How Technology Can Help HR Teams Navigate Compliance Challenges in 2022

Since 2020, companies worldwide have shifted their stance on remote work. They opened their roles to global talent to attract candidates outside their local hubs. In our 2021 State of Tech Salaries reportOpens a new window , Hired found that 90% of employers have moved to a hybrid, flexible, or fully remote work model. This trend, which began temporarily during the COVID-19 pandemic, is here to stay for the foreseeable future.Â

While outsourcing across borders has allowed recruiters and hiring managers to surface many more high-quality candidates, it has also led to a myriad of new complexities for HR departments. Here are a few ways businesses can support their internal recruiting and HR teams and help them overcome compliance challenges. This will enable them to attract and source remote talent in 2022 and beyond successfully.Â

Key Challenges Ahead in 2022

Some of the challenges that lay ahead for HR teams are as follows:

1. Processing payroll

When selecting a remote work model, HR teams must first determine whether their workers are full-time employees or independent contractors. This differentiation will impact their ability to withhold and/or pay taxes, provide benefits, pay overtime, comply with minimum wage laws, and provide disability and workers’ compensation insurance. They must also be aware of the various compensation requirements that range across different states. These can be burdensome to navigate without formal expertise or background in these areas.

To prevent encountering penalties during tax season, hiring teams and managers may want to outsource these tasks to an accounting firm or leverage payroll-processing technology solutions (more on that later). That will ensure they are set up to effectively and compliantly manage a global workforce.Â

See More: 3 Trends Impacting PayrollOpens a new window

2. Navigating taxes

Taxes have become an increasingly challenging area to navigate when hiring a remote team. As remote workers are no longer tied to the same states as their employers, they are subject to different tax laws and local requirements. This can create a lot of confusion for employees and employers. Companies may encounter severe penalties if they do not withhold taxes correctly or follow local labor laws.Â

Additionally, employers will also need to consider the tax implications of home office equipment they provide to employees throughout the year. For example, they must determine whether these are considered expenses or if the company will purchase them directly.

While employers are not federally obligated to pay for work-related expenses incurred by their remote employers, many states, including California, District of Columbia, Illinois, and Pennsylvania, among others, have established statutes that require them to reimburse employees for business expenses.Â

3. Establishing benefit policies

Companies must be aware that minimum wage requirements and employees’ eligibility for exempt status differ from state to state. This is also true of specific benefits policies such as PTO, maternity leave, sick day leave, and time accrual. For example, under California lawOpens a new window , earned vacation time is considered wages. Vacation time is earned, or vests as labor is performed. This means if an employee is entitled to two weeks (10 workdays) of vacation per year, after six months of work, they earned five days of vacation.Â

When Hired surveyed tech professionals on the benefits they value most beyond compensation in its data report, the study uncoveredOpens a new window flexible work, PTO, and physical health topped the list. To meet the changing preferences of their workforce and stay compliant, HR managers must understand how these requirements vary across state lines and develop their policies in accordance.Â

See More: 5 Ways Collaboration Can Solve the Challenges for HR and Payroll

How HR Tech Has Evolved for the Remote LandscapeÂ

Approaching these challenges can feel overwhelming. The good news is HR technology has rapidly evolved alongside our work landscape to help companies of all sizes inform their global HR and hiring strategies. Platforms that allow employers to easily and compliantly expand their talent search globally are growing quickly and becoming more widely accessible.

For example, cloud-based solutions such as Gusto and Zenefits enable small businesses that lack sufficient resources and team members in HR. These tools automate HR functions such as payroll, onboarding, and benefits management while accounting for the tax and payroll laws where their employees are based.Â

Additionally, EOR (Employer of Record) and PEO (Professional Employer Organization) platforms such as Remote have been key players in solving compliance issues for SMBs that employ employees and contractors, both on a national and international level. Under such platforms, the company enters a contractual co-employment agreement, wherein the PEO becomes the employer of record. The PEO is thus responsible for collecting and remitting payroll taxes for employees on its platform. Depending on their offering, these tools can also streamline administrative HR functions, such as managing benefits, tracking salary payments and expenses, and regulatory compliance assistance.Â

In 2022, the global remote landscape will continue to change recruiters’ and HR managers’ day-to-day roles and responsibilities. It will be critical that companies support these departments in their talent acquisition efforts with appropriate tools and resources. To maintain and attract a steady pipeline of remote talent, companies must increase their budgets for HR technology and provide ongoing training to help their team compliantly manage the needs of their global, distributed workforce.Â

How are you using technology to overcome compliance challenges when hiring remote talent? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

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