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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 - 2011<br />
  3. 3. Consider These Frightening Facts:<br />Certified Human Resources - 2011<br />
  4. 4. Frightening Facts / Startling Statistics<br />In 2010, there were 99,922 complaints filed with the EEOC, up 7.1% from the previous year.<br />Highest increase in complaints came from Retaliation (as applied to all statutes) – 36,258 claims or 36.3%.<br />In fiscal year 2010, the Wage and Hour division of the FLSA received over 40,000 complaints.<br />Family and Medical Leave Act (FMLA) complaint filings were up 22% from previous year.<br />The monetary benefits awarded in 2010 from EEOC litigated suits were $85.1 million.<br />(Date from the EEOC website)<br />Certified Human Resources - 2011<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 don’t think about employment law issues when terminating employees.<br />Certified Human Resources - 2011<br />
  6. 6. Why Do A Compliance Audit?<br />Monetary costs could be exorbitant if issues are ignored or not addressed.<br />Facilitates 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 - 2011<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 - 2011<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 - 2011<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 time clocks are used.<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, understanding that Wage and Hour violations can go back several years.<br />Certified Human Resources - 2011<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 information in personnel files.<br />Check to ensure health information kept separate.<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 - 2011<br />
  11. 11. Employee Handbook or Manual<br />Make sure it has been updated to reflect the current (and ever changing) employment laws.<br />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.<br />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.<br />Certified Human Resources - 2011<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 and not administered on an ad-hoc basis.<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 - 2011<br />
  13. 13. Position Descriptions<br />Ensure they are updated as responsibilities change and as business grows or changes in a significant way.<br />Determine that position descriptions verify specific job responsibilities for proper exempt / non-exempt classification purposes (Wage and Hour claims).<br />Determine that position descriptions include the essential functions of each position to help with decisions about ADA (Americans with Disabilities Act).<br />Clarify that position descriptions help outline the details of a position. This will be especially helpful when preparing procedural manual information.<br />Certified Human Resources - 2011<br />
  14. 14. What Happens Next?<br />Determine the scope of the audit. <br />Once the scope is determined, an audit questionnaire is developed, data collected, and the findings detailed in writing.<br />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.<br />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.<br />Good practice is to let employees know that the company takes people issues seriously and will always correct any problem issues and concerns.<br />Certified Human Resources - 2011<br />
  15. 15. Compliance Audit Thoughts<br />Business owners 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 HR area.<br />Don’t let your company become a victim to one of the many statistics mentioned above.<br />Certified Human Resources - 2011<br />
  16. 16. Certified Human Resources<br />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 - 2011<br />