When it Comes to Compliance, Ignorance is not an Option

Organizations face a host of regulatory trends and issues as they engage an increasingly complex workforce in a global business environment. For many line-level managers and talent decision-makers, assuming someone else is monitoring these issues may be easier than recognizing and learning about them when they arise.

Unfortunately, in-house legal experts and front-line talent acquisition and workforce management experts may often operate in isolation. This challenge may result in overlooked issues, last-minute finds, and ensuing panic as the employer scrambles to face an audit or legal action. Avoiding such firefighting begins with everyone involved in procurement or talent acquisition understanding potential areas of risk, and our latest white paper, “Demystifying Compliance: Priorities for a Workforce Advantage,” reveals how.

In addition to offering real-world applications and strategies for business success, the report provides insight into key issues in regulatory and compliance today. Here are some of the big themes we uncovered.

Data Privacy and Information Security 

Companies cannot underestimate the role of data in today’s workforce. Data privacy and information security go hand-in-hand, and they play a large role in recent regulations enacted around the world. Data privacy refers to the application of rules that govern the collection and handling of personal information. Information security refers to the practices aimed at protecting data from unauthorized access, misuse, or destruction.

• Issues: Laws such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act in the U.S. represent the latest push by regulators to hold those in possession of personal data accountable for their use. While laws enacted in one region were created specifically for those areas, the global nature of today’s digital environment means that privacy mandates apply globally. From externally facing websites and career portals to internal systems, employers must be intentional about their collection and handling of data from employees, flexible workers, and job candidates.

• Implications: Control over the digital environment is essential. Ask questions about the technology that is used to collect and process data about flexible workers and employees. Are the systems adequately protecting personal information, and are the people with access to that information using it in a compliant fashion? Are the partners, including staffing organizations, talent solutions organizations, vendor management systems, background check vendors, and other parties, compliant with the latest regulations? The answers can determine your own organization’s level of exposure to regulatory risk.

Worker Classification 

As a perennial challenge when engaging talent outside the traditional employee model, the issue of classification raises many questions as companies navigate the engagement of freelancers and contractors in the growing gig economy. For example, in a 2018 California ruling, Dynamex Operations West, Inc. v. Superior Court, the state adopted what is known as the ABC test for determining worker classification. That test requires a worker to be classified as a contractor if the person is:

A) Free from the control of the hiring entity,
B) Performs work that is not central to the hiring organization’s business, and
C) Is customarily engaged in an independently established trade of the same type of work performed for the hiring entity.

Other notable rulings, such as a U.S. finding that Uber drivers are not considered employees, will likely continue to be challenged around the world.

• Issues: Worker classification gained widespread attention as an issue in the late 1990s, as companies had to determine whether they needed to afford flexible IT workers the full advantages enjoyed by traditional employees, such as vacation and benefits. Today, that issue has expanded as organizations lean on gig economy workers across a variety of fields through technology platforms such as Uber, freelancer systems such as Upwork, or as traditional contractors through consulting arrangements.

• Implications: Visibility into the entire current workforce is key to staying ahead. Most organizations know how many employees they have. However, many do not know how many total people work for them, including contingent workers, freelancers, consultants, and employees of services providers.

Background Checking

As one of the most basic functions in the onboarding process, the background check requires workers to disclose personal information to the employer. For employers, background checks may provide challenges due to their varied requirements for hiring in different skill sets or industries.

• Issues: Many regulations cover the amount and type of background information that can be disclosed, from the basic name and identification verifications (i.e., Social Security numbers in the U.S. or National Insurance Numbers in the UK) to education history, certifications, and reference checks. Beyond the basics, employers are subject to various rules according to the location and type of industry or work being done. For example, the finance, law, education, and healthcare fields require a deeper look at the applicant’s background but for different criteria in each field. In many cases, certain professions require additional checks (i.e., incidents of financial fraud in the finance industry or child abuse in education fields).

• Implications: Rules vary by location and type of work. In all cases, the employer must ensure that the right checks are made, even if the process is outsourced to a background check provider or third-party recruitment vendor. Companies must also ensure that they are complying with varying regulations that differ by location.

Bias and Discrimination 

When recruiting and engaging talent, several issues can bring an organization into conflict with applicable laws about bias in hiring. From targeting candidates to interviewing and screening processes, bias can influence all parts of employee engagement.

• Issues: Today, much of the risk associated with discrimination stems from unconscious bias when the employer, through language, processes, or other means, unknowingly creates a disadvantage or disincentive for people of particular groups or backgrounds. In job advertising, for example, a seemingly innocent phrase like “looking for a digital native with emerging skills” may be interpreted as age discrimination as the term “digital native” generally refers to those born after 2000. Likewise, some interview questions can be discriminatory even if the interviewer had no conscious, negative intentions (e.g., “Where are you from?”).

• Implications: No organization wants to be seen as discriminatory in the eyes of the law or in the perception of the workforce as such a reputation could reduce its ability to attract and retain workers. Addressing bias and discrimination issues requires regulatory expertise to recognize specific areas of risk, as well as the resources and commitment to create a bias-free culture of inclusion and diversity.

Get the Report

Organizations that want to stay ahead should recognize the factors that influence compliance – like those above – and create a proactive approach to tackling them. Our latest white paper reveals how. Get your free copy today then contact us to learn more about building or enhancing your relationship with Allegis Global Solutions.