The HR Audit: The Importance Of Conducting A Periodic Review Of Your HR Practices

Finances aren’t the only things that should be audited each year. Just as important is an audit of a business’ human resources policies and procedures. An HR audit gives organizations the opportunity to identify potentially problematic policies that may not be in compliance with federal or state regulations in an effort to reduce the risk of costly lawsuits or fines.

To prove just how costly HR compliance lawsuits can be, take a look at the penalties assessed in these recent investigations conducted by the US Department of Labor (DOL):

• The Safety Harbor Resort & Spa in Tampa, Florida, was required to pay 37 employees over $30,000 in back wages as a result of an investigation conducted by the Wage & Hour Division of the DOL after it was found to have violated several provisions of the Fair Labor Standards Act’s (FLSA) overtime, minimum wage and record-keeping regulations.
• A Motel 6 in Knoxville, Tennessee, was required to pay employees over $50,000 in back wages after the Wage & Hour Division of the DOL found that the company had violated the overtime provisions of the FLSA. The motel was also found to have violated the posting requirements of the Family Medical Leave Act (FMLA).
• A company based in Kentucky (Bowlin Group LLC) and one of its subsidiaries (Bowlin Services LLC) were required to pay 196 employees $1,075,000 in back wages and liquidated damages after an investigation conducted by the Wage & Hour Division of the DOL found that the companies misclassified several employees as independent contractors and violated the FLSA’s overtime and record-keeping regulations.

An HR audit may cover many topics, including the organization’s employee handbook, record-keeping policies, hiring/termination procedures and even communications like company-wide emails or announcements. Because regulations are always subject to change as a result of new legislation or interpretations, HR audits should be conducted periodically to ensure that organizations are in compliance with the latest federal and state requirements.

Despite the figures listed above, many businesses might think that they’d rather take their chances on being audited, rather than make an effort to correct any noncompliance issues. This would be a dangerous gamble: The government has been steadily increasing the number of audits it conducts in recent years. In addition, a complaint filed by a disgruntled employee may also greatly increase a business’ chances of being audited. By taking a proactive approach to HR compliance, businesses can catch errors or problems that might otherwise be overlooked in the organization’s day-today operations before a governmental agency does.

G&A Partners offers a lifeline to businesses by delivering both strategic as well as tactical HR and administrative support. Our experienced human resource professionals study the nuances of federal and state labor laws so they can help companies understand and expertly execute procedural tasks surrounding government compliance. With G&A Partners managing your HR labor law and HR compliance, you can rest assured that your employees are afforded the protection of federal laws, and that you are protected from the risk of human resources noncompliance.

Want to know more about conducting an audit of your organization's HR practices? Check out G&A's webinar, "The HR Audit: A Periodic Review Of Your HR Practices," hosted by Senior HR Advisor Nancy Edwards, SPHR.