3 End-of-Year HR Compliance Mistakes To Avoid

With so many other things on our mind from the holidays to COVID-19 to next year’s plans—wrapping up this year already feels like the past. But HR is responsible for a lot of activities toward the end of the year. As a result, HR compliance mistakes are bound to happen.  

To help, here are the most common HR compliance mistakes that happen during this time of the year, and a resource to help you avoid them and prepare for a successful 2022. 

End-of-Year HR Compliance Mistakes 

1. Employee Information Is Not Up to Date

One end-of-year requirement for HR and payroll is to file and send W-2 forms to employees. Making sure employee information is up to date will ensure that W-2s are correct and sent to the right address. A payroll audit of the following can catch the most common errors on W-2 forms: 

• Employees’ personal information (i.e. mailing address, social security number)
• Employee status (i.e. active, terminated, inactive, on leave, etc.)
• Employee wages and deductions 
• Tax rates 
• Employee time-off balances

Don’t forget that W-2s also have to be sent to any employees who no longer work for your company, but did at one point throughout the year. And Form 1099-NEC has to be filed for non-employee contractors. As a result, making sure the employee status and classification are up to date is particularly important. 

2. Missing Deadlines

Although it would be nice if all tax forms and HR compliance tasks had the same deadline, that’s unfortunately not the case. Here are some of the most important deadlines for this year—but be sure to check the dates for your state and business as they can vary:

• If you adopted the extension for Flexible Spending Accounts, then FSA balances that carry forward into 2022 must be claimed by 12/15/22 for expenses they incurred in 2021
• Form W-2 must be produced and mailed to employees by 1/31/2022
• Form W-3, Form 940, Form 1099-MISC, and Form 1099-NEC must be reported to the IRs by 1/31/2022
• Form 1094, Form 1095-C, and Form 1096 by 2/28/2022 if filing by paper or 3/31/2022 if filing electronically 

3. Not Making Updates for Next Year

The end of the year is the time when HR must make updates to comply for next year. HR must make sure that payroll is updated with the new social security wage base, minimum wage, benefit premium rates,401(k) contribution limits, and mileage reimbursement rate for 2022—if applicable.

This is also a good time to review the employee handbook and make any necessary changes—especially as things continue to be impacted by COVID-19. Update your COVID-19 protocols to ensure compliance with OSHA, CDC, and local guidance. 

How to Avoid HR Compliance Mistakes

Many HR compliance mistakes are due to simple errors or a lack of awareness of deadlines or changes. But staying up to date on workplace compliance trends and new laws and regulations is a full-time job. Specifically, you must continually evaluate and redesign your policies, procedures, and programs to avoid risk or penalties. Without legal support, it can feel overwhelming. 

Obsidian HR can keep you updated on evolving laws and regulations, how they impact your business, and how you can be compliant. We can also relieve the administrative burden that the end of the year brings by managing your payroll and filing tax forms on your behalf. 

• We record, file, and share your forms with you (Form W-3, W-2 1099s, 941, 940, 1096, and SUTA and state withholding quarterly and annually) 
• Paystubs and W-2 forms are available electronically for you and your employees for ease and convenience through our payroll platform 
• Our platform also tracks time off, attendance, and can create customized reports to make it easier to conduct payroll audits and update employee records

To avoid these HR compliance mistakes and prepare for Colorado employment laws in 2022, download our guide below.