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How to Evaluate the Success of Your Employer Compliance Program

Many aspects of HR and Payroll are measured by metrics, KPIs and reports.

Like HR rates for employees staying, leaving, and engaging.

Or Payroll metrics for paying employees on time, costs for running payroll, and errors in payments.

Of course, that’s just scratching the surface of your dashboard reports.

But not everything can be precisely measured when it comes to the compliance of your employee programs.

It’s not all black and white—there’s plenty of grey.

Yet… you still want to know how well you’re doing.

Let’s look at a few areas you can measure to gauge the success of your employer compliance.

non-compliance cost

What non-compliance can cost you

You can’t control if the IRS will audit you for your HR and payroll practices (though you should be prepared).

But you can reduce any penalties for being out of compliance. Because the ultimate measure of success is having clean audits and paying no penalties for violations.

Some potential compliance penalties to keep in mind

Withholding taxes. Do you operate in multiple states, with employees travelling between those offices? Each state has requirements for withholding employees’ taxes that employers must adhere to or risk issues during an audit.

Reporting for the Affordable Care Act (ACA). As an applicable large employer (ALE) you must report to the IRS information about the health care you offer to full-time employees.

If you file incorrect returns or payee statements, you could pay:

  • $100 for each occurrence
  • Up to $1,500,000 for a calendar year
  • If after 2015, $270 for each occurrence with a max of $3,275,500 for the year

Timely and accurate completion of I-9 forms. By not having completed I-9 forms on file for all employees you could pay major fines. Here’s a few:

  • From $216 to $2,126 for each Form I-9 violation
  • From $539 to $21,563 for each unauthorized worker
  • From $445 to $3,563 for each unfair immigration related offense

Even worse, these fines increase per offense, up to $17,816 per worker. ICE handed out fines of $24+ million in 2018 against companies deemed non-compliant.

Employee records storage

Storing historical employee records correctly is also important for staying compliant and avoiding fines.

  • You must store completed I-9 forms for three years from the date of hire (or for one year after they leave)
  • Store pay statements in the proper format, based on the state where your business operates

Costs are much higher for a paper-based, versus a paper-less, process. It’s best to use an online service to automate your process rather than do things manually. Employee statements are available when you need them, both for audits and also employee requests.

Conduct internal audits and measure the results

Why wait for the IRS to do it? Do internal audits, regularly.

Better you catch things to prevent them from knocking on your door. And if they do, they’ll find less when you find it first—and correct it.

Measures to consider:

  • What’s the percentage of employee onboarding forms completed on time?
  • What have been the results of any past audits? Were corrective actions taken?
  • How much did you pay in fines last year?

administrative impact of compliance

Measure the administrative impact of your compliance practices

Monitor the percentage and costs of paper-based versus online forms

More companies are taking actions to encourage employees to shift to electronic delivery of statements and other employee forms. From multi-channel communications campaigns to having sign-up kiosks at employee events, employers are encouraging employees to register and make the move online. They monitor the percentage of electronic delivery and the associated cost savings of producing and managing less paper-based forms.

Track the administrative time of your teams

When you take advantage of online services and process automation, your teams can reduce the time they spend on administrative tasks related to your compliance programs so they can focus on the real HR and Payroll priorities. You can track the administrative time spent by your team or even the resources involved and assess the progress over time.

Measures to consider:

  • What percentage of employees receive electronic statements?
  • What are the costs of managing print-based employee forms and statements?
  • How much time is spent on administrative tasks related to your compliance programs?
  • Monitor the compliance-related calls into your call center or employee requests. Are call/request volumes reduced as you employ more self-service for employees?

Where you can be more efficient

… by automating your compliance processes to save time for your HR and Payroll teams.

With CIC Plus you can

  • Spend little to no time identifying regulatory updates, understanding changes to federal and local requirements and updating your programs
  • Get out of the business of processing paper-based employee forms
  • Let the system do the work—not you. Allow employees to complete electronic forms themselves. Faster, more accurately—with no need for re-work and corrections.
  • Make onboarding faster and more enjoyable for new hires

Evaluate the employee experience

An oftentimes overlooked part of employer compliance is the experience employees have while completing compliance activities. It starts right away during onboarding when employees complete everything from W-4 and I-9 forms to other onboarding documents. Are employees able to complete forms properly and on time? What is their level of engagement with the process? This area of compliance might be more difficult to measure, but it can have the greatest impact on your organization.

Measures to consider:

  • What is the percentage of employee forms completed on time?
  • How many form corrections are needed?
  • What is the overall satisfaction of your employees with experience?
  • Do you conduct employee surveys regarding their experience with your HR services and systems?

Like with many business metrics, having the perfect KPIs to measure the success of your compliance practices might be difficult to identify, but it’s important to get started and then learn and evolve along the way. Your teams and your employees will thank you.