State and federal laws shape human resources management (HRM) across America. Every aspect of HRM, from hiring, firing, compensation, benefits, and workplace safety are governed by statutes that hold companies financially responsible for failure to comply. Protecting the company from liability stands as one of HRMs primary functions.
According to INC magazine, compliance with the Civil Rights Act of 1964 generates the largest number of compliance issues for human resources management. This landmark law protects employees and job applicants from discrimination based on several protected characteristics, including race, sex, religion, national origin, and color. Job discrimination appears in many forms, such as wrongful termination, discriminatory hiring practices, pay discrepancies, harassment, and failure to promote. The law established the Equal Employment Opportunity Commission, which is a federal agency that investigates and sometimes prosecutes claims of employment discrimination.
HRM practices must consist of record keeping that demonstrates the organization’s compliance with the act. Human Resources departments must also establish procedures around hiring, terminations, promotions, disciplinary actions, and all other employment-related activities that could be subject to violations of the act. For example, HR departments must provide managers with a written policy regarding terminations, and retain the authority to prevent terminations that violate law. Without an established procedure, a manager could simply terminate an employee for a discriminatory reason, in which case an EEOC investigation would likely ensue.
As much as the Civil Rights Act encompasses, HR departments must comply with other regulations as well. The Equal Pay Act of 1963 requires that men and women receive equal pay for equal work. If a company pays women less than men for the same work, the women who have been shorted on compensation can take action against the company to recover the difference. The company may also have to pay legal expenses and punitive damages.
In addition to discrimination, HR departments must design and enforce procedures to ensure their organizations comply with minimum wage regulations and benefits requirements. Organizations must comply with laws regarding unions and workplace safety. Many states and local governments have their own additional laws, such as increased minimum wage requirements, above those governed under federal statute.
Few managers know all laws. Consequently, companies depend on HRM to train employees in areas of legal compliance. HR managers must intervene timely in cases where legal violations occur. Internal investigations and resolutions often prevent further legal exposure and action against the organization.