HR compliance is a crucial responsibility for every business. Yet, with so many evolving regulations, it’s easy to feel overwhelmed. According to SHRM, 80% of employers face challenges keeping up with labor law changes each year—a situation that puts them at risk of fines, lawsuits, and reputational harm. This is where expert HR guidance becomes invaluable.
At Lift HCM, we understand how daunting HR compliance can be. For over five decades, we’ve supported businesses like yours with practical, up-to-date solutions that keep you compliant and protect your employees. In this checklist, we’ll outline the key areas you need to monitor—from wage and hour laws to data privacy, leave policies, and more.
By the end of this article, you’ll have a clearer path forward to protect your business, support your team, and foster a workplace that’s safe, fair, and compliant.
Table of Contents
Compliance with federal, state, and local wage and hour laws remains a top priority for businesses in 2025 and beyond. These regulations are a frequent source of litigation and govern how employees are paid, how hours are tracked, and how overtime is calculated. Missteps in these areas can lead to significant financial penalties and legal challenges.
It's imperative to stay updated on the current federal minimum wage. However, it's even more critical to monitor and comply with the minimum wage rates set by the specific states, counties, and cities where your employees perform work. Many local jurisdictions have rates significantly higher than the federal standard. These rates are often subject to annual increases, typically at the start or mid-year. Failure to pay the correct minimum wage, even inadvertently, can result in back pay claims, fines, and penalties.
Ensuring the correct classification of employees as either exempt (not eligible for overtime) or non-exempt (eligible for overtime) under the Fair Labor Standards Act (FLSA) and equivalent state laws is critical. Misclassification is a common and costly error that can lead to substantial liabilities. For non-exempt employees, accurately tracking all hours worked is mandatory. This includes travel time, training time, and any off-the-clock work. Overtime must be correctly calculated and paid at the appropriate rate, typically 1.5 times the regular rate of pay for hours worked over 40 in a workweek. It's important to remember that state laws may have different daily or weekly overtime triggers.
Maintaining accurate, complete, and detailed records of hours worked, wages paid, and deductions made isn't just good practice; it's a legal mandate. These records are essential for demonstrating compliance in the event of an audit or dispute. This includes timekeeping records, payroll registers, and records of any additions to or deductions from wages. The required retention period for these records varies by law but is typically several years.
The trend towards greater pay transparency is accelerating across the United States. Businesses must be aware of increasing state and local laws that require employers to disclose salary ranges in job postings. These laws may also mandate providing this information to job applicants or current employees upon request. Pay transparency laws aim to address pay equity and can have specific requirements regarding the format and timing of disclosure. Understanding these requirements in the locations where you recruit and employ is crucial for compliance.
Managing employee leave requires careful attention to a complex web of various federal and state regulations. Each of these laws comes with specific eligibility criteria, notice requirements, and provisions for job protection and benefits continuation. Navigating these requirements ensures fairness to employees and compliance for your business.
For eligible employers and employees, understanding the FMLA's provisions for unpaid, job-protected leave is fundamental. This federal law covers specific family and medical reasons, such as the birth or adoption of a child, care for a spouse, child, or parent with a serious health condition, or an employee's own serious health condition. It's crucial to know the eligibility thresholds (number of employees, employee tenure, hours worked), the qualifying reasons for leave, and the notice requirements for both employees and employers. Employees also have a right to reinstatement to the same or an equivalent position upon return from leave.
This is an area of significant complexity and frequent change for businesses operating across different jurisdictions. Many states and cities have enacted their own paid sick leave laws, paid family leave insurance programs, or other types of mandated leave, such as leave for victims of domestic violence, school activity leave for parents, or bereavement leave. These local laws often have different eligibility rules, covered reasons for leave, and benefit levels than the FMLA. Businesses must understand which of these laws apply based on their employees' work locations and how they interact with or potentially offer greater benefits than federal leave laws.
The ADA requires employers to provide reasonable accommodations to qualified individuals with disabilities, unless doing so would pose an undue hardship. It is important to recognize that leave can be considered a form of reasonable accommodation under the ADA. This means that even if an employee is not eligible for FMLA or other general leave, providing a period of leave may still be necessary to comply with the ADA. The interactive process, where employers and employees collaborate to determine appropriate accommodations, is key in these situations.
Complying with Uniformed Services Employment and Reemployment Rights Act (USERRA) is essential when employees need to take leave for military service, including training and active duty. USERRA provides important reemployment rights, continuation of benefits, and protection from discrimination for individuals who serve in the uniformed services. Understanding the specific requirements for notice, duration of leave, and reinstatement is crucial for employers to avoid legal issues.
