A Glossary of Key Terms in Compliance & Governance Concepts

In today’s fast-evolving business landscape, understanding the nuances of compliance and governance is not just a legal necessity but a strategic advantage, especially for HR and recruiting professionals. As automation and AI increasingly integrate into our operations, ensuring these systems uphold ethical standards, protect data, and adhere to regulatory frameworks becomes paramount. This glossary provides clear definitions of key terms to help you navigate this complex domain, ensuring your talent acquisition and management practices are robust, responsible, and future-proof.

General Data Protection Regulation (GDPR)

GDPR is a comprehensive data privacy law enacted by the European Union, governing how personal data of EU citizens is collected, stored, processed, and destroyed. For HR and recruiting, GDPR dictates stringent rules around candidate data management, consent for data processing, data portability, and the “right to be forgotten.” Automated recruiting systems, particularly those that handle international candidates, must be meticulously designed to ensure explicit consent is obtained, data is securely anonymized or deleted after retention periods, and privacy-by-design principles are embedded to avoid costly non-compliance fines.

California Consumer Privacy Act (CCPA) / California Privacy Rights Act (CPRA)

The CCPA, enhanced by the CPRA, grants California consumers significant rights over their personal information, similar to GDPR but with specific applications for US-based businesses. HR and recruiting teams dealing with California residents (including employees and job applicants) must understand rights such as access to personal information, deletion, and opt-out of sales. Automation platforms used for applicant tracking, background checks, or employee onboarding must incorporate mechanisms to manage these requests efficiently and transparently, ensuring compliance with data subject requests.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA is a US law primarily designed to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge. While often associated with healthcare providers, HIPAA can impact HR in specific scenarios, such as managing employee health records, leave requests under FMLA that involve medical information, or wellness program data. Automated HR systems must employ robust security measures to protect any protected health information (PHI) and limit access strictly on a need-to-know basis, ensuring data segregation and audit trails for compliance.

Equal Employment Opportunity (EEO)

EEO refers to the laws and policies designed to ensure fair treatment in employment, free from discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information. HR and recruiting automation must be scrutinized to prevent algorithmic bias in candidate screening or selection processes. Implementing AI tools requires rigorous testing for fairness and transparency, ensuring that automated decisions align with EEO principles and do not inadvertently perpetuate or amplify existing biases, thus supporting diversity and inclusion.

Office of Federal Contract Compliance Programs (OFCCP)

The OFCCP is a US Department of Labor agency responsible for ensuring that federal contractors and subcontractors comply with non-discrimination and affirmative action laws. This includes requirements for outreach, record-keeping, and reporting on applicant flow, hires, promotions, and terminations. Automated ATS and HRIS systems used by federal contractors must be capable of tracking and generating the necessary data for OFCCP audits, including demographic information and disposition codes, to demonstrate good faith efforts in compliance.

Data Privacy

Data privacy refers to the rights an individual has regarding the collection, use, and disclosure of their personal data. For HR, this encompasses all employee and candidate information, from contact details to performance reviews. Implementing automation requires a “privacy by design” approach, meaning privacy considerations are integrated from the outset. This includes minimizing data collection, ensuring secure storage, implementing access controls, and transparently communicating data practices to individuals, reducing the risk of breaches and enhancing trust.

Information Security

Information security involves protecting information from unauthorized access, use, disclosure, disruption, modification, or destruction. In the context of HR, this means safeguarding sensitive employee and candidate data from cyber threats, internal misuse, and system failures. Automation tools should integrate strong encryption, multi-factor authentication, regular security audits, and secure data backups. A robust information security posture protects sensitive HR data, maintains business continuity, and prevents reputational damage and legal repercussions.

Records Retention Policy

A records retention policy outlines how long different types of business records, including HR documents, must be kept and how they should be disposed of. Compliance requirements vary by jurisdiction and document type (e.g., applicant records, payroll data, performance reviews). Automated document management systems can streamline the enforcement of these policies by automatically archiving, flagging for review, or securely deleting records based on predefined schedules, preventing unnecessary data storage and ensuring legal adherence.

Risk Assessment

Risk assessment is the process of identifying potential threats and vulnerabilities, evaluating their likelihood and impact, and determining appropriate mitigation strategies. For HR and recruiting, this includes assessing risks associated with data breaches, non-compliance with labor laws, or biased hiring practices. When implementing automation, a thorough risk assessment should evaluate potential security flaws, algorithmic biases, and regulatory gaps, guiding the development of controls and safeguards to minimize adverse outcomes.

Audit Trail

An audit trail is a chronological record of events that provides documentary evidence of the sequence of activities that have affected any specific operation, procedure, or event. In HR, this could track who accessed an employee’s file, when a hiring decision was made, or changes to a payroll record. Automated systems should inherently generate comprehensive audit trails, allowing for transparency, accountability, and the ability to demonstrate compliance during internal or external audits, particularly in sensitive areas like compensation or promotions.

Ethical AI

Ethical AI is a set of principles and practices aimed at ensuring that artificial intelligence systems are developed and used in a responsible, fair, transparent, and accountable manner. For HR and recruiting, this means mitigating algorithmic bias in resume screening, ensuring fairness in predictive analytics for talent management, and maintaining human oversight in decision-making processes. Adhering to ethical AI principles builds trust, promotes equitable opportunities, and prevents discriminatory outcomes in automated talent workflows.

Whistleblower Protection

Whistleblower protection refers to laws and policies designed to protect employees who report illegal or unethical activities within their organization from retaliation. HR departments play a crucial role in establishing and maintaining secure channels for reporting, investigating claims, and ensuring non-retaliation. Automated internal reporting systems must be designed to be confidential, anonymous where appropriate, and to route reports securely to the correct personnel, facilitating a culture of transparency and integrity without fear of retribution.

Fair Labor Standards Act (FLSA)

The FLSA is a US federal law that establishes minimum wage, overtime pay, record-keeping, and youth employment standards for employers. For HR, ensuring compliance involves accurate tracking of work hours, proper classification of employees (exempt vs. non-exempt), and adherence to overtime rules. Automated timekeeping and payroll systems are critical for FLSA compliance, as they can accurately calculate wages, manage overtime, and maintain detailed records, significantly reducing the risk of wage and hour violations.

Background Checks & Vetting Compliance

Background checks and vetting involve verifying a candidate’s information, such as employment history, education, criminal record, or credit history. Compliance in this area requires adherence to laws like the Fair Credit Reporting Act (FCRA), state-specific regulations, and privacy considerations. Automated background check platforms must ensure proper consent is obtained, adverse action procedures are followed, and the information is handled securely and without bias, maintaining fairness and legal integrity throughout the hiring process.

Business Continuity Planning (BCP)

BCP is the process of creating systems of prevention and recovery to deal with potential threats to a company. For HR, this involves ensuring that critical HR functions, data, and systems can continue to operate during and after a disaster, such as a data breach, natural calamity, or system outage. Automated data backup solutions for HRIS and applicant tracking systems, along with well-documented recovery procedures, are essential components of a robust BCP, safeguarding valuable HR data and operational integrity.

If you would like to read more, we recommend this article: Keap CRM Data Protection & Recovery: The Essential Guide to Business Continuity