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CENTRAL MINNESOTA SHRM Why An HR Audit Is Necessary October 20, 2011 By Beth Papacek and Jonathon Naples 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 Concerns • Expense • Lack of personnel • Disruption to HR function and others • What will come of it? • Create roadmap for litigation Basic Steps • Determine scope and type • Develop audit checklist/Questionnaire/Key Documents • Collect Data • Analyze/benchmark • Create action plans • Ongoing monitoring and improvement What to Audit • • • • • • • Wage and Hour Practices Recruiting Practices Pre-employment testing Employee forms Orientation Training Restrictive Covenants Policies/Handbooks What to Audit • Affirmative Action Plans and Practices • Discrimination/Harassment policies and complaint process • Accommodation Requests • Medical Requests/Exams (GINA) • I-9 What to Audit • Personnel Files/Recordkeeping • Security/Privacy • Performance Management Systems • Pay Plans/Pay Equity – (Ledbetter) • Independent Contractors and Other Non-Employees What to Audit • • • • • • • • Litigation Preparedness Federal/State Postings Leave Management Benefits/Insurance Payroll tax audit OSH/Safety Privacy Union Vulnerability Wage and Hour Practices Audit Areas • Exempt/Nonexempt Status • Timekeeping Systems/Recording of Hours • Defining the Workweek/Workday • Wage Deductions • Overtime/Comp Time • Bonus Calculations Wage and Hour Practices Audit Areas • Management Practices/Communications • Child Labor • Travel • Training • On-Call • Joint Employer Wage and Hour Practices Key Documents • Job description • Time records • Written policies re: Timekeeping Overtime Pay Periods Attendance Wage and Hour Practices Key Documents Written policies re (cont.): Meal/Rest breaks Deductions Safe harbor Classification Travel Training Pay at Termination Wage and Hour Practices Key Documents • Compensation plans • Offer letters • CBA’s Wage and Hour Practices Other “Keys” • May be unwritten • Informal communication • Manager behavior Wage and Hour Practices Correcting Issues Found – Retro or Forward Only • • • • • Determine scope of issue Who is impacted? Dollars involved? Timeframe for liability Consult legal counsel Wage and Hour Practices Correcting Issues Found – Retro or Forward Only • Plan Timing Communication Execution • Documentation • Ongoing monitoring Policies and Handbooks • • • • • Confidentiality Policies Social Media Policies Blogging and Internet Usage Anti-Discrimination & EEO Policies NLRA Issues Applicable to both union and nonunion employers. Medical Requests/Exams Audit Areas • Permissible purpose • Scope of inquiry GINA disclaimer • Confidentiality Medical 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-Employees • Independent Contractors • Interns/Trainees • Volunteers Non-Employees Key Documents • Contracts • Offer letters • Applicable policies • Important information will be “unwritten” Who Should Audit • • • • HR professionals Outside consultant Inside Counsel Outside Counsel Using 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 Q&A THANK YOU FOR YOUR ATTENTION AND PARTICIPATION! DISCLAIMER This presentation is not legal advice.