CENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRM
Why An HR Audit Is Necessary
October 20, 2011
ByBy
Beth PapacekBeth Papacekandand
Jonathon NaplesJonathon Naples
ByBy
Beth PapacekBeth Papacekandand
Jonathon NaplesJonathon Naples
Why Audit?Why Audit?Why Audit?Why Audit?
Compliance – laws and regulations Proactive protections Identify and correct Limit liability
• Establish best practices• Identify opportunities for
improvement/development• Strategic – do the processes align
with goals, strategic plan
ConcernsConcernsConcernsConcerns
• Expense• Lack of personnel• Disruption to HR function
and others• What will come of it?• Create roadmap for litigation
Basic StepsBasic StepsBasic StepsBasic Steps
• Determine scope and type• Develop audit
checklist/Questionnaire/Key Documents
• Collect Data• Analyze/benchmark• Create action plans• Ongoing monitoring and
improvement
What to AuditWhat to AuditWhat to AuditWhat to Audit
• Wage and Hour Practices• Recruiting Practices• Pre-employment testing• Employee forms• Orientation Training• Restrictive Covenants• Policies/Handbooks
What to AuditWhat to AuditWhat to AuditWhat to Audit
• Affirmative Action Plans and Practices
• Discrimination/Harassment policies and complaint process
• Accommodation Requests• Medical Requests/Exams (GINA)• I-9
What to AuditWhat to AuditWhat to AuditWhat to Audit
• Personnel Files/Recordkeeping
• Security/Privacy• Performance Management
Systems• Pay Plans/Pay Equity –
(Ledbetter)• Independent Contractors and
Other Non-Employees
What to AuditWhat to AuditWhat to AuditWhat to Audit
• Litigation Preparedness• Federal/State Postings• Leave Management• Benefits/Insurance• Payroll tax audit• OSH/Safety• Privacy• Union Vulnerability
Wage and Hour PracticesWage and Hour PracticesAudit AreasAudit AreasWage and Hour PracticesWage and Hour PracticesAudit AreasAudit Areas• Exempt/Nonexempt Status• Timekeeping Systems/Recording
of Hours• Defining the Workweek/Workday• Wage Deductions• Overtime/Comp Time• Bonus Calculations
Wage and Hour PracticesWage and Hour PracticesAudit AreasAudit AreasWage and Hour PracticesWage and Hour PracticesAudit AreasAudit Areas• Management
Practices/Communications• Child Labor• Travel• Training• On-Call• Joint Employer
Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents• Job description• Time records• Written policies re:
Timekeeping Overtime Pay Periods Attendance
Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents
Written policies re (cont.): Meal/Rest breaks Deductions Safe harbor Classification Travel Training Pay at Termination
Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents
• Compensation plans• Offer letters• CBA’s
Wage and Hour Practices Wage and Hour Practices Other “Keys”Other “Keys”Wage and Hour Practices Wage and Hour Practices Other “Keys”Other “Keys”
• May be unwritten• Informal communication• Manager behavior
Wage and Hour Practices Wage and Hour Practices Correcting Issues Found – Correcting Issues Found – Retro or Forward OnlyRetro or Forward Only
Wage and Hour Practices Wage and Hour Practices Correcting Issues Found – Correcting Issues Found – Retro or Forward OnlyRetro or Forward Only
• Determine scope of issue• Who is impacted?• Dollars involved?• Timeframe for liability• Consult legal counsel
Wage and Hour Practices Wage and Hour Practices Correcting Issues Found – Correcting Issues Found – Retro or Forward OnlyRetro or Forward Only
Wage and Hour Practices Wage and Hour Practices Correcting Issues Found – Correcting Issues Found – Retro or Forward OnlyRetro or Forward Only
• Plan Timing Communication Execution
• Documentation• Ongoing monitoring
Policies and HandbooksPolicies and HandbooksPolicies and HandbooksPolicies and Handbooks
• Confidentiality Policies• Social Media Policies• Blogging and Internet Usage• Anti-Discrimination & EEO Policies• NLRA Issues
Applicable to both union and non-union employers.
Medical Requests/ExamsMedical Requests/ExamsMedical Requests/ExamsMedical Requests/Exams
Audit Areas• Permissible purpose• Scope of inquiry
GINA disclaimer• Confidentiality
Medical Requests/ExamsMedical Requests/ExamsMedical Requests/ExamsMedical Requests/Exams
Key Documents• Job descriptions• Pre-employment exam• Drug/alcohol testing policy, consent• FMLA forms• Fitness for Duty• Accommodation requests• Attendance/Absence forms
Non-EmployeesNon-EmployeesNon-EmployeesNon-Employees
• Independent Contractors• Interns/Trainees• Volunteers
Non-EmployeesNon-EmployeesNon-EmployeesNon-Employees
Key Documents• Contracts• Offer letters• Applicable policies• Important information will be
“unwritten”
Who Should AuditWho Should AuditWho Should AuditWho Should Audit
• HR professionals• Outside consultant• Inside Counsel• Outside Counsel
Using AttorneysUsing AttorneysUsing AttorneysUsing Attorneys
• May utilize some privileges• Fact-gathering for purpose of legal
advice• Fact of the audit and actions taken
likely discoverable• Reliance on recommendation –
minimize damages• Purposeful documentation