Why Are HR Management and Law in Separate Silos?

Yesterday, I heard the best presentation on HR management in many years (given by the former Chief Human Resource Officer, and my dear friend, Jill Smart). She spoke of HR metrics, aligning work with P&L analysis of employee costs and outputs, intelligent staffing, and making HR and finance equal business partners.

It was brilliant—and it’s been battle tested. By why no mention of law as a strategic driver of HR decision making? In a word, it’s because lawyers and HR leaders work in silos. The main implication is that law is viewed as a compliance function.

In my opinion, that’s like coaching a football team by demonstrating the way that penalties are assessed. I’m sure teams discuss rules and refereeing—but not much. But I'm also sure rules play into the type of players team draft. If you have stronger penalties against roughing the passer, you might feel better about drafting a QB who runs for yardage and spreads a defense.

Is HR missing more “value-add” by not thinking strategically about the law? Yes.

For one, I would ask: What is the regulatory cost of each employee? Apart from wages, employees in California are more expensive than employees in Arizona. Start adding up employment taxes, worker’s comp costs, etc. Employers have a good sense of this. Now, add into it an employer’s flexibility—Arizona, lots, California, much less.

With the advent of artificial intelligence, the idea of a “basic income” is almost certain to gain traction. Essentially, this idea means a baseline of welfare for all. You can call it socialism, or anything else. 
But businesses will likely pay for it—or be forced to move offshore. What’s the point at which it’s smarter for an employer to hire someone than to pay into a welfare program? 
Obama-type healthcare will precede this development (see expansion of Medicaid, even in "red" states).

Is there a work model that fuses independent contracting and employment? The costs of employment are growing relentlessly, which is why wages creep up so slowly. 
Is there a way for employers to share independent contractors in a jointly regulated labor pool? 
This would save employment costs, but it raises many tough issues. Trucking companies do it. Nurses sometimes work in a shared labor pool.

An innovation in this area is a few firms pay not only a set amount to a contract worker, but an increment into a 401(k) (called Self Employment Plan), and a worker’s Health Savings Account. 

This creates some degree of loyalty and incentive to continue the relationship. For the firm, if this model works, it can have a true just-in-time, project-focused workforce.

For now, labor and employment lawyers fight rear-guard battles, picking up after employers who discriminate, underpay, create conditions for union organizing, breach employment contracts, and the like (see photo). There are missed opportunities here.