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New Software Helps Shoulder HR's Growing Compliance Workload

Two business people sitting at a table looking at a laptop.

​When Pam Armstrong sought new technology to help manage compliance obligations tied to her company's employee leave process, she wasn't content to use general features available in a core human capital management (HCM) system. Armstrong, senior human resources manager for American Airlines, wanted a specialized software platform designed for tracking legislative changes impacting leave and automating tasks such as eligibility calculation, employee communications and record keeping. 

"The system we chose [AbsenceSoft, based in Golden, Colo.] not only allowed us to move from a paper-based to an electronic system, it enabled us to track compliance in more efficient ways, like paperwork that's now barcoded and automatically attached to leave cases," Armstrong said. "We now have automated, customized workflows that facilitate our leave processes and back-end reporting that helped us better manage our operations."

Complying with ever-shifting legislative and regulatory changes is more challenging than ever for HR professionals. Whether the new laws are tied to employee leave, pay transparency, use of artificial intelligence, background screening, minimum wage or noncompete agreements, HR teams have to track, manage and report on an expanding number of compliance requirements.

That's led more HR leaders to rely on features in software platforms to help shoulder the compliance burden. While these technologies can be invaluable in reducing manual administrative tasks, providing legislative updates and improving data accuracy, experts say it's important to thoroughly evaluate software vendors to ensure they have the kind of modern technology and legal knowledge needed for today's more demanding compliance environment.

Value of 'Best of Breed' Software Platforms

While the features embedded in many HCM technology suites can help meet standard compliance requirements in areas including payroll and benefits, HR leaders increasingly seek out specialized "best of breed" software platforms to address more complex compliance needs.

One such category is employee leave, where systems such as AbsenceSoft help HR stay current on changing federal and state laws, calculate eligibility criteria, store required forms, run custom reports, and create automated reminders and alerts tied to key milestones in an employee's leave process.

AbsenceSoft also provides compliant templates for writing letters, e-mails and texts notifying employees of the status of their leave requests and has tools to help HR navigate the complexities of laws including the Americans with Disabilities Act. Using such centralized, cloud-based platforms also means HR no longer has to rely on sticky notes, calendar reminders and spreadsheets to track Family and Medical Leave Act leave and other types of employee leave.

Staying on top of legislative changes is vital for HR and legal teams, a responsibility they are looking to vendors' software platforms to help manage. This year, legislative changes will impact paid family- and medical-leave standards in states including Colorado, Oregon, New York and California, with new paid-leave proposals being considered in a handful of other states.

"The complexities and workload around employee-leave compliance started growing with the pandemic and haven't slowed down much," said Jennifer Limon, vice president of industry solutions for AbsenceSoft. "Many employees are now part of the sandwich generation, having to care both for young kids at home and for their aging parents. Compliance needs also are more complex for companies that have a larger number of dispersed employees working either remotely or in person in different states or countries."

Evaluating Vendors' Compliance Capabilities

HR technology analysts say that given the high stakes of regulatory compliance and the responsibility software vendors assume in helping clients comply with a wide range of laws, it's important to ensure providers you partner with possess both up-to-date technology and the necessary legal expertise to succeed in that task.

Ron Hanscome, research vice president specializing in HR technologies for Gartner, said one good step before contracting with an HR software vendor is to ask to speak with some of the vendors' clients about the provider's performance on compliance matters—including how responsive they are in making critical updates.

"We always suggest that companies selecting vendors check with customer references regarding a vendor's responsiveness to making updates in their systems to legislative changes," Hanscome said.

HR functions also need to understand there may be cases when a jurisdiction makes a change to a law but may not give vendors adequate advance time to respond, Hanscome said. "You should expect your software provider to give you a high level of support around laws and regulations, but you also need to be realistic about how long it might take for changes to be reflected in the vendor's system," he said.

Technology plays a role in that responsiveness, Hanscome noted. "Generally the more modern a technology platform the quicker those legislative updates can be incorporated into it," he said. "With older, on-premise systems there can sometimes be a more complex configuration or custom coding that lengthens the time needed to respond and incorporate legislative changes."

Serving Specialized Compliance Needs

HR leaders can choose from a growing number of software vendors to help meet the breadth of their compliance needs. For example, providers including Oyster, Deel and Safeguard Global specialize in helping companies deal with the compliance challenges of hiring workers from other countries and states, two growing practices given ongoing labor shortages in many industries and the rise of remote and hybrid work. Such vendors help organizations avoid having to open a local entity to hire employees in different countries.

Oyster has features that ensure organizations hiring globally use employment contracts that comply with local labor laws and international payroll regulations. The vendor has an in-house legal team that works with leading employment law firms.

Matteo Bordin, a product director with Oyster, said the biggest compliance challenges for HR and recruiting leaders when hiring workers internationally come in understanding differences in laws governing areas such as employee terminations, probationary work periods and paid time off. "There are many differences and surprises on these practices around the world," Bordin said.

As one example of such variations, France introduced a law in 2017 called the "right to disconnect," which requires organizations with more than 50 employees to negotiate agreements with unions that allow workers to disconnect from work technologies such as e-mail and text after certain hours. Other European countries have since followed suit with similar laws.

"Our global database contains all of the updated laws and requirements for all countries where we do business," Bordin said. "For example, there's a drop-down box for each country that helps users pick the right, compliant probation period for new employees."

Software platforms including Deel can help employers address immigration issues by managing the visa process for newly hired workers, while Safeguard Global and other systems ensure global payroll is compliant with local labor and tax laws. Other vendors serve more niche compliance needs and markets. The vendor Homebase, for example, helps small businesses stay compliant with federal and state labor laws while provider Certemy automates the tracking of employee licenses and credentials.

What do these software platforms cost? Pricing varies based on required features and company size, but as one example, Oyster starts at $499 per employee per month for larger organizations.

Some HR software platforms also contain modules and datasets that can help users comply with expanding pay transparency laws requiring companies to list salary ranges in job postings. Vendor ADP, for example, has extensive compensation benchmarking data collected from thousands of employers of varying industries and sizes that can help recruiting leaders set more competitive salary ranges for job ads.

"HR technology can help level the playing field for those organizations that might not have the internal resources to gather and analyze that kind of real-time payroll data," said Helena Almeida, vice president of counsel for ADP.

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


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