I find that the beginning of the New Year is the perfect time to do an employee record keeping check-up. With all that you do, setting aside a designated day and time to review processes and documentation may seem a luxury you cannot afford, however, scheduling a regular human resource audit can save you a headaches and penalties as the year progresses.
- Personnel Files: Do you maintain comprehensive, organized personnel files?
- Employee Handbooks and Policy Manuals: Do you have a handbook and has it been reviewed in the last few years?
- Employee Record keeping: Have you established a policy and procedure for tracking and reviewing: I-9s based on temporary employment eligibility and e-verify?
- Equal Employment Opportunity and Affirmative Action: Do you have a written sexual harassment policy that meets federal and state guidelines?
- Discipline and Termination Process: Do you use a termination checklist to ensure terminated employees receive all benefits and information to which they are entitled?
- Compliance with Applicable Employment Laws and Posters: Have you posted the non-English version of the notice to employees regarding Workers Compensation?
- Tax filings, deductions: Have any employees moved recently or have gotten married?
If you answered “No” or “I don’t know” to any of the above questions, it is time for a Human Resources Checkup!
There are several reasons why having a routine HR audit, but one of the biggest reasons is because laws change. A primary reason for periodic reviews is that new employment laws and regulations are enacted with increasing frequency.
Here are some core areas to include in your HR check-up:
- Employee handbook—Pay particular attention to the EEO and harassment policies, discipline and termination policies, and employment-at-will language
- Code of ethics—As well as confidential information and conflict of interest
- Required postings—e.g. Family Medical Leave Act, minimum wage, employee rights. These should be in an accessible and frequented place, like the break room.
- Affirmative Action plan—Has it been updated for the current year?
- Forms you use on a regular basis: employment application, offer letter, performance appraisal, disciplinary notice, etc. Are these forms still fulfilling the purpose of recording the information you need?
- Personnel files—Review in detail at least a few from each department, as well as the files of the most recently separated employees. Things to look for: Is there a signed acknowledgment of the employee handbook and policies, including the ethics code? Are all regular performance appraisals included?
- Job descriptions—Review job descriptions, as well as job descriptions for any exempt position for which it is not clear which exemption applies. The job description should reflect the “primary duty” under Fair Labor Standards Act regulations justifying exempt treatment. The job description should also list “essential job functions” and any physical or mental job requirements.
- Payroll records—concentrate on non-exempt positions. Does the sample of time records show the exact hours worked? Have they been signed by the supervisor on a weekly basis? Has overtime pay been properly calculated? Federal and State exemption forms, if recently moved, married or divorce an updated exemption form should be on file.
- I-9s—these should be maintained separately from the personnel file. Check that every box has been filled in, down to the printing of the employer representative’s name under his/her signature. When the government audits I-9s, every single paperwork deficiency means a fine!
Going forward…yearly audit
The essential tool for an audit is a checklist. Checklists, once completed for each area reviewed, are the basis for your audit report and recommendations, and constitute the back-up documentation needed to defend against a future challenge. Whether you go it alone, or seek outside help, don’t neglect the audit chore. You’ll be happy you’ve done this and so will your pocket book.