In today's highly globalized marketplace, companies have found it necessary to maintain a tech team that is spread out around the world. This approach comes with many challenges. For instance, privacy laws and regulations vary greatly from one country to another. An organization's normal operations may be perfectly legal under the laws of one nation, but unacceptable within the legislative framework of another state.
Staying compliant across borders requires four key steps:
- Investment in the right expertise
- Investment in the right technology
- Assign responsibility
- Ensure coordination
First, and perhaps most importantly, companies must have access to the right experts.
1. Invest in Expertise
It should come as no surprise that a company with experts in legal compliance for its state/country of residence may stumble badly when it comes to compliance requirements across several countries. The European Union's GDPR (General Data Protection Regulation) has provided several case studies of this phenomenon over the years.
A classic example of how a U.S.-based company may falter when dealing with foreign nationals was furnished by the United Kingdom's Information Commissioner's Office (ICO) in November of 2018. At that time, the ICO issued a warning to the Washington Post over how it was obtaining consent from its visitors for cookies. Since the paper did not offer a free alternative to accepting cookies (such as the ability to decline cookies), the ICO concluded that the Post was in violation of GDPR Article 7.
At that time, no specific action was taken against the Washington Post. However, this illustrates the danger of leaving global compliance management to in-house professionals, since very few individuals (if any) have expertise in all areas of compliance.
HIPAA (the Health Insurance Portability and Accountability Act) provides another clear example of this predicament. Organizations covered under HIPAA must ensure that all of their international partners and vendors have entered into a valid Business Associate Agreement (BAA) in order to remain compliant. In addition, while HIPAA rules may allow a covered entity or business associate to use a CSP that stores electronic personal health information (ePHI) on servers outside of the United States, the company in question will still be liable for breaches of confidentiality if those internationally-sourced servers are hacked into by cybercriminals.
With that in mind, many companies have decided to outsource compliance to an experienced Professional Employer Organization (PEO). Such a partnership can not only prevent international compliance errors but can also help the client to avoid major domestic regulatory fines. For example, violation of Equal Employment Opportunity Commission (EEOC) guidelines in the United States can ultimately result in severe financial penalties, such as:
- Full payment of an employee's back wages
- Payment of attorneys' fees and other legal expenses
- Payment of compensative and punitive damages (possibly between $50,000 to $300,000 per employee)
A PEO can help its client to avoid both international and domestic non-compliance.
2. Invest in Integrated Technology
Another factor to consider is the technology stack. When compliance requirements are recorded and spread out between several programs, it can be difficult to keep track of relevant rules and regulations. This lack of a centralized database of information can eventually result in non-compliant actions.
In many cases, it's much better to invest in all-in-one HRIS software; software that integrates payroll, time-keeping, and other key features related to compliance. Integrating time and attendance tracking reduces the risk of non-compliance. For instance:
- Integrated time and attendance tracking with payroll results in immediate evidence of compliance. All relevant data is stored on one platform and can easily be retrieved as necessary. Data related to coverage, wages, overtime, schedule adherence, and contract labor is all available at a moment's notice.
- Compliance reporting becomes much more user-friendly with integrated record-keeping technology. Employers with automated time-keeping processes in place are in a better position to comply with the reporting requirements mandated by federal, state, and local agencies.
- Automated time-keeping software can automatically apply rules that comply with all applicable labor laws. For instance, the software can run necessary calculations for overtime pay, as mandated by both company policy and local, state, and federal regulations.
3. Assign Responsibility
There's a saying that goes: "When no one is in charge, everyone is to blame." It's important for you to have a designated contact at each site who's responsible for keeping all relevant employee information well-organized and easily accessible in case compliance experts need to examine the data. The principle is simple, but the impact is enormous.
4. Ensure Coordination
In conjunction with the previous step, you must also make sure that all contacts assigned to maintain relevant employee information are not only trustworthy but in sync with your company's "chain of command." In other words, they need to regularly coordinate with either a primary contact at your organization's home office or a contact from your outsourced HR experts.
Failure to stay compliant with a global tech team can lead to serious consequences. Your company could face severe financial penalties, loss of credibility, and ultimately a loss of business. Whether you decide to hire multiple in-house HR employees across the planet or just partner with a PEO, make sure that you have a system in place to deal with the many compliance requirements of each country. If you do, and if you follow the 4 steps discussed above, then you'll be able to enjoy peace of mind when it comes to staying compliant on a global scale.