Law and Behold: The Evolution of Workforce Compliance
Investing in workforce technology that ensures compliance is no longer a nice to have – it’s necessary to help identify, measure, and mitigate risk. Papaya Global's got you covered
Rivka Abramson| Nov 28, 2023
- According to a recent KPMG survey, complying with new regulatory requirements will be the biggest challenge to organizations over the next two years.
- Staying on top of changes related to workforce compliance worldwide without the right technology is almost impossible, considering the ever-changing nature of labor laws and regulations.
- With local labor laws, tax codes, and benefits regulations in more than 160 jurisdictions baked into its platform, Papaya Global can detect any compliance gap, eliminating the risk of fines and potential employee litigation.
It’s hard to think of a C-suite position more stressful than a Chief Compliance Officer (CCO). By their own admission, Chief Compliance Officers are constantly anticipating more scrutiny – which is also the title of a recent KPMG survey of 240 CCOs from the largest Fortune 500 organizations across six industries.
Key findings from the survey include:
- 73% of CCOs expect the focus on compliance to increase based on regulatory expectations and scrutiny, with the most pressure coming from their boards.
- New regulatory requirements pose the biggest challenge to CCOs’ efforts over the next two years.
- 63% of CCOs expect an increase in their technology budgets, with 44% already implementing enterprise tech solutions.
“We are in a period of discordant and highly sensitized public policy – as well as intense regulatory activity – affecting all industries,“ explained Amy Matsuo, Principal and National Leader of Regulatory Insights at KPMG. “Compliance feels acute pressure to enhance. Technology and data analytic investment in the ethics and compliance function is no longer a ‘nice-to-have;’ it’s a necessity to help mitigate, measure, and identify risk.”
Climbing the social protection ladder
Nowhere is this more evident than in global workforce and payment compliance. According to a recent study by PYMNTS – based on a survey of executives in finance, payroll, or payments at US– and UK-based companies with more than $100 million in annual revenue – the most crucial challenge in paying international workers is the need to comply with jurisdictional regulations.
This shouldn’t come as a surprise to anyone versed in the evolution of workforce compliance. Take the US, for example. With the exception of the Fair Labor Standards Act of 1938 (FLSA), which established a minimum wage and required overtime pay, up until the 1970s, most labor laws revolved around collective bargaining and discrimination in the workplace. But the past 50 years have seen a resurgence of employment laws focused on social protections and benefits.
Starting with the Employee Retirement Income Security Act of 1974, federal laws have increasingly addressed issues such as healthcare (the Consolidated Omnibus Budget Reconciliation Act of 1985), leave benefits (the Family and Medical Leave Act of 1993), and employee misclassification (the Independent Contractor Status Under FLSA). And to complicate matters further, state and local laws quickly followed suit.
The San Francisco Bay Area, for instance, has 23 different minimum wages. “Employers operating in multiple states now face the challenge of keeping up with varied and sometimes inconsistent local laws and regulations,” said Roger Quillen, former chairman & managing partner with labor and employment law firm Fisher Phillips. “This makes compliance extremely difficult.”
Mind the (compliance) gap
It gets even more difficult for employers who also operate in Europe. Unlike the US, European countries generally have more robust social protections and benefits, including universal healthcare, paid parental leave, statutory pension plans, and mandated vacation time, ranging from 20 to 30 days per year. Plus, the termination process in most European countries is much longer and more complicated than in the US.
Staying on top of all that without the right workforce technology is almost impossible. This is where Papaya Global, the world’s leading payroll and payments platform, comes in. With local labor laws, tax codes, and benefits regulations in more than 160 jurisdictions baked into it, Papaya’s platform can detect any compliance gap and alert payroll managers in time, eliminating the risk of fines and potential employee litigation.
Naturally, Papaya’s unwavering commitment to compliance extends to payments as well. As a regulated financial services company, Papaya holds money transfer licenses across the globe, enabling compliant workforce payments everywhere. In addition, we perform Know Your Customer (KYC) and Anti Money Laundering (AML) processes and run rigorous screenings for every payment to keep employees’ data and clients’ funds safe.
Completing the compliance picture are Papaya’s global network of workforce experts, in-house legal counsel, and Center of Excellence. Part of our core offering, the Center of Excellence contains resources on labor laws, taxes, mandatory benefits, work permits, and equity management. It also functions as a notification channel where clients can learn about regulatory changes, alleviating the pressure on CCOs one update at a time.