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10 Reason to Conduct an HR Audit: Protect and Propel Your Business

hr-auditAccording to an HR Support Center Poll, 57% of the respondents indicated they have not conducted any audits of their company’s HR function. Understanding what audits are, the purpose they serve, and the significance they provide can position your organization to be compliant with various employment laws. And spotlight your culture as one that protects and propels not only your organization mission but your employees also.

Remember; conducting an audit is not a one and done deal. Instead, effective audits should be conducted, at minimum, once a year.

Generally, there are four types of HR audits:

  1. Compliance: Evaluation of the organization’s compliance with state and federal workplace laws as well as industry regulations.
  2. Function-Specific: Comprehensive assessment into specific areas of the HR function, such as Benefits, Compensation, and Safety.
  3. Best Practices: Comparative review of internal business practices with those of other businesses considered to be leaders in the industry or in the HR field.
  4. Strategic: Examination of the strengths and weaknesses of the company’s systems and processes to gain greater market competitiveness.

10 reasons to conduct a Compliance Audit:

  1. Wage and hour claims are up by 70%
  2. New FLSA overtime exemption rules
  3. Revaluate employees classified as exempt or (salaried who don’t get paid overtime)
  4. Confirm Independent Contractors classifications
  5. Increased random employer audits by IRS, EDD and DOL
  6. Increased employee claims and law suits
  7. Increase in hiring or terminations
  8. High turnover rates
  9. Outdated and noncompliant job descriptions
  10. Business expanding into new areas including multiple states

Federal and state agencies have increased random employer audits. To identify workers misclassified as exempt, independent contractors, wage and hour, and recordkeeping violations. Employee claims of unfair discrimination or practices in the workplace may also trigger a federal or state investigator’s knock on your door. So be prepared and compliant.

The Department of Labor states, while many employers “have a culture of compliance others have a culture of noncompliance these employers depend on luck and happenstance to avoid workplace violations”. Still others make a “calculated decision whether to comply with employment laws. A catch me if you can attitude”. The mission of the DOL is to replace ‘catch me if you can’ with Plan/Prevent/Protect.  The DOL’s Plan / Prevent / Protect strategic compliance enforcement initiative is already in motion.


Author: Bernadette Jones, SPHR, SHRM-SCP

Visionova HR Consulting



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