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Seeing Through the Fog of HR Vendor Compliance Support

US-based employers face the challenge of complying with the many federal, state and local laws that apply to employment. And complying with the employment laws of other countries can be even harder. Legal developments never stop.

As discussed in this article, vendors’ compliance support is incomplete and employers still need to provide direction to their vendors. But compliance enabled by a vendor is often much better than what an employer, particularly a small or midsize one, can do without the vendor. And since a single vendor supports the compliance of multiple employers, the costs are in effect shared by those employers.

Most HR technology vendors know that compliance is a key part of their offerings. They should dedicate significant resources to it. Some vendors are better than others, including at supporting compliance needed for customers' employees in other countries.

But what's needed to be compliant, and what vendors do to support compliance, is foggy. It involves judgment and, as mentioned, direction from customers. And some vendors aren't exactly clear about what they do for customers' compliance.

To get clarity, employers should ask questions. A vendor that's good about compliance will be able to describe its staff working on legal developments, and the process it uses to update its systems and services. To dig deeper, employers can ask questions like:

  • What publications and websites does the vendor review? Do the publications/websites cover not only laws, but also regulations and relevant court rulings?

  • If the vendor uses secondary sources, such as payroll publications, does the vendor confirm the actual legal developments in primary sources like laws, regulations, and government websites?

  • How does the vendor share info internally so systems and services can be updated?

  • How long does it take the vendor to implement these updates?

  • How does the vendor share info with customers, and does this info include proposed laws and regulations?

  • When customer direction is needed to implement a legal development, how does the vendor obtain this direction?

  • Does the vendor's process include review by a lawyer, paralegal or other expert?

  • If the vendor's services include consulting from HR specialists, what do these specialists share with customers about legal developments?

These questions are a start. A vendor's answers should show significant resources dedicated to compliance, and a thorough and flexible process to communicate legal developments and implement updates after developments.

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