Creating and maintaining a workplace free from discrimination and harassment is not only a legal mandate but also a cornerstone of a respectful, productive, and ethical organizational culture. Adhering to these protections helps foster a positive environment for all employees.
Businesses must understand and comply with federal laws enforced by the Equal Employment Opportunity Commission (EEOC). These include Title VII of the Civil Rights Act, the Age Discrimination in Employment Act (ADEA), and the ADA. These laws prohibit discrimination in all aspects of employment based on protected characteristics, such as race, color, religion, sex (encompassing pregnancy, childbirth, related medical conditions, sexual orientation, and gender identity), national origin, age (40 or older), disability, and genetic information. Many states and localities have additional protected categories, like marital status or veteran status. Ensuring fair treatment in hiring, firing, promotions, and compensation is paramount.
Implementing robust and clearly communicated anti-harassment policies is a critical preventative measure for any organization. These policies should define what constitutes harassment, explicitly state that harassment will not be tolerated, and provide multiple, accessible avenues for employees to report concerns without fear of retaliation. Providing regular, interactive training to all employees, including managers and supervisors, is essential. This training educates them on preventing harassment and understanding their roles and responsibilities in maintaining a respectful workplace. Establishing clear procedures for promptly and thoroughly investigating all complaints, taking appropriate corrective action, and ensuring confidentiality to the extent possible are vital for legal compliance and fostering employee trust.
While specific DEI initiatives may not always be strictly mandated by law, developing and promoting a diverse, equitable, and inclusive workplace aligns strongly with anti-discrimination principles. Fostering an inclusive environment where all employees feel valued and respected can significantly help prevent issues that could lead to discrimination or harassment claims. DEI efforts contribute to a more compliant and thriving organization overall.
It is crucial for employers to understand that laws prohibiting discrimination and harassment also prohibit retaliation against individuals who report discrimination or harassment, participate in an investigation, or oppose discriminatory practices. Retaliation claims are common and can arise even if the underlying discrimination or harassment claim is not substantiated. Ensuring that employees feel safe to raise concerns without negative repercussions is vital for legal compliance and maintaining a trusting workplace environment.
Protecting sensitive employee data is an increasingly critical aspect of HR compliance in today's digital world. This is driven by a growing awareness of privacy rights and the rapid evolution of data protection regulations. Businesses must be diligent in their approach to handling personal information.
Businesses must be mindful of what types of employee data they collect, how that data is used, and how long it is retained. This includes sensitive information such as Social Security numbers, health information (which is subject to HIPAA and other privacy laws), performance reviews, disciplinary records, and payroll information. Data collection should be limited to what is necessary for legitimate business purposes. Employees should generally be informed about what data is being collected and how it will be used to ensure transparency and trust.
Implementing reasonable administrative, technical, and physical security measures to protect sensitive employee information from unauthorized access, use, disclosure, alteration, or destruction is a legal and ethical imperative. This includes securing electronic records through strong access controls and encryption where appropriate. Physically securing paper records is equally important. Data breaches can lead to significant legal liabilities, severe reputational damage, and even identity theft for employees, making proactive security essential.
While many state privacy laws, like the California Consumer Privacy Act (CCPA) and its successor the California Privacy Rights Act (CPRA), initially focused on consumer data, they often have significant implications for employee data as well. Other states are enacting similar comprehensive privacy laws that impact how businesses manage employee information. Businesses need to understand if these laws apply to the employee data they collect and process and comply with requirements regarding employee rights to access, delete, or opt-out of the sale of their personal information, where applicable.
The use of biometric data, such as fingerprints or facial scans, for timekeeping or security purposes is becoming more common. However, this practice is subject to specific state laws, like the Illinois Biometric Information Privacy Act (BIPA), which require informed consent and outline strict data handling requirements. Similarly, employee monitoring, including email, internet usage, or location tracking, must comply with federal and state laws regarding employee privacy rights and clear notice requirements. Employers should ensure transparency and adhere to all applicable regulations when implementing such technologies.
Ensuring a safe and healthy working environment is a fundamental HR compliance requirement and a moral obligation to your employees. Proactive measures and adherence to regulations are key to preventing incidents and fostering a secure workplace.
Businesses in most private sector industries are covered by the Occupational Safety and Health Act and must comply with OSHA standards relevant to their specific industry and operations. This includes the general duty clause, which requires employers to provide a workplace free from recognized hazards that are likely to cause death or serious physical harm. Understanding and applying these standards is crucial for preventing accidents and ensuring employee well-being.
