The power of an HR audit: the case for doing it and a checklist for doing it

Conducting an internal audit may not top the list of things HR professionals hope to do, but the importance of reviewing HR practices should not be underestimated or ignored. Simply put, an HR audit can be the savior that keeps your company out of the courtroom.

Think about this: On average, more than 450 job claims are filed each week. The most common target is private employers with between 15 and 100 employees. While you may not be able to control whether someone files the lawsuit, are you prepared to defend the company when someone does? With plaintiffs’ attorneys on the offensive, joined by an administration and the Labor Department sympathetic to that cause, employers must be ready to handle whatever comes their way.

But the reasoning behind internal HR audits extends beyond the defense of a lawsuit, for example:

* Audits are a sure way to make sure the company follows best HR practices and metrics.

* Help with process improvement

* May lead to fewer errors and complaints.

* May increase preparation for government investigations

* May lead to reduced costs of EPLI coverage (external insurance)

* Develop management support to join HR practices.

* Lead to better use of labor law expenditures.

So what exactly does an HR audit do? As with any audit, take a closer look at what you are doing. In this case, it measures the health of current HR practices. An HR audit will help you identify deficiencies and provide guidance on the following topics: employment practices, employment policies, employment-related documentation, compliance with labor laws.

Bottom line: an internal HR audit is an opportunity to save the company money and avoid problems they might otherwise face. At the end of the day, an audit should help you develop more consistent policies, treat employees more fairly, and in return, employees become more productive.

When it comes to an audit, there are two main areas of focus: compliance and best practices. Compliance looks at the legal aspects of HR and includes areas such as missing, outdated, or conflicting policies or inconsistencies between policy and practice. Practices pay attention to what is (and is not) working for the company, including current processes (on issues such as recruiting, discipline, or layoffs) and procedures (on issues such as performance or evaluations).

To get started, you will need to develop an audit team. This includes key administrative personnel. You want people who can give you a clear opinion of what exactly is going on. Feedback from non-management employees is helpful, but they should not be part of a formal ‘team’.

So you have the equipment and you are ready to go. What areas should you look at first? I don’t know if there is a good first or second place to start, but there are many places to go. An HR audit should ask the following questions:

* Do you have all required posts present and visible?

* Does your business follow all appropriate I-9 requirements, including proper recording?

* Do job applications contain questions that are illegal? Are they properly maintained?

* Is the employee handbook up-to-date and legal? Do the employees have a copy? Have they signed documentation showing that they have obtained a copy?

* Are there files stored in the managers desktop files (as opposed to placing them correctly in the logs file)?

* Are all OSHA records current, completed, and available to employees?

* Do you have an electronic communication policy (this includes email, social media, etc.)?

* Do you have a policy for company issued cell phones (how often can you talk, can you text / photos, for personal use or just for business, etc.)?

* Do you have a legally sufficient anti-harassment policy? Does it include a strong policy against retaliation?

* Do you have a complaint or grievance procedure that employees know and feel they can use?

* Is the language at will in your legal manual?

* Is the paid time off policy clear?

* Do you have a satisfactory equal opportunity employment policy? Is it noted in job offers?

* Are FMLA policies and procedures up to date?

* Do you have substance abuse policies?

* Are employees aware of accident reporting or safety policies?

* Are ERISA and COBRA requirements met and met?

* Are ADA policies current and followed?

* Does the company comply with all FLSA regulations? Please refer to this article for more information on wage and hour requirements under the FLSA.

* What are the contracting procedures you have in place? Are you looking for the right candidate? Does it have an effective (and legal) application? Do you perform a background check (criminal check plus employment history / references)? Who handles the interviews?

* Do you have a suitable onboarding practice for new hires?

* Do you have a formal performance appraisal procedure? What about a disciplinary policy procedure? Is it being followed consistently?

* Are you properly keeping all records for the proper amount of time as required by law?

And as you go, remember these two HR 101 rules: Document everything (jurors will only believe what you have in writing) and be consistent (a policy is not a policy unless it is always followed).

For a FREE one-hour presentation from two leading employment attorneys on this topic, log on to our Insider Network at http://www.ProjectionsInc.com/webinars.

Note: This information is not intended to be legal advice or advice. Seek a qualified attorney to learn more.