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Human resources compliance audit

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  • 1. Worth The Cost or Risk?
    Jeanine Maloney, SPHR
    Avoid Becoming A StatisticHuman Resources Compliance Audit
  • 2. What Will We Learn?
    Frightening facts.
    Why so many violations?
    Why do a compliance audit?
    What should be included?
    Opportune times to do a compliance audit.
    What should it touch on?
    What happens after?
    Additional thoughts.
    Certified Human Resources - 2011
  • 3. Consider These Frightening Facts:
    Certified Human Resources - 2011
  • 4. Frightening Facts / Startling Statistics
    In 2010, there were 99,922 complaints filed with the EEOC, up 7.1% from the previous year.
    Highest increase in complaints came from Retaliation (as applied to all statutes) – 36,258 claims or 36.3%.
    In fiscal year 2010, the Wage and Hour division of the FLSA received over 40,000 complaints.
    Family and Medical Leave Act (FMLA) complaint filings were up 22% from previous year.
    The monetary benefits awarded in 2010 from EEOC litigated suits were $85.1 million.
    (Date from the EEOC website)
    Certified Human Resources - 2011
  • 5. Why So Many Violations?
    High risk associated with non-compliance is overlooked.
    Employment decisions are often made “in the heat of the moment”.
    Employers may be scrambling to get staff on board or don’t think about employment law issues when terminating employees.
    Certified Human Resources - 2011
  • 6. Why Do A Compliance Audit?
    Monetary costs could be exorbitant if issues are ignored or not addressed.
    Facilitates legal compliance for benefit of company, even if considering retirement/sale of business, for liability purposes.
    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’.
    Helps company avoid costs as well as time away from business to address any issues.
    Certified Human Resources - 2011
  • 7. Opportune Times For Compliance Audits
    If there is a contemplated sale of the business.
    If there is an upcoming merger or acquisition.
    When there are changes in Senior Management.
    When there have been changes in Labor Laws or regulations.
    If you have experienced significant growth in your business.
    If you have added a significant amount of staff.
    Certified Human Resources - 2011
  • 8. What Should A Compliance Audit Touch On?
    Payroll compliance
    Record documentation and retention
    Employee handbook or manual
    Policies and Procedures
    Position Descriptions
    List is NOT all inclusive but a good place to start
    Certified Human Resources - 2011
  • 9. Payroll Compliance
    Make sure that timesheets compare with actual hours worked.
    Make sure that time clock rounding is done properly if time clocks are used.
    Check to make sure overtime pay calculations are done accurately.
    Ensure that classification of employees is done correctly to avoid liability for overtime costs, understanding that Wage and Hour violations can go back several years.
    Certified Human Resources - 2011
  • 10. Record Documentation and Retention
    Check for issues such as missing or incomplete information on Form I-9’s.
    Check for incomplete information in personnel files.
    Check to ensure health information kept separate.
    Check for inadequate discipline documentation.
    Ensure that personnel evaluation information is not inadequate or inaccurate.
    Make sure you have accurate and complete data to support any employment decisions.
    Certified Human Resources - 2011
  • 11. Employee Handbook or Manual
    Make sure it has been updated to reflect the current (and ever changing) employment laws.
    Determine if employees have been provided a copy of the handbook. The handbook is a communication tool to inform employees of company rules, as well as Federal, state, local employment laws that may apply to the business.
    Determine that the handbook is reviewed on a regular basis, as well as communicated and reviewed with all employees and managers. Having an accurate, updated, and communicated handbook may help avoid possible claims and litigation from non-compliance to many of the labor laws.
    Certified Human Resources - 2011
  • 12. Policies and Procedures
    Check to ensure that policies and procedures are written, up-to-date, communicated, and are followed as stated and not administered on an ad-hoc basis.
    Make sure your policies and procedures include disciplinary, performance and termination guidelines.
    Make sure all managers are trained on your policies and procedures and use them consistently to avoid claims such as wrongful termination.
    Certified Human Resources - 2011
  • 13. Position Descriptions
    Ensure they are updated as responsibilities change and as business grows or changes in a significant way.
    Determine that position descriptions verify specific job responsibilities for proper exempt / non-exempt classification purposes (Wage and Hour claims).
    Determine that position descriptions include the essential functions of each position to help with decisions about ADA (Americans with Disabilities Act).
    Clarify that position descriptions help outline the details of a position. This will be especially helpful when preparing procedural manual information.
    Certified Human Resources - 2011
  • 14. What Happens Next?
    Determine the scope of the audit.
    Once the scope is determined, an audit questionnaire is developed, data collected, and the findings detailed in writing.
    A written reports with recommendations, prioritized depending on risk level, should be presented to senior management and decisions on how to handle each issue should be discussed.
    If changes are to be made, a course of action should be set in place to address and any which affect the employees should be communicated along with reasons for the changes.
    Good practice is to let employees know that the company takes people issues seriously and will always correct any problem issues and concerns.
    Certified Human Resources - 2011
  • 15. Compliance Audit Thoughts
    Business owners perform audits on your financial records on a regular basis, HR compliance should be taken just as seriously.
    Take the initiative to prevent litigation or legal challenges in the HR area.
    Don’t let your company become a victim to one of the many statistics mentioned above.
    Certified Human Resources - 2011
  • 16. Certified Human Resources
    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 Jeanine@certifiedacquisitions.com
    Certified Human Resources - 2011

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