When businesses think about cutting costs, it’s tempting to look at lowering fixed expenses such as rent, electricity, insurance, salaries and employee benefits. Some employers have even decided to trim their HR departments in an effort to save money. But when it comes to reducing expenses, investing in your Human Resources team can yield big returns.

HR handles a huge range of activities relating to employees. From implementing organizational strategies such as employee engagement and wellbeing efforts, to managing employee compliance requirements, to maintaining administration systems for payroll, employee benefits, and compliance tracking, these folks do some pretty heavy lifting.

HR functions are not a luxury, especially the administrative and compliance pieces. Your company depends on HR’s critical role to keep you in compliance— and out of legal trouble.

The stakes are high when you’re dealing with a part of the business that is regulated with potential fines and lawsuits. If you’re not following the rules, punitive fines, fees and litigation can literally bring down your business.

A few quick facts:

  • According to the Small Business Administration, the number of labor laws and regulations grew by almost two-thirds between 1980 and 2000.
  • Compliance penalties for not keeping up with new regulations can be severe, including fines and criminal penalties.
    • SPD violations can be $110 per day, per instance and up to $500,000 and/or include imprisonment for willful violation.
    • Form 5500 violations can be up to $1,100 per day.
    • COBRA penalties can be complex and mounting, starting at $100 per day for tax penalties + $110 per day through ERISA, + actual benefit missed and legal fees.

Keeping up with these responsibilities is daunting, but an “I didn’t know” defense isn’t going to help if you end up on the wrong side of the rules. It’s your job to know your organizational responsibilities and operate within that space. If you don’t have the team, resources, and processes in place to manage it all, things can go wrong. Sometimes very wrong. Dangers include:

  • Fines for non-compliance
  • Litigation and attorney fees
  • Lack of confidence in leadership
  • Damage to the organizational brand
  • Exposure to increased Workers’ Comp fees
  • Inefficiencies due to lack of training and procedures

The good news is that taking the time to invest in your HR team and processes will keep you in the safe zone.

Start by breaking your efforts down to the basic level to uncover your most pressing needs. Review your current HR and Compliance Administration practices as a leadership team. Discussing the importance of these issues allows for strategic-level input to address issues that may arise. Once you have an understanding of your greatest concerns, you can seek out the right solutions.

Ask your benefits consultant to help you work through any HR and compliance challenges you may be facing. If your current broker isn’t focused on finding creative business solutions, do yourself a huge favor and find someone who is. If you need some help, we know lots of them.

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This is the sixth post in a series of blogs designed to help you look beyond the cost of insurance to control employee expenses. For more information on this topic, read 500 Words series – An Overview, 500 Words on Employee Engagement, 500 Words on Employee Communication, 500 Words on Performance Management, and 500 Words on Employee Wellbeing, or download our eBook below.

5 Pillars of Employee-Related Expenses eBook