Automated Tools Can Help Keep Pace with Regulatory Changes

Ashley Park had grown weary of having to manually track the frequent changes to federal and state labor regulations impacting her organization.

Park, senior corporate counsel at Amy’s Kitchen, an organic food company based in Petaluma, Calif., found a large amount of her time was spent interpreting legislation tied to minimum wage, employee health and safety, pay transparency, and other concerns.

So, like a growing number of HR and legal professionals, she turned to an automated solution for help. Park partnered with Aptifore, a division of XpertHR, to make it easier to stay abreast of legislative changes and quickly update her company’s employee handbook and policies with needed changes.

“The time I’m required to spend on research and updates is a fraction of what it used to be when that work was manual, and I feel more confident in my organization’s compliance with the ever-changing employment law landscape,” Park said.

Value of Proactively Monitoring Legislation

Keeping tabs on domestic or international regulatory changes is not a new challenge for HR leaders. But recent developments such as the rise of hybrid and remote work have added new complexity to that task—particularly for HR teams that don’t have the bandwidth or internal expertise to constantly monitor emerging legislation. Allowing employees to work remotely from different states or countries, for example, increases the risk of running afoul of labor and employment laws that often can vary considerably by jurisdiction.

Many vendors now offer proactive monitoring services to help HR and in-house counsel more efficiently track legislative changes and save significant time on HR policy maintenance, experts say.

Ben Eubanks, chief research officer for Lighthouse Research and Advisory in Huntsville, Ala., said such automated tools can be sound investments for companies without the internal resources or time to track these changes through traditional methods like reviewing government agency websites or reading relevant industry publications.

“Even high-quality HR leaders with plenty of experience can miss things that come up on a local or global level,” Eubanks said.

The biggest caution in relying on technology or external providers for such compliance, Eubanks said, is ensuring the guidance applies directly to your business or the jurisdictions in which you operate.

“For instance, if you ask ChatGPT how your company should comply with FMLA [the Family and Medical Leave Act], it will tell you,” he said. “But it may not tell you that since your company only has 40 employees, you’re not actually subject to the FMLA.”

Aptifore is designed to save time for HR teams by helping them avoid the often-onerous task of manually updating employee handbooks as relevant legislation and company policies change. Those using the platform complete a company profile detailing the jurisdictions they operate in and then upload their existing employee handbooks to the system, said Dean Stack, senior product manager at Aptifore.

Artificial intelligence baked into the platform reads all the data in the handbook to determine what policies currently exist, then compares that to the more than 1,000 legislative policy templates in Aptifore’s library to assess which of those templates are applicable based on a company profile. All information in the uploaded handbook is encrypted, stored separate from other client data and protected with other security measures, Stack said.

Aptifore goes beyond simply alerting HR leaders to pending or recently enacted legislative changes, Stack said.

“Some regulations are very specific to the type of organization, not just the jurisdictions where it operates,” he said. “HR leaders want to know what actions they need to take immediately to stay compliant with their employee handbooks.”

The platform tracks the majority of state and local jurisdictions in the U.S., so HR users in a company that expands its operations to a new state—by hiring remote workers there, for example—typically get access to current labor or employment laws in that state. For instance, if an organization hires a remote worker based in Kansas for the first time, Aptifore enables them to automatically add a Kansas state supplement to their handbook and HR policies.

“If a new or modified regulation is applicable to a handbook a HR client has uploaded to our platform, we’ll send them an instant notification to let them know we have a new policy template available to them,” Stack said. “They then can review it and decide if they want to add it to their handbook or not.”

A collaboration feature on the platform allows HR, legal and other users to chat in real time about potential changes to a policy or handbook document before reaching consensus.

Stack said in 2023, Aptifore documented 95 legal developments across the jurisdictions it monitors that had some impact on its clients’ employee handbooks. “As a result, we created 24 new policy templates to account for those developments, as well as updated 141 of our existing policy templates,” he said.

Growing Compliance Risks Around Global Expansion

Some technology vendors also specialize in helping HR functions figure out compliance-related requirements that vary significantly by country or region, such as data privacy laws, termination processes, leave entitlements, or the classification of workers as employees or contractors—areas where mistakes can lead to costly fines or lawsuits.

Deel, a San Francisco-based HR solutions provider for global businesses, developed a tool called Compliance Hub designed to help companies navigate the ever-shifting international regulatory climate. Among the hub’s features is a newsfeed regularly sent to HR clients that tracks regulatory changes around the globe, as well as an AI-driven quiz companies can take to help determine whether workers should be classified as employees or contractors based on regulations in the jurisdictions where they work.

“Staying on top of compliance when you’re only operating in a single country can be hard, but factor in many more countries and the advent of things like remote work, and it becomes next to impossible,” said Aaron Goldsmid, head of product for Deel. “The challenge is that compliance is not static and is continually changing.”

Deel’s newsfeed is meant to supplant the more time-intensive practice of checking government agency websites, reading industry newsletters or using other methods of staying current on legislative changes around the globe. Deel’s staff of legal, HR, payroll and tax experts reviews, synthesizes and interprets those regulatory developments before they’re published to the newsfeed.

“In an average week, we probably see 40 to 60 compliance changes across all of the countries we monitor,” Goldsmid said. “It could be changes in anything from minimum wage law to overtime pay to tax regulations. We [recently] saw a change in Belgium for home office allowance and a minimum wage change in Honduras.”

Deel also partnered with two universities to build a quiz designed to help organizations more accurately classify workers as employees or contractors. An AI model evaluates and synthesizes all relevant case law in various global markets to construct questions for the quiz, Goldsmid said, with results enabling companies to assess their classification risks.

Deel also offers a service that periodically re-evaluates the classification status of workers on the payroll or employee-of-record technology systems the vendor provides to its clients. Goldsmid said: “There might be a chance a person is a higher classification risk than they were when originally evaluated, given recent changes in regulation, so we offer the option of re-running the misclassification quiz for them.”

Dave Zielinski is principal of Skiwood Communications, a business writing and editing firm in Minneapolis.