HR Compliance and Form W4: Where Do They Tie-In?

What is HR Compliance?

All businesses have to comply with the rules and regulations of the employment law. This law determines how the employer and employee work together. It sets the relationship standard between owners, managers and workers to ensure that everyone is treated fairly. The main aim of the Human Resource Department is to take a proactive approach to ensure all legal obligations of the business are met. 

Human Resource Compliance focuses on preventing workplace discrimination, inspecting workplace conditions, resolving employee disputes, ensuring employee health and safety, gender pay and wage gap reporting, adhering to fair recruitment policies, procedures for employing foreign workers and executing employment law changes within the organization.

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The Role of Human Resources in HR Compliance

All HR personnel should possess the knowledge and skill to handle and resolve compliance related issues in the organization. They should be able to identify the areas that require further training or action

HR personnel will advise, strategize and implement policies and procedures in order to meet compliance requirements. Depending on the structure of the organization, the HR Compliance will vary. 

In case there is a legal action taken, the chief executive or HR Director is the one who will be held responsible. However, there are other areas of HR Compliance that involve all individuals of the organization. For example, HR managers should train employees on fire safety and conduct fire drills regularly. 

These HR managers should also be qualified and equipped to execute policies and procedures that are relevant in any compliance situation. It is their job to make sure that all employees and staff are aware of their roles and responsibilities, code of conduct, whom to approach to raise concerns, etc. The Human Resource Director also overlooks compliance issues with legal and auditing offices. Some of these compliance responsibilities are listed below.  

  • Employee Handbook and Procedures

HR officials should precisely maintain and update an employee manual on all employee procedures. The manual should state all compliance policies and procedures such as export control, anti-corruption, government contracts, etc. 

  • Compliance Communications

The HR Department must coordinate with their Chief Compliance Officer on the process of implementation and execution of an effective communications strategy to raise compliance awareness through the organization.

  • Disciplinary Procedures

The HR managers must work with the General Counsel and Chief Compliance Officer to construct and implement a disciplinary program for employee misconduct and set the guidelines for unacceptable employee behaviour.

  • Education and Training

HR managers are the ones who initiate education and training programs within the organization. They identify which department requires training and the material on which to train them on. Certification and documentation of employees who have completed training will be recorded and maintained.

  • Whistleblower Response Program

HR officials should develop a whistleblower response program to encourage responses from whistleblower complaints and internal reporting such as a triage program.

What is Form W4?

Form W4 is also known as the Employee’s Withholding Certificate, it calculates the amount of federal tax that is withheld from an employee’s paycheck. All employees are encouraged to update their W4 forms annually as the calculation is based on the employee’s personal information such as their family size and filing status. These calculations from Form W4 are combined with the employee’s yearly earnings to generate Form W2 or the Wage and Tax Statement. 

Form W4 consists of 4 pages, the final page is related to W4 allowances. This is a worksheet for employees who have unique circumstances, dual-earning married couples or employees that have a second job. In layman’s terms, Form W4 states how much federal tax employers should withhold from an employee’s paycheck.

Who is Required to Submit Form W4?

Only individuals who are employed are applicable for Form W4. The new 2020 Form W4 is required when the following circumstances arise.

  • When Hiring New Employees

If you have hired new employees who were first paid after 2019, they must submit the updated 2020 W4 form.

  • When a Relevant Life Event Occurs

If you have an employee that has recently got married, divorced or given birth, they must complete the new form for these changes to reflect in their filing status and dependency credits.

  • When an Employee Applies for an Exemption

For employees who have recorded and filed zero federal tax liability for 2019 and expect to do the same for 2020, can apply for an exemption. Eligible applicants need to write ‘exempt’ in bold on Form W4.

The Common Mistakes When Completing Form W4

If there are unauthorized changes or incorrect information on your Form W4, it will be considered as invalid. Some of the most common mistakes to avoid are listed below. 

  • Completing Another Applicant’s Form

This is highly illegal, employers are not supposed to complete a W4 form on behalf of their employees.

  • Completing Unnecessary Sections 

For Form W4, only Section 1 (relating to personal information) and Section 5 (employee signature) is required to be filled in. Sections 2 and 4 are for employees who claim dependents, hold secondary jobs and other related adjustments. 

  • Accepting an Invalid Form

All employers must scrutinize each accepted Form W4 to check its legitimacy and if there are any illegal modifications. 

  • Giving Unsolicited Advice to Employees

All employers are forbidden from advising employees to enter specific information. They are only allowed to remind employees to update W4 forms before December 1, direct them to Form W4 instructions, give them access available worksheets and the Internal Revenue Service (IRS) troubleshooting tools. 

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