CENTRAL MINNESOTA SHRM Why An HR Audit Is Necessary October 20, 2011 By Beth Papacek and Jonathon Naples

CENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRMCENTRAL MINNESOTA SHRM

Why An HR Audit Is Necessary

October 20, 2011

ByBy

Beth PapacekBeth Papacekandand

Jonathon NaplesJonathon Naples

ByBy

Beth PapacekBeth Papacekandand

Jonathon NaplesJonathon Naples

Why Audit?Why Audit?Why Audit?Why Audit?

Compliance – laws and regulations Proactive protections Identify and correct Limit liability

• Establish best practices• Identify opportunities for

improvement/development• Strategic – do the processes align

with goals, strategic plan

ConcernsConcernsConcernsConcerns

• Expense• Lack of personnel• Disruption to HR function

and others• What will come of it?• Create roadmap for litigation

Basic StepsBasic StepsBasic StepsBasic Steps

• Determine scope and type• Develop audit

checklist/Questionnaire/Key Documents

• Collect Data• Analyze/benchmark• Create action plans• Ongoing monitoring and

improvement

What to AuditWhat to AuditWhat to AuditWhat to Audit

• Wage and Hour Practices• Recruiting Practices• Pre-employment testing• Employee forms• Orientation Training• Restrictive Covenants• Policies/Handbooks


• Affirmative Action Plans and Practices

• Discrimination/Harassment policies and complaint process

• Accommodation Requests• Medical Requests/Exams (GINA)• I-9


• Personnel Files/Recordkeeping

• Security/Privacy• Performance Management

Systems• Pay Plans/Pay Equity –

(Ledbetter)• Independent Contractors and

Other Non-Employees


• Litigation Preparedness• Federal/State Postings• Leave Management• Benefits/Insurance• Payroll tax audit• OSH/Safety• Privacy• Union Vulnerability

Wage and Hour PracticesWage and Hour PracticesAudit AreasAudit AreasWage and Hour PracticesWage and Hour PracticesAudit AreasAudit Areas• Exempt/Nonexempt Status• Timekeeping Systems/Recording

of Hours• Defining the Workweek/Workday• Wage Deductions• Overtime/Comp Time• Bonus Calculations

Wage and Hour PracticesWage and Hour PracticesAudit AreasAudit AreasWage and Hour PracticesWage and Hour PracticesAudit AreasAudit Areas• Management

Practices/Communications• Child Labor• Travel• Training• On-Call• Joint Employer

Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents• Job description• Time records• Written policies re:

Timekeeping Overtime Pay Periods Attendance

Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents

Written policies re (cont.): Meal/Rest breaks Deductions Safe harbor Classification Travel Training Pay at Termination

Wage and Hour Practices Wage and Hour Practices Key DocumentsKey DocumentsWage and Hour Practices Wage and Hour Practices Key DocumentsKey Documents

• Compensation plans• Offer letters• CBA’s

Wage and Hour Practices Wage and Hour Practices Other “Keys”Other “Keys”Wage and Hour Practices Wage and Hour Practices Other “Keys”Other “Keys”

• May be unwritten• Informal communication• Manager behavior

Wage and Hour Practices Wage and Hour Practices Correcting Issues Found – Correcting Issues Found – Retro or Forward OnlyRetro or Forward Only


• Determine scope of issue• Who is impacted?• Dollars involved?• Timeframe for liability• Consult legal counsel



• Plan Timing Communication Execution

• Documentation• Ongoing monitoring

Policies and HandbooksPolicies and HandbooksPolicies and HandbooksPolicies and Handbooks

• Confidentiality Policies• Social Media Policies• Blogging and Internet Usage• Anti-Discrimination & EEO Policies• NLRA Issues

Applicable to both union and non-union employers.

Medical Requests/ExamsMedical Requests/ExamsMedical Requests/ExamsMedical Requests/Exams

Audit Areas• Permissible purpose• Scope of inquiry

GINA disclaimer• Confidentiality

Medical Requests/ExamsMedical Requests/ExamsMedical Requests/ExamsMedical Requests/Exams

Key Documents• Job descriptions• Pre-employment exam• Drug/alcohol testing policy, consent• FMLA forms• Fitness for Duty• Accommodation requests• Attendance/Absence forms

Non-EmployeesNon-EmployeesNon-EmployeesNon-Employees

• Independent Contractors• Interns/Trainees• Volunteers

Non-EmployeesNon-EmployeesNon-EmployeesNon-Employees

Key Documents• Contracts• Offer letters• Applicable policies• Important information will be

“unwritten”

Who Should AuditWho Should AuditWho Should AuditWho Should Audit

• HR professionals• Outside consultant• Inside Counsel• Outside Counsel

Using AttorneysUsing AttorneysUsing AttorneysUsing Attorneys

• May utilize some privileges• Fact-gathering for purpose of legal

advice• Fact of the audit and actions taken

likely discoverable• Reliance on recommendation –

minimize damages• Purposeful documentation

Q&AQ&AQ&AQ&A

THANK YOU FOR YOUR ATTENTION AND PARTICIPATION!

DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMER

This presentation is not legal advice.