Human Resources Compliance Audit


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Human Resources Compliance Audit

  1. 1. Worth The Cost or Risk?<br />Jeanine Maloney, SPHR<br />Avoid Becoming A StatisticHuman Resources Compliance Audit<br />
  2. 2. What Will We Learn?<br />Frightening facts.<br />Why so many violations?<br />Why do a compliance audit?<br />What should be included?<br />Opportune times to do a compliance audit.<br />What should it touch on?<br />What happens after?<br />Additional thoughts.<br />Certified Human Resources - 2009<br />
  3. 3. Consider These Frightening Facts:<br />Certified Human Resources - 2009<br />
  4. 4. Frightening Facts / Startling Statistics<br />In 2007, there were over 82,000 charges filed with the EEOC, approximately 7,000 more that the previous year.<br />In fiscal year 2008, Wage and Hour collected over $185 million in back wages for over 228,000 employees.<br />For fiscal year 2008 there were over 4700 minors employed in violation of the child labor laws.<br />There were over 1800 complaint cases on FMLA enforcement.<br />The monetary benefits awarded in 2007 from EEOC litigated suits were $54.8 million.<br />(Date from the EEOC website)<br />Certified Human Resources - 2009<br />
  5. 5. Why So Many Violations?<br />High risk associated with non-compliance is overlooked.<br />Employment decisions are often made “in the heat of the moment”.<br />Employers may be scrambling to get staff on board or when terminating employees.<br />Certified Human Resources - 2009<br />
  6. 6. Why Do A Compliance Audit?<br />Monetary costs could be exorbitant if issues are ignored or not addressed.<br />Ensure legal compliance for benefit of company, even if considering retirement/sale of business, for liability purposes.<br />Liability has two-fold effect: It may not only remain with the company but can follow the owner because he ‘should have known the rules’.<br />Helps company avoid costs as well as time away from business to address any issues.<br />Certified Human Resources - 2009<br />
  7. 7. Opportune Times For Compliance Audits<br />If there is a contemplated sale of the business.<br />If there is an upcoming merger or acquisition.<br />When there are changes in Senior Management.<br />When there have been changes in Labor Laws or regulations.<br />If you have experienced significant growth in your business.<br />If you have added a significant amount of staff.<br />Certified Human Resources - 2009<br />
  8. 8. What Should A Compliance Audit Touch On?<br />Payroll compliance<br />Record documentation and retention<br />Employee handbook or manual<br />Policies and Procedures<br />Position Descriptions<br />List is NOT all inclusive but a good place to start<br />Certified Human Resources - 2009<br />
  9. 9. Payroll Compliance<br />Make sure that timesheets compare with actual hours worked. <br />Make sure that time clock rounding is done properly if you use one.<br />Check to make sure overtime pay calculations are done accurately.<br />Ensure that classification of employees is done correctly to avoid liability for overtime costs.<br />Understand that Wage and Hour violations can go back several years.<br />Certified Human Resources - 2009<br />
  10. 10. Record Documentation and Retention<br />Check for issues such as missing or incomplete information on Form I-9’s.<br />Check for incomplete personnel files information.<br />Check for inadequate discipline documentation.<br />Ensure that personnel evaluation information is not inadequate or inaccurate.<br />Make sure you have accurate and complete data to support any employment decisions.<br />Certified Human Resources - 2009<br />
  11. 11. Employee Handbook or Manual<br />Make sure it has been updated to reflect the current employment laws that are ever changing.<br />Make sure employees have a copy of the handbook. It is a communication tool to inform employees of company rules (Federal, state, local, company policies).<br />The handbook should be reviewed on a regular basis and communicated and reviewed with all employees and managers.<br />Having an accurate, updated, and communicated handbook may help avoid possible claims and litigation from non-compliance to many of the labor laws.<br />Certified Human Resources - 2009<br />
  12. 12. Policies and Procedures<br />Check to ensure that policies and procedures are written, up-to-date, communicated, and are followed as stated rather than ad-hoc.<br />Make sure your policies and procedures include disciplinary, performance and termination guidelines.<br />Make sure all managers are trained on your policies and procedures and use them consistently to avoid claims such as wrongful termination.<br />Certified Human Resources - 2009<br />
  13. 13. Position Descriptions<br />Ensure they are updated as responsibilities change and as business grows or changes in a significant way.<br />Make sure position descriptions verify specific job responsibilities for proper exempt / non-exempt classification purposes (Wage and Hour claims).<br />Make sure position descriptions include the essential functions of each position to help with decisions about ADA (Americans with Disability Act).<br />Position descriptions also outline the workflow of a position.<br />Certified Human Resources - 2009<br />
  14. 14. What Happens Next?<br />Generally a report is compiled with concerns listed in order of importance.<br />Report should be reviewed with senior management and decisions on how to handle each issue should be discussed.<br />If changes are to be made, any of which affect the employees, they should be communicated along with reasons for the changes.<br />Good practice is to let employees know that company takes people issues seriously and will always correct any problem issues and concerns.<br />Certified Human Resources - 2009<br />
  15. 15. Compliance Audit Thoughts<br />As a business owner you perform audits on your financial records on a regular basis, HR compliance should be taken just as seriously.<br />Take the initiative to prevent litigation or legal challenges in the long run.<br />Don’t let your company become a victim to one of the many statistics mentioned above.<br />Certified Human Resources - 2009<br />
  16. 16. Jeanine Maloney, SPHR, is an Independent Human Resources professional (Certified Human Resources) working in association with Certified Acquisition Associates LLC and may be reached at<br />Certified Human Resources - 2009<br />