HR Audit A Checklist to Help Audit Human Resource Practices and Procedures

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1 HR Audit A Checklist to Help Audit Human Resource Practices and Procedures

2 Sabrina Baker, PHR Sabrina Baker, PHR is a human resource consultant with Acacia HR Solutions. Before founding the company in 2011, Sabrina spent eleven years in corporate human resource roles of both small and large businesses. Connect with Sabrina on Linkedin. 2

3 TABLE OF CONTENTS: How To Use This Checklist The Essentials...5 Going Deeper Conclusion

4 How To Use This Checklist: This guide is broken down into two sections. The first is a simple checklist to help leaders ensure the very basic human resource management requirements are in place. This section could be considered the bare minimum legal requirements that companies must have in place. The second section provides a more in-depth checklist that allows the user to determine areas of focus from a human resource perspective. 4

5 Section 1: The Essentials From a legal perspective, there are things every business should have in place to remain compliant and reduce risk. This checklist outlines those items. If after reviewing this checklist you determine that your business is in need of any of these items, do not haste in getting them implemented. The longer you wait, the longer your business is at risk. Need help implementing the basics? Click here to find out more about our HR setup services. 5

6 HR Audit Checklist: The Essentials Legal & Compliance: There are a few must haves for businesses to be compliant from a human resource and legal standpoint. The list below highlights those standards. Workplace Posters If you have a physical place of employment, does it display the proper workplace posters? Does your company have an EEOC policy and is it followed? Compliance Training Do employees get annual training on preventing sexual harassment and OSHA related issues? Do you have workers compensation insurance as required by your state law? Are you withholding the proper taxes from employee pay? Are final paychecks delivered in accordance with the law? Recruitment & Onboarding: When hiring and onboarding new employees, certain elements should be reviewed for proper compliance. New Employee Paperwork and I-9 Compliance Are new employees filling out I-9's and are they up to date for existing employees? Recruitment and Hiring Process Is there a documented recruitment and hiring process? Is it being administered fairly and consistently? Are applications accepted and if so, do they have an at-will statement on them where applicable? Is the proper new hire paperwork filled out as required by your state? This includes tax forms, new hire reporting etc. 6

7 HR Audit Checklist: The Essentials cont. Performance Management For the ongoing performance of employees, the following items should be established. An Employee Handbook which outlines policies and expectations from both the employer and employee perspective Do you have an employee handbook and is it current? Performance Reviews Is there a process for annual (or more frequent) performance reviews? If so, is it being fairly and consistently administered? Compensation & Benefits Compensation and benefits are some of the most regulated issues surrounding employment. FLSA Are employees classified in the proper FLSA category and compensated accordingly? Compensation Fairness are employees compensated consistently, meaning employees in similar roles with similar responsibilities and tenure make similar amounts of money? Benefits If you offer benefits, are they being administered properly and within regulations? If you have more than 50 employees are you offering the appropriate leave policies? Are you paying overtime correctly? 7

8 Section 2: Going Deeper If you want to make sure that your business has the best human resource practices in place, then going beyond the absolute essentials is necessary. The basics keep you legal, going deeper makes you a best in class organization. 8

9 HR Audit Checklist: Going Deeper Recruitment & Onboarding: When hiring and onboarding new employees, these items will ensure higher levels of compliance and enable an organization to attract and retain top talent. Do job descriptions exist for every position? Are they current? Are new position openings offered to existing employees first? Are there reference and background checks performed? If so, are you filing the proper paperwork if adverse action is taken? Do applications refrain from asking protected information? Do you have an onboarding process? Does the onboarding process establish guidelines for employees to work within? Does the onboarding process cover safety information? Compensation & Benefits: Beyond paying everyone correctly, the following checklist ensures pay practices are established, communicated and reviewed. Is working time documented properly and audited? Is there a vacation/time off benefit structure and is it administered consistently? Are summary plan descriptions shared with participants in the benefit plan? Are COBRA notices shared with employees who have left the company? Is protected health information kept private? Are plan documents in compliance with ERISA? 9

10 HR Audit Checklist: Going Deeper Performance Management Managing performance is an ongoing process. This checklist provides guidelines for aligning performance with business objectives. Is performance tied to compensation? Is both quality and quantity of work evaluated? Is disciplinary action applied fairly and consistently? Is an employee grievance procedure in place? Performance Reviews Is there a process for annual (or more frequent) performance reviews? If so, is it being fairly and consistently administered? Are employee files kept on every employee? Is employee documentation kept for its required duration? Are supervisors trained on leadership techniques and workplace behavior such as handling grievances, identifying disciplinary problems and providing feedback? 10

11 Conclusion While this guide is a great starting place to help you determine if you are at the very minimum legally compliant, no checklist can be exhaustive. It is meant to be a guide only and not a definitive source to determine what human resource practices your company needs to have in place. Ensure your business has the basics and then implement the rest over time. Are you worried about whether you are compliant after reading this checklist? Do not delay in getting help. Employee legal issues cost American businesses millions of dollars every year. Click to setup your FREE consultation 11

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