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COMPLIANCE: NECESSARY AND NOT NECESSARILY A CULTURE DISRUPTER
One of the consistent things we coach and consult our small business leaders on is addressing labor law compliance. Yet, compliance often feels to our clients like a disruptor to the desired culture our clients want for their organizations. All the rules! All the technical mumbo-jumbo! All the new P’s and Q’s our leaders have to remember when working with and addressing employees.
It might feel easier to turn your head and ignore compliance and hope you don’t get caught in violation. That’s understandable.
At INFINITI HR, we like to say that there’s a difference between what we’re required to do and what’s simply the right thing to do. That’s why in this article, we want to share how you can navigate compliance needs without disrupting your culture. When we identify the right reasons for adopting new policies or practices and communicating them effectively, we can maintain compliance to labor laws without disrupting culture. In fact, your culture may thrive by applying a more proactive approach to adhering to labor laws.
COMPLIANCE CONCERNS: PLEASE GO AWAY!
In a recent survey we conducted with clients, we found that three labor law obligations had the most perceived challenges with regard to compliance and its potential negative impact on workplace culture:
1. Converting contractors to employees
2. Recategorizing employees as Non-Exempt (paid by the hour)
3. Employment eligibility: I9 within 3 days of the employee’s first day of employment
There are, of course, any number of labor law compliance challenges facing your company. A small example is posting current labor law posters in your company. Sure, the likelihood of someone from the Department of Labor popping by your company unannounced just to confirm you are displaying current labor law posters is pretty low!
But it’s a good example of having an intentional approach to compliance: what matters to your organization? What’s the risk of not complying? And, just as important: what’s the right thing to do? Particularly in gray-area judgement calls when it comes to the Fair Labor Standards Act (FLSA). From there, it comes down to what you want to do and how you’ll do it. HR is as much an art as it is a science. You have to make a judgment call on what works for your organization and the culture you seek to flourish.
REALITY CHECK FOR ASSESSING COMPLIANCE RISK
There are four essential risks to consider when assessing your risk for not being in compliance with labor laws:
1. What is the risk of an audit?
2. What is the risk of penalties? If so, how much?
3. What is the risk of legal costs?
4. What is the risk of a retaliatory ex-employee?
But we would challenge you to think bigger than this when making compliance decisions.
Many employees are learning more about rights and labor laws: from family members, colleagues, others in their profession, or doing their own research.
Ask yourself: do you want to open yourself up to breaking trust with employees? Do you want to field increasing complaints?
All this undermines your credibility: as decision-makers and as an organization. Those are negative dings on your culture.
THE CULTURE CLASH WITH COMPLIANCE
There are reasonable excuses to bristle with labor law compliance.
– Red tape and compliance complexity is a roadblock to addressing your business plan and goals.
– You don’t want compliance to mess with your culture: you have low employee turnover, so why mess with success?
– Compliance laws are difficult to explain or difficult to enforce.
– Employees may be unaware of their rights or simply don’t care.
– A “Why bother?” attitude: past complaints haven’t driven change and since nothing has changed, employees stopped speaking up.
As HR experts, we can tell you that many of these laws are complex to understand, let alone to follow! We also believe that nobody likes mandates, even those who are complying with them. We must find a better way to enact positive change than using mandates to drive change. (But that’s a topic for a different article!)
A CULTURE OF POSITIVE COMPLIANCE
What are some of the benefits of complying with labor laws? How would your organization benefit from compliance?
– Leading by example builds credibility
– Quality control and consistency and dependability
– Pride in your organizational ethics
– Employees can act and feel empowered
– Create a safe place for feelings where people are seen and heard
– Increased referrals of like-minded people and retention of great talent
SELLING COMPLIANCE CHANGE TO LEADERSHIP AND EMPLOYEES
Staying in compliance with labor laws doesn’t have to mean disrupting your workplace culture. In fact, done right, compliance can foster a stronger and more unified culture. That’s why it’s important to understand the intention of compliance laws.
For example, the Fair Labor Standards Act (FLSA) was first passed in 1938. The original intent for the FLSA was to do away with the labor standards that were detrimental to the minimum standard of living necessary for “mandates, rules and regulations necessary for the health, efficiency, and general well-being of employees.”
Yes, the government seems at times to be out of date with regard to how organizations work and function today. Yet, the basic reason for the FLSA still rings true today. Most workplaces want to do right by employees to help support the “health, efficiency, and general well-being of employees.”
If your organization wants to be a great place to work and raise the standard of living for employees, then you may very well want to encourage more compliance for FLSA and compliance labor laws.
But how do you sell in change?
– Be a culture champion and weave in why complying to labor laws can foster a thriving culture.
– For those gray-area judgment calls: ask yourself, ask what is required to do versus what is the right thing to do?
– Make sure you’re credible: know the intent of the laws, communicate why you decided to comply and why compliance benefits the organization.
– Have a compliance plan! And, reward the right behaviors for following labor laws.
– Use the CAB approach to selling in change: What’s the Condition to address? What’s the Action we need to take? What is the Benefit to this change and desired outcome?
– Communicate well by knowing your audience and communicating to their needs and perspectives.
THREE STEPS TO COMMUNICATING COMPLIANCE CHANGE
When it comes to communicating compliance changes, remember these three steps.
1. Shift perceptions about the changes by using simple and positive messaging.
2. Keep people’s attention by connecting the policies to ethics, appealing to the greater good, and leading by example.
3. Empower employees by involving them in their change process.
And remember: there are no finish lines on the quest for improvement! Labor laws aren’t stagnant and your business isn’t stagnant. Keep advancing change in the workplace for the better.
REMEMBER: YOU’RE THE EXPLAINER IN CHIEF
Compliance and labor laws are complex! That’s why we encourage our small business leaders to consider themselves “Explainer in Chiefs.”
Here are a few helpful strategies to become a better Explainer in Chief:
– Gain trust by being relatable and credible.
– Reduce complexity and remove what is unnecessary in the explanation and communication.
– Seek varying perspectives to create a more engaged and connected workforce that embraces compliance.
– Encourage questions and feedback: it’s how your employees will feel heard and understand the key messages and path ahead.
– Be reasonable and respectful: compliance can be a thorny issue, so remove antagonism or standoffishness from the conversation.
– Be transparent, kind and consistent: in all your communications and engagement, including compliance!
Interested in other current employment trends? Click the link to view the recent blog: Labor Law Updates for December – 2021 or check back for more on human resources, payroll, insurance, and benefits.