Study Reveals Critical Gap in Organizational Compliance Preparedness Despite Growing Legal Risks

According to the HR Research Institute's new research report, HR.com's State of Legal Compliance and Employment Law 2025, only 33% of organizations take a proactive approach to labor and employment law compliance despite growing risks and increasing regulatory complexity. The study reveals a concerning gap between confidence and capability, with 78% of HR professionals believing their organization is well prepared for labor and employment compliance issues, yet only 13% strongly agree that their compliance processes use up-to-date technologies.

The research indicates that just 10% of organizations report having highly automated systems, while over half of respondents expressed dissatisfaction or neutrality regarding the level of automation and integration in their compliance systems. Resource constraints appear to be a significant factor, as only 49% of respondents believe their compliance initiatives are adequately funded. This underinvestment has real-world consequences, with 34% of organizations having faced at least one employment-related enforcement action in the past year.

Further compounding the compliance challenges, 20% of organizations rely on outdated systems, 14% have only partially documented procedures, and 9% remain purely reactive in their approach to compliance. Debbie McGrath, Chief Instigator and CEO at HR.com, characterized this situation as "a red flag," noting that many organizations may be overestimating their readiness while still relying on outdated, inefficient, and underfunded compliance systems.

The recording of the research webcast presentation, Navigating the Tricky Legal and Compliance Landscape of 2025, is available for viewing on demand. The findings underscore the urgent need for organizations to align their perceived preparedness with actual infrastructure capabilities to avoid potential legal and financial repercussions in an increasingly complex regulatory environment.