HR Compliance Checklist: What Every Business Needs

HR compliance isn’t just about staying out of trouble, it’s about creating a stable foundation for everything from talent strategy to risk management. As regulatory complexity grows across states, industries, and work models, the stakes for getting it right have never been higher.

This comprehensive checklist is designed to help HR leaders go beyond box-checking and build a compliance program that’s integrated, proactive, and resilient—without losing sight of strategic priorities.

Why It’s More Than Just Legal Risk

The downstream impact of non-compliance goes far beyond fines. It affects employer reputation, business continuity, leadership trust, and employee morale. More importantly, poor compliance practices tend to unravel in moments that matter: during audits, investigations, M&A due diligence, or workforce restructures. This checklist helps build institutional muscle memory, ensuring your team isn’t scrambling when it matters most.

Core Areas of Compliance (and Where Gaps Usually Hide)

Even seasoned HR teams can miss critical elements. Here’s a breakdown of the most essential areas—with added guidance on where hidden risks often live.

1. Hiring and Pre-Employment

• Job postings: Must meet ADA and EEO requirements. Also verify salary transparency mandates (e.g., Colorado, California, New York City).

• AI in hiring: If you use automated screening or AI-powered assessments, check for emerging compliance laws (like NYC Local Law 144).

• Background screening: Comply with Ban-the-Box laws and FCRA notice/dispute processes. Keep an eye on evolving state laws around credit and criminal history usage.

• Remote roles: Multi-state or international recruiting? Ensure your job ads and onboarding processes align with each jurisdiction’s notice, tax nexus, and employment law—navigating multi-country requirements adds a layer of complexity that demands system-level oversight.

Risk trigger: Rapid expansion or remote hiring often causes organizations to overlook location-specific laws.

2. Classification and Compensation

• Worker classification audits: Misclassifying contractors is a massive liability—particularly under IRS 20-Factor and ABC tests in California.

• Exempt status: Audit exempt roles annually to confirm they meet both salary threshold and duties test. Don’t rely on outdated benchmarks.

• Overtime calculation: Includes bonuses, commissions, shift differentials—not just base pay. Ensure your payroll system calculates this properly, many platforms offer built-in compliance features that require correct configuration.

  
  

• Pay equity: Use structured audits to proactively correct disparities by gender, race, or age. Document intent and action plans.

Risk trigger: Organizations with decentralized or M&A-heavy histories often inherit outdated classifications or inconsistent pay bands.

3. Employee Policies and Enforcement

• Handbook version control: Keep historical versions of your handbook with time-stamped acknowledgments. Ensure policies are updated when laws shift mid-year (e.g., leave laws, data privacy).

• Multi-jurisdictional policies: Don’t treat your handbook as one-size-fits-all. Policies like paid sick leave, expense reimbursement, and non-compete enforcement vary significantly.

• Investigations: Implement structured protocols for conducting and documenting internal investigations (e.g., harassment, ethics, safety). Don’t rely on ad hoc manager notes.

Risk trigger: Small HR teams often rely on “tribal knowledge” or outdated handbooks—leaving a gap in documentation when it counts.

4. Leaves and Accommodations

• FMLA and state-specific leave: Make sure managers understand the difference. California, Washington, Massachusetts, and others have their own rules.

• Reasonable accommodations: Document every request and your interactive process under ADA. Even short-term mental health issues may qualify.

• Pregnancy, bereavement, and caregiving: These are evolving fast. Illinois and Oregon, for example, now require more expansive leave protections.

Risk trigger: Inconsistent leave tracking or supervisor discretion often leads to inadvertent compliance violations.

5. Workplace Safety and Health

• Remote work ergonomics: OSHA may not regulate home offices, but workers' comp claims still apply. Provide written guidance or virtual assessments.

• Recordkeeping: Maintain OSHA 300 logs—even if not required to post—if you operate in high-risk environments.

• Pandemic policies: Even if COVID-specific protocols are phased out, infectious disease preparedness is now considered part of your safety plan.

Risk trigger: Assuming remote and hybrid workers are exempt from health and safety protocols.

6. Data Security and Employee Privacy

• Employee monitoring: With increased digital surveillance tools, confirm transparency and consent. New laws in Connecticut, New York, and California are setting stricter expectations.

• HRIS permissions: Ensure role-based access to sensitive information (e.g., health data, disciplinary actions, DEI demographics).

• Exit data wipes: When employees leave, audit offboarding for access removal, especially for shared drives and third-party systems.

Risk trigger: Growth-stage companies often deploy HR tools quickly without aligning internal data governance policies.

7. Separation, Layoffs, and Post-Employment

• Final pay timing: Varies by state. In some cases (like California), you must provide final pay on the day of termination.

• WARN Act compliance: Applies to layoffs over a certain threshold. Some states have their own “mini-WARN” laws with lower employee counts.

• Severance agreements: Must be compliant with OWBPA (Older Workers Benefit Protection Act), especially when waivers are involved.

• Non-competes and non-solicits: Many states are banning or restricting them—recently Minnesota, California (more aggressively), and the FTC at a federal level.

Risk trigger: M&A activity or RIFs often happen quickly without time to review compliance steps around separations.

Moving from Reactive to Proactive

Compliance isn’t just a matter of checking the box once a year. Here are a few recommendations for creating sustainable compliance practices:

• Conduct quarterly micro-audits focused on 1–2 areas each time (e.g., classifications in Q1, I-9s in Q2).

• Build cross-functional awareness with Legal, Finance, and IT so you’re not owning compliance in a vacuum.

• Use workflows in your HRIS or compliance platform to flag missing documents, out-of-date trainings, or expiration windows.

• Document your decision-making process, not just your decisions. If you get investigated, your logic matters as much as your outcome.

Closing Thoughts

If your organization uses platforms like Workday, UKG, ADP, or Dayforce, compliance isn’t just about policies—it’s also about configuring and using these systems correctly. Our consultants specialize in aligning your HR technology with federal, state, and local compliance requirements, ensuring your workflows, data practices, and reporting capabilities are audit-ready.

Whether you’re navigating complex leave laws, preparing for a system migration, or simply want a compliance health check, our team can help you mitigate risk and build a more resilient HR operation. Reach out today for a tailored compliance consultation based on your HCM platform.