Skip to main content

Human Resources Compliance

Apr 21, 2017

Question: Our bank is undergoing an internal review of its human resources department. I know you conduct such reviews and would like to know some of the primary regulations involving human resources compliance. There are experts in this kind of compliance; however, they seem to be mostly interested in handling litigation issues, while we are looking for a way to draft policies and procedures. What are some important federal regulations involving human resources? What review issues should we consider in our policy statements?
 
Answer
Human Resources (“HR”) compliance is a specialization that very few risk management firms offer. Ours does! Unfortunately, the legal community tends to focus on the litigation arising from compliance failures involving human resources, rather than providing reasonably-priced, compliance reviews of the HR function. Our firm actually has a Director of Human Resources Compliance, an expert in the regulatory requirements of human resources. We focus on guidance and reviews that seek to prevent litigation!
 
HR is the term that describes individuals who comprise the workforce of an organization. Human resources compliance, or "HR compliance," or sometimes colloquially referred to as "HR," is the term that applies to the department and functions within an organization, the administrative responsibility of which is charged with implementing strategies and policies relating to the management of individuals associated with the organization.
 
In many ways, human resources compliance is a central feature of a financial institution’s overall compliance function. This is intuitively obvious, given that local, state, and federal employment laws all play a role in human resources. Indeed, HR must be familiar with a wide array of different statutory and regulatory authorities to effectively and lawfully deal with company personnel.
Here are just two of the many federal regulations that affect HR compliance. Local and state statutes should also be included in any HR policy statement.
 
Fair Labor Standards Act (FLSA): This is a federal statute that applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce (unless the employer can claim an exemption from coverage).
 
National Labor Relations Act (NLRA), sometimes called the Wagner Act, which, as amended, is known as the Labor Management Relations Act (LMRA).

The foregoing regulations are but two of the vast array of regulations, at all levels of government, that involve HR.
 
HR compliance takes into consideration virtually all work functions amongst an institution’s rank and file. For instance, HR’s responsibilities in an institution include overseeing and managing duties related to hiring, firing, employee benefits, wages, paychecks, and overtime. 
 
A compliance review of the HR function should include how its many authorities extend to the oversight of workplace safety, privacy, preventing discrimination, prohibiting harassment, minimizing legal liability in the hiring and firing process, worker complaints, job protection, compensation, benefits, pensions, employee training, and labor relations.

Jonathan Foxx is managing director of Lenders Compliance Group, the first and only full-service, mortgage risk management firm in the United States, specializing exclusively in outsourced mortgage compliance and offering a suite of services in residential mortgage banking for banks and non-banks. If you would like to contact him, please e-mail [email protected].


 
 
About the author
Published
Apr 21, 2017
PACE Yourself

How green dreams for homeowners turn into lenders’ red flags

Rocket Mortgage Sues HUD Over Regulatory, Enforcement Discrepancies

Rocket seeks dismissal of the DOJ's October lawsuit alleging the lender committed racial appraisal bias.

Dec 05, 2024
CFPB Finalizes Rule Increasing Federal Oversight On Nonbank Fintechs

The final rule concerns lenders that offer digital payment apps and handle more than 50 million transactions per year.

Banking Regulator Testifies On Digital Transition, Climate Risks

Head of the OCC shares front-line perspectives as federal agencies prepare for a second Trump administration

Nov 20, 2024
FHA Proposes Looser Boarder Income Requirements For Qualifying Borrowers

The proposed changes reduce acceptable rental income history from two years to 12 months, among other expansions of FHA guidelines

Nov 20, 2024
New Calendar, Or Dictionary, Needed For AnnieMac

Half-a-dozen class-action law firms have launched investigations into AnnieMac's "proactive" handling of a late-August data breach.