Proactively identifying potential workplace hazards is the first step in prevention. These can be physical (e.g., machinery, heights), chemical (e.g., hazardous substances), biological (e.g., infectious diseases), or ergonomic (e.g., repetitive motion). Implementing effective measures to control or eliminate these hazards is essential. This often involves engineering controls (like machine guards), administrative controls (like safe work procedures), and providing appropriate personal protective equipment (PPE) to employees.
Providing employees with necessary safety training specific to their job duties and potential workplace hazards is a key OSHA requirement. This includes training on emergency procedures, the safe operation of equipment, the handling of hazardous materials, and proper lifting techniques. All safety training should be thoroughly documented, and employers must ensure employees clearly understand the material to be effective.
Maintaining required OSHA records of work-related injuries and illnesses is mandatory for many employers. This includes maintaining an OSHA 300 Log, a 301 Incident Report, and a 300A Summary of Work-Related Injuries and Illnesses. These detailed records are used to track workplace safety performance and are subject to inspection by OSHA, making accurate and timely record-keeping critical for demonstrating compliance.
Administering employee benefits involves navigating a complex and ever-changing landscape of federal and state regulations. These laws are designed to protect employee rights related to health, retirement, and other welfare benefits. Compliance in this area is essential to avoid legal pitfalls and ensure your employees receive their entitled benefits.
ERISA, or the Employee Retirement Income Security Act of 1974, sets minimum standards for most voluntarily established retirement and health plans in private industry, providing protection for individuals in these plans. Compliance involves understanding various fiduciary duties and adhering to specific reporting and disclosure requirements. This includes providing Summary Plan Descriptions (SPDs) to employees and filing Form 5500 with the Department of Labor. Ensuring the proper administration of plan benefits is also a core component of ERISA compliance.
Understanding your obligations under the Affordable Care Act (ACA) is critical, particularly for Applicable Large Employers (ALEs), which are businesses with 50 or more full-time equivalent employees. This includes the requirement to offer affordable, minimum essential health coverage to full-time employees and their dependents. ALEs must also comply with specific reporting requirements, submitting Forms 1095-C and 1094-C to the IRS. Even smaller employers need to be aware of ACA provisions that may apply to their group health plans, as the law has broad implications.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives eligible employees and their dependents the right to continue health coverage under their employer's group health plan for a limited time after certain qualifying events. These events can include termination of employment, reduction in hours, or other specific circumstances. Administering COBRA correctly involves providing timely and accurate notices to eligible individuals and managing enrollment and premium collection processes. It's also important to note that many states have "mini-COBRA" laws that apply to smaller employers not covered by federal COBRA.
Beyond federal laws, many states have their own mandates regarding employee benefits, adding another layer of complexity. This can include requirements for specific types of health insurance coverage to be offered, mandates for short-term disability insurance, or requirements related to paid family leave insurance programs, as mentioned in the Leave Laws section. Staying informed about these state-specific requirements is essential for businesses, especially those with employees in multiple states, to ensure comprehensive compliance.
The significant and likely permanent shift towards remote and hybrid work models has introduced a new layer of complexity to HR compliance. This requires businesses to consider the legal requirements of every location where their employees work, rather than just the company's headquarters.
A key challenge of remote work is ensuring compliance with the wage and hour, leave, anti-discrimination, and other employment laws of the state, and potentially the city or county, where the remote employee is physically located. This means understanding and applying different minimum wage rates, overtime rules, paid sick leave mandates, and other regulations based on the employee's remote work location. It is a critical distinction from only complying with the laws of the company's main office.
Employing individuals in different states triggers payroll tax obligations in those states. Businesses must ensure they are registered to pay unemployment insurance and other required taxes in each state where they have remote employees. There can also be significant implications for state income tax withholding, requiring careful attention to avoid penalties.
Ensuring appropriate workers' compensation coverage for remote employees is crucial for businesses. Generally, workers' compensation laws apply based on the state where the employee works, regardless of the employer's physical location. Businesses need to confirm their workers' compensation insurance covers employees working remotely in different states. Clear policies regarding the reporting of remote work injuries should also be well-communicated to all employees.
Remote work can significantly increase data security risks for sensitive company and employee information. Implementing clear policies and providing appropriate technology are vital to ensure data is protected when accessed and stored on remote devices and networks. This includes requirements for secure internet connections, the use of Virtual Private Networks (VPNs), device encryption, and the physical security of work equipment in the employee's home. Proactive measures are necessary to prevent data breaches.
