Human Resources Compliance Audit presentation

1. Worth The Cost or Risk? Jeanine Maloney, SPHR Avoid Becoming A StatisticHuman Resources Compliance Audit

2. What Will We Learn? Frightening facts. Why so many violations? Why do a compliance audit? What should be included? Opportune times to do a compliance audit. What should it touch on? What happens after? Additional thoughts. Certified Human Resources - 2009

3. Consider These Frightening Facts: Certified Human Resources - 2009

4. Frightening Facts / Startling Statistics In 2007, there were over 82,000 charges filed with the EEOC, approximately 7,000 more that the previous year. In fiscal year 2008, Wage and Hour collected over $185 million in back wages for over 228,000 employees. For fiscal year 2008 there were over 4700 minors employed in violation of the child labor laws. There were over 1800 complaint cases on FMLA enforcement. The monetary benefits awarded in 2007 from EEOC litigated suits were $54.8 million. (Date from the EEOC website) Certified Human Resources - 2009

5. Why So Many Violations? High risk associated with non-compliance is overlooked. Employment decisions are often made “in the heat of the moment”. Employers may be scrambling to get staff on board or when terminating employees. Certified Human Resources - 2009

6. Why Do A Compliance Audit? Monetary costs could be exorbitant if issues are ignored or not addressed. Ensure legal compliance for benefit of company, even if considering retirement/sale of business, for liability purposes. Liability has two-fold effect: It may not only remain with the company but can follow the owner because he ‘should have known the rules’. Helps company avoid costs as well as time away from business to address any issues. Certified Human Resources - 2009

7. Opportune Times For Compliance Audits If there is a contemplated sale of the business. If there is an upcoming merger or acquisition. When there are changes in Senior Management. When there have been changes in Labor Laws or regulations. If you have experienced significant growth in your business. If you have added a significant amount of staff. Certified Human Resources - 2009

8. What Should A Compliance Audit Touch On? Payroll compliance Record documentation and retention Employee handbook or manual Policies and Procedures Position Descriptions List is NOT all inclusive but a good place to start Certified Human Resources - 2009

9. Payroll Compliance Make sure that timesheets compare with actual hours worked. Make sure that time clock rounding is done properly if you use one. Check to make sure overtime pay calculations are done accurately. Ensure that classification of employees is done correctly to avoid liability for overtime costs. Understand that Wage and Hour violations can go back several years. Certified Human Resources - 2009

10. Record Documentation and Retention Check for issues such as missing or incomplete information on Form I-9’s. Check for incomplete personnel files information. Check for inadequate discipline documentation. Ensure that personnel evaluation information is not inadequate or inaccurate. Make sure you have accurate and complete data to support any employment decisions. Certified Human Resources - 2009

11. Employee Handbook or Manual Make sure it has been updated to reflect the current employment laws that are ever changing. Make sure employees have a copy of the handbook. It is a communication tool to inform employees of company rules (Federal, state, local, company policies). The handbook should be reviewed on a regular basis and communicated and reviewed with all employees and managers. Having an accurate, updated, and communicated handbook may help avoid possible claims and litigation from non-compliance to many of the labor laws. Certified Human Resources - 2009

12. Policies and Procedures Check to ensure that policies and procedures are written, up-to-date, communicated, and are followed as stated rather than ad-hoc. Make sure your policies and procedures include disciplinary, performance and termination guidelines. Make sure all managers are trained on your policies and procedures and use them consistently to avoid claims such as wrongful termination. Certified Human Resources - 2009

13. Position Descriptions Ensure they are updated as responsibilities change and as business grows or changes in a significant way. Make sure position descriptions verify specific job responsibilities for proper exempt / non-exempt classification purposes (Wage and Hour claims). Make sure position descriptions include the essential functions of each position to help with decisions about ADA (Americans with Disability Act). Position descriptions also outline the workflow of a position. Certified Human Resources - 2009

14. What Happens Next? Generally a report is compiled with concerns listed in order of importance. Report should be reviewed with senior management and decisions on how to handle each issue should be discussed. If changes are to be made, any of which affect the employees, they should be communicated along with reasons for the changes. Good practice is to let employees know that company takes people issues seriously and will always correct any problem issues and concerns. Certified Human Resources - 2009

15. Compliance Audit Thoughts As a business owner you perform audits on your financial records on a regular basis, HR compliance should be taken just as seriously. Take the initiative to prevent litigation or legal challenges in the long run. Don’t let your company become a victim to one of the many statistics mentioned above. Certified Human Resources - 2009

16. Jeanine Maloney, SPHR, is an Independent Human Resources professional (Certified Human Resources) working in association with Certified Acquisition Associates LLC and may be reached at Jeanine@certifiedacquisitions.com Certified Human Resources - 2009