safe workplace:

Display the OSHA Job Safety and Health poster in your workplace.
Make sure to train workers on safety in the workplace.
If working with chemicals, be sure to tell workers about chemical hazards by training them and establishing warnings about chemical hazards with color-coding labels, alarms, etc.
Do any testing necessary to check the safety of the workplace, like checking air quality, as required by OSHA. This also applies to medical testing of workers.
If workers need to wear protective gear to do their job, provide it to them for free.
Record any injury or illness that happens in the workplace, and notify OSHA within 8 hours of a work-related death or within 24 hours of a work-related inpatient hospitalization, amputation, or loss of an eye: dial 1-800-321-OSHA (6742).
Display any OSHA citations and workplace illness and injury reports where your workers can see them.

As with other HR laws, OSHA protects workers against retaliation from employers. For other questions about workplace safety or OSHA, visit the Department of Labor employer page on health and safety.

Diversity and Inclusion

What Does Workplace Diversity, Equity, and Inclusion Have to Do with Labor Laws?

We know this to-do and to-don’t list of HR regulations can seem daunting. The good news is that following these HR laws doesn’t just keep you on the right side of HR compliance; it also shows your employees that you can be trusted to keep them safe, whether that’s in a physical sense or in an emotional sense (e.g., from discrimination or retaliation). While it’s incredibly important to maintain a healthy working environment, it’s only part of the equation for building an engaged, productive workforce.

Instead of sticking to a basic mentality of workplace safety where employees don’t get hurt and your organization doesn’t get sued, you can and should do more to build a successful work environment where employees feel welcomed, engaged, and encouraged. Taking time to address DEI issues shows that your organization understands and appreciates your employees as human beings, not just productivity providers with legal strings attached.

Why Is DEI Important in Business?

The 2018 U.S. census data shows that racial diversity is increasing across all age groups. So, on the one hand, increased diversity is just a growing reality. But different perspectives also bring new, creative solutions to problems, so it should come as no surprise that workplace diversity is also good for business.

There is a wealth of evidence that more diversity equals better business outcomes, including:

Companies with more racial, ethnic, and gender diversity have higher financial returns.
Leadership teams with higher diversity correlate with higher innovation revenue.
When the number of women in corporate leadership increases by just 30%, this leads to a 15% increase in profitability.
Immigrants make up about half the growth in the U.S. labor force, meaning that they fill essential roles in the economy, and immigration also improves labor market efficiency.

Something else to consider is your employees themselves. Three-quarters of Americans say it’s “important for companies and organizations to promote racial and ethnic diversity in their workplace,” according to the Pew Research Center. Additionally, Millennials will soon make up a large majority of the workforce, and diversity and inclusion is a top criteria for them when they make employment decisions.

Here’s the bottom line: Diversity makes organizations stronger, more profitable, more innovative, and more attractive to employees. Inclusion is the active part of that equation; it’s how you show your diverse workforce that they are welcome in your organization.

How Can You Promote Inclusion in the Workplace?

Workplace diversity is quantifiable. For example, you can look at the gender or age makeup of your workforce, or you can compare your organization’s demographics to local census data to see if you’re being fair and equitable in your hiring and sourcing. Inclusion, on the other hand, is more about how people feel and think, and that can make it more difficult to measure and work on.

Johnny C. Taylor, Jr., president and CEO of the Society for Human Resource Management (SHRM), warns that it’s easy to think you’ve achieved both diversity and inclusion if you have a diverse workplace. “We often forget the ‘I’ in the D&I conversation,” says Taylor. “The challenge is in having a culture where all employees feel included. It’s a major investment to bring talent into your organization, so why bring them in if they’re not happy when they get here? You’ve got to get the inclusion part right.”

The goal of inclusion is to make employees feel like they belong and that they are valued by the organization. And while belonging certainly means making social connections, it’s also about employees being able to contribute and make a difference in the work. So, inclusion has to be a wide-ranging effort that spans well beyond your hiring practices and into your culture, brand, communication practices, leadership training, and more.

The goal of inclusion is to make employees feel like they belong and that they are valued by the organization. Inclusion is a wide-ranging effort that spans well beyond your hiring practices and into your culture, brand, communication practices, leadership training, and more.

Here are some strategic and meaningful ways to promote inclusion in the workplace:

Involve and educate leadership. Executives and senior leaders might have certain assumptions about inclusion, e.g., that it’s the same as workplace diversity. Even highly experienced business leaders might not be fully aware of the importance of seeking out different voices and perspectives.
Train managers on bias. You need to train your managers on unconscious bias and how it influences decision making. Managers are on the front line of hiring and mentoring. Inclusion can’t be left to chance; you need to make it part of their core skills and responsibilities.
Give everyone a voice. Make sure that this comes with a real platform and that it’s a safe space—employees shouldn’t be penalized in any way for bringing up concerns or questions. SHRM suggests townhall-type meetings, but you could also use anonymous surveys aimed at gauging inclusion overall or measuring the effectiveness of your efforts.
Measure and understand the employee experience. Workplace culture includes both the visible and intangible things an employee experiences at work, and while it’s difficult to measure, you can measure employee satisfaction. When you’re considering making changes, this can help you understand what is already good about your culture that you shouldn’t change. It’s also another venue for employees to voice their opinions about what could be improved.
Form an inclusion council. Also suggested by SHRM, these councils should be staffed with people just one or two ranks below the CEO, so they have the power to effect real change. They should bridge the gap between underrepresented employee groups and leadership, helping to achieve goals around hiring, retaining, and engaging diverse employees. They should be actively listening to employees and promoting inclusion in the workplace.
Provide sponsorship for underrepresented groups. Employees from underrepresented groups have more difficulty advancing their careers, which is why a sponsor can be a powerful aid. The Center for Talent Innovation found that “women of color who say they have sponsors are 81 percent more likely to be satisfied with their career progression than those without sponsors.”
Celebrate difference and diversity. People will feel more comfortable bringing their “full selves” to work if they feel like differences are valued. Build joy and meaningful recognition of diversity with cultural celebrations and holidays, consider matching employee charitable donations, or provide paid volunteer time. Recognizing that employees care about all sorts of worthy causes and supporting those on a company level are important and powerful measures of inclusion.

Inclusion is an ongoing process—wherever you start and decide to change, there are always opportunities to make a difference and create more inclusion.

Helpful Resources

To make it easier to navigate the many HR regulations, here are a few key links we mentioned throughout this article and a few additional ones with useful information for employers.

List of discrimination laws enforced by the EEOC
Tips for small businesses on handling common workplace issues relating to discrimination
Overview of the FMLA
Overview of the FLSA
IRS laws regarding the ACA
Immigration labor laws
Employers questions on workplace safety regulations

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Chapter 11

HR Compliance