Establishing clear, comprehensive remote work policies or agreements is highly recommended for any business with a distributed workforce. These documents should outline expectations regarding work hours, communication protocols, data security, and the use of company equipment. They should also address reimbursement for home office expenses, which may be required by state law, and how performance will be managed in a remote setting. Well-defined policies create clarity and mitigate potential misunderstandings.
The process of bringing new employees into your organization is subject to numerous regulations. These are designed to ensure fair hiring practices and verify employment eligibility, making compliance in this stage critical for avoiding legal issues from the outset.
Accurately completing and retaining Form I-9, Employment Eligibility Verification, for every new hire is a mandatory federal requirement for all U.S. employers. This form verifies the identity and employment authorization of individuals hired in the United States. Businesses must follow strict procedures regarding the documents that can be accepted and the timeline for completion. Errors or omissions on I-9 forms are a common target during government audits, making precision essential.
If your business conducts background checks, including criminal history, credit checks, or driving records, as part of the hiring process, you must comply with the Fair Credit Reporting Act (FCRA). The FCRA has specific requirements for obtaining consent from the applicant, providing notice if adverse action is taken based on the report, and giving the applicant an opportunity to dispute the information. Many states and cities also have "ban the box" laws that restrict when employers can ask about an applicant's criminal history, requiring careful attention to local regulations.
While not always legally required, clear and compliant offer letters and, where applicable, employment agreements are essential for setting expectations. These documents should accurately reflect the terms and conditions of employment, including position, compensation, benefits, and any at-will employment status (where applicable). It's crucial to avoid language that could inadvertently create an implied contract contrary to the employer's intent, thereby protecting both the employee and the business.
Federal and state laws require employers to report information about newly hired employees to a designated state agency. This information is primarily used to locate individuals who owe child support, but it is a mandatory compliance step. Businesses must comply with the specific reporting requirements and timelines in the states where they hire employees to avoid penalties.
Many areas of HR compliance are underpinned by mandatory training requirements for both employees and managers. Effective training isn't just about fulfilling a legal obligation; it's about educating your workforce and fostering a culture of compliance that protects everyone.
As discussed earlier, many states and localities mandate specific types and frequencies of training on preventing sexual harassment and other forms of workplace harassment. These requirements often specify the content of the training, who must be trained (e.g., all employees, supervisors), and how often the training must occur (e.g., annually, every two years). Even where not legally mandated, providing regular harassment prevention training is a best practice for mitigating risk and fostering a respectful environment.
OSHA standards require training on various safety topics relevant to the specific hazards present in a workplace. This can range from general safety orientations for all new hires to specific training on handling hazardous chemicals, operating forklifts, or responding to emergencies. All safety training should be thoroughly documented, and employers must ensure employees clearly understand the material to be effective.
With an increasing focus on data protection, training employees on handling sensitive company and employee data securely is becoming more important than ever. This includes training on data classification, secure password practices, recognizing phishing attempts, and adhering to company policies regarding data use and access. Regular training sessions help maintain a strong security posture across the organization.
Depending on your industry and location, other types of mandatory training may apply. This could include ethics training, cybersecurity awareness training, or training related to specific industry regulations unique to your field. Tracking employee completion of all required training is essential for demonstrating compliance during audits or legal inquiries.
Maintaining HR compliance is an ongoing process, not a one-time task. Adopting these best practices can help businesses navigate the complexities and stay ahead of potential issues, ensuring long-term legal protection and a positive workplace.
Navigating the intricate landscape of HR compliance in 2025 and beyond requires vigilance, a commitment to continuous learning, and proactive management. The sheer volume and complexity of regulations can seem daunting, but a systematic approach ensures your business remains protected and your team thrives.
By diligently addressing the key areas outlined in this comprehensive checklist – from ensuring fair wages and managing leave correctly, to fostering a safe and non-discriminatory workplace, and meticulously protecting employee data – businesses can significantly mitigate legal risks and avoid costly penalties. This proactive stance not only builds a strong foundation of legal compliance but also cultivates a positive, secure, and productive environment for your most valuable asset: your people.
Staying informed and seeking expert guidance when needed are your best strategies for success in the evolving world of HR compliance. The investment in robust compliance practices today safeguards your business against future challenges and strengthens your employer brand.
Ready to simplify your HR compliance in 2025 and beyond? Lift HCM offers expert guidance and comprehensive solutions designed to keep your business compliant and your employees protected. Learn how our tailored payroll and human capital management services can reduce your risk and enhance your workplace.
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