Three HRMS compliance issues facing US companies
HRMS compliance is a complex topic. How do you make sure that you’re meeting requirements and minimizing risk without adding too much cost to your operating budget? Here are three issues that require attention and awareness as you design your HRMS solution and procedures.
1. Ambiguity in requirements
In many cases it is clear that a company has an HRMS compliance requirement. Confusion sometimes happens when the requirement is open to interpretation by internal and external auditors.
An example is the Sarbanes-Oxley Act (SOX) that came into effect in 2004. SOX covers ‘material changes’ to a company’s bottom line or anything related to employee compensation. An HRMS holds pay and benefits data so it is usually included in audit testing. Different auditors will approach the requirements in various ways so you will find that HR procedure testing may vary between companies. It may differ internally if your audit professionals change on a yearly basis.
2. New and shifting legislation
Understanding and managing the changes required by new government legislation is almost a full-time job sometimes. Are you on top of the requirements?
This comprehensive HRMS selection checklist will help you identify your key compliance requirements for new software
The Affordable Care Act (ACA) is a prime example of a compliance challenge. A robust HRMS will allow you to capture relevant employee data elements. A strong HRMS will come with the delivered government reporting templates to enable automatic reporting.
A company is responsible to make sure that the relevant data is tracked and kept current. You need to pay attention to deadlines to be sure that employees are given the correct notices and that government filing dates are met. As the government requirements are new and evolving a high-performing HRMS will help you to stay on top of the compliance tasks. A lack of understanding of the requirements does not absolve you from financial penalties.
3. Mixture of state and local requirements
If you do business across state lines or in multiple counties, local requirements can be more cumbersome than federal legislation. HRMS payroll requirements are detailed and impossible to manage once you have a number of employees living and working in different jurisdictions. As employees move the compliance risks get higher. Did you already withhold the one-time county tax this year or is it still outstanding?
An up-to-date HRMS is critical if you want to stay ahead of the game. It will handle all of these small details and taxes so that your payroll managers can focus on value added tasks.
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