How an HR Audit Can Benefit and Protect Your Organization

Audit crossword

An audit of your organization’s Human Resources functions can be one of the best ways to manage risk and obtain valuable business information.

What is an HR Audit?

There are many different types of audits. Some audits consist of simply reviewing employee files to make sure they contain up-to-date I-9s and other essential documents. Other audits are more comprehensive and involve a thorough review of employment and pay policies for compliance with the myriad of federal, state and local laws.

Audits can also be focused on certain aspects of the HR function, such as wage and hour compliance (a particularly important area given recent governmental actions around employee classification and overtime under the Fair Labor Standards Act discussed here and here), benefits (which is a constant “hot topic” thanks the Affordable Care Act) or administration of the Family and Medical Leave Act and/or Americans with Disabilities Act.

Why Conduct an HR Audit?

Some of the benefits of properly conducted HR audits include:

  • Ensuring regulatory and legal compliance and reducing human resources risk. Having employees is risky business.  Laws are changing seemingly every day and increased governmental oversight and litigation risk requires organizations to review their employment policies and practices to make sure they are up to date.
  • Identifying inaccurate or out-of-date job descriptions and classifications. Organizations change and job duties change, making job descriptions inaccurate or out-of-date.  Do your job descriptions include all of the “essential functions,” qualifications and requirements of the job? If you have worker’s classified as independent contractors, is that classification appropriate and withstand the increased scrutiny.  Are your employees properly classified as exempt/non-exempt?  Will those classifications need to be changed when the new overtime regulations take effect?
  • Measuring the effectiveness of HR policies and programs and HR personnel.  How effective are your HR policies?  Are you offering employees programs and benefits they want?  Are your HR policies being disseminated? Are they effective?  Are there unwritten policies that are exposing your organization to risk?
  • Identifying misunderstandings between employees and management about corporate policies. Do your managers and employees know what the corporate policies are?  Are managers implementing those policies fairly, uniformly and consistently?
  • Identifying training needs and opportunities.  Have all required employees undergone anti-discrimination/anti-harassment training?  Are there recurring issues that require additional training? If changes to the Fair Labor Standards Act will result in reclassification of employees, would those employees (and supervisors) benefit from training on time recording and time management?
  • Streamlining HR functions and improving efficiencies. Are there ways your HR team could be more effective? Could outsourcing some HR functions allow them to be more of a strategic partner to the management team?

HR audits provide organizations with valuable information. But, they require an effective plan for how to conduct the audit and how to address and prioritize any issues revealed in the audit.

Want to Know More?

For more information about how an HR audit can benefit and protect your organization, consider attending the PA SHRM Annual State Conference on September 24th and 25th.  During the conference, Julie Kinkopf, Esquire and Renee Mundy, Esquire, SPHR will conduct a workshop discussing how and why to conduct an HR audit.  You can also contact Julie Kinkopf at 610-660-7786 or Julie@KinkopfLawFirm.com.

Julie Kinkopf, Esquire is principal of Kinkopf Law LLC and is an accomplished attorney who has represented employers for over 15 years.  Ms. Kinkopf helps businesses develop sound employment practices and provides training to supervisors and employees designed to avoid litigation and government audits.  She also represents employers before various governmental agencies as well as in state and federal courts in post-employment litigation, including discrimination, retaliation, pay disputes and non-compete/trade secret matters.  More information may be found at www.kinkopflawfirm.com or www.linkedin.com/in/juliekinkopf/

Disclaimer: The contents of this post are for informational purposes only, are not legal advice and do not create and attorney-client relationship.

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