How large companies can stay ahead of evolving labor regulations

Labor regulations continue to increase in the United States, presenting a whirlwind of challenges for employers, especially those operating on a large scale across multiple jurisdictions. Recent introductions of new labor laws, such as the Department of Labor’s final rule on overtime pay, Pregnant Workers Fairness Act, and paid sick leave laws in several states, have added complexity to an already intricate regulatory environment.

These new regulations are just the tip of the iceberg. Large employers face a daunting task in following updates to longstanding labor laws that can vary significantly at the federal, state, and local levels. This multi-tiered regulatory structure means that a company operating in multiple jurisdictions must comply with potentially different sets of rules in each location.

The sheer volume and variety of these regulations significantly burden HR departments, as well as operational and company leadership. Staying informed about new laws, understanding their implications, and implementing necessary operational changes requires substantial resources and expertise. The pace of regulatory change shows no signs of slowing down, with new laws and amendments continually being proposed and enacted across the country.

The stakes are high, as non-compliance can lead to costly lawsuits, financial penalties, and damage to a company’s reputation.

How regulations affect employers

Ensuring compliance for new labor regulations presents significant operational challenges for large employers, extending beyond simple policy updates. For example, accommodating pregnant workers under the new Pregnant Workers Fairness Act requires changes across multiple operational areas, including scheduling, performance evaluations, training, and system updates.

In terms of scheduling, employers must ensure that pregnant workers aren’t assigned tasks they can’t perform, which may necessitate an overhaul of existing scheduling systems and processes. Performance evaluations must be adjusted for necessary accommodations, ensuring pregnant workers are not unfairly penalized. Training programs must be developed and implemented to educate managers and supervisors on the new requirements and how to properly implement them. Additionally, HR and operational software systems often need to be updated to effectively track and implement these accommodations.

This process becomes exponentially more complex for large employers with diverse workforces across multiple locations. Ensuring consistent implementation of new regulations across all levels of the organization can be a monumental task, requiring significant resources and coordination.

The stakes for non-compliance are high, including costly lawsuits from employees who feel their rights have been violated, substantial financial penalties from regulatory bodies, and potential damage to the company’s reputation and employee morale. In some cases, non-compliance can lead to losing contracts or business opportunities, particularly when dealing with government entities or socially conscious partners.

Strategies for compliance

Large employers need to adopt holistic approaches and leverage technology effectively. The key is prioritization and risk mitigation, focusing first on highly regulated countries, states, and areas with the largest employee populations to mitigate the most significant risks. Ensuring compliance with high-impact issues like pay and taxes should be at the top of the priority list, as these areas often carry the heaviest penalties for non-compliance.

Implementing systematic, automated processes is crucial for maintaining compliance at scale. This includes integrating compliance checks into core HR and operational systems, implementing automated scheduling systems that account for regulatory requirements, and using payroll systems that automatically apply the latest pay rules. These automated systems can significantly reduce the risk of human error and ensure consistent compliance across the organization.

While automation is ideal, it may not always be immediately feasible, especially when new regulations are introduced. Companies should avoid the decision to implement quick manual processes to address new regulatory requirements in the short term and ensure they are leveraging systems that support rapid and continuous change. These manual processes are often insufficient to ensure full regulatory compliance across pay, scheduling, operations and communications. They are also hard to replace once they have been implemented resulting in multiple change management requirements.

In addition to reducing human error, automated systems allow quicker updates when regulations change, provide better tracking and reporting for audit purposes, and can handle complex calculations and rule applications more efficiently than manual processes.

Given the dynamic nature of labor regulations, companies need technology solutions that are flexible enough to accommodate new rules quickly, scalable to handle operations across multiple jurisdictions, and capable of providing detailed compliance reporting and analytics. These systems should be able to adapt to new regulations without requiring a complete overhaul, allowing companies to stay agile in their compliance efforts.

The path forward

The trend demonstrating increasing labor regulations shows no signs of abating, and large employers should brace themselves for a future characterized by even greater regulatory complexity. We can expect to see more country, state and local governments enacting their own labor laws, often going beyond national standards. There’s likely to be a continued focus on worker protections, particularly in areas like work-life balance and employee wellbeing. Additionally, with each new administration at the national level, there’s potential for significant shifts in labor law, adding another layer of uncertainty to the regulatory landscape.

Related: How 2024 will shape the future of employment and labor law

Recognizing that regulatory compliance is not a one-time effort but an ongoing process is essential. Large employers must be prepared to continuously monitor regulatory changes across all jurisdictions. This will require regularly updating policies, processes, and systems to reflect new requirements. Ongoing training for employees at all levels will be necessary to ensure that everyone understands their role in maintaining compliance.

Perhaps most importantly, companies must foster a corporate culture prioritizing ethical behavior and regulatory adherence. This culture should view compliance not as a burden but as an integral part of the company’s commitment to its employees and the communities in which it operates.

Companies that can effectively navigate evolving labor regulations can gain a competitive advantage, build trust with their employees, and position themselves for sustainable long-term success. By embracing proactive strategies, leveraging technology, and fostering a culture of compliance, these companies can turn regulatory challenges into opportunities for organizational excellence.

Sandra Moran, Chief Marketing Officer at WorkForce Software