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August 14th, 2017 / by Mike Cooney

Did Someone Say Audit?

With all the daily nagging pressures of running a small business, trying to find the time to asses how the HR side of things is running can be daunting. If things seem to be running smoothly, why go looking for problems? The word audit strikes fear into the hearts of almost everyone, but correcting minor HR issues now with an HR Audit or HR Assessment can protect a company against costly legal claims in the future, and can also achieve smaller immediate gains, like better employee retention and more accurate vendor payments. So have no fear, take a look at the most commonly made mistakes listed below and see if your company can benefit from some improved practices.

Recruiting and Onboarding – Consistency is key. Are all candidates put through the same clear screening process? Things such as drug testing, background checks, reference checks, and pre-employment testing should be administered the same way with each candidate. Companies would also want to ensure their applications and interviews don’t include any outdated or prohibited questions.

Employee Files and Classification – It’s common to see either incomplete files or files with every related document dumped in. Both would be considered out of compliance. Benefit and medical documents should be kept in separate folders with restricted access. I-9’s belong in separate folder or binder as well (and should always be up to date). Companies would want every employee file to contain such documents like handbook acknowledgements and performance documentation. Additionally, making sure exempt and non-exempt employee classification meets the required definition for each can save headaches down the road.

Benefits – Are all employee enrollment forms current? Do their elections and payroll deductions match? Cross-auditing your insurance carrier bill monthly against payroll can save companies money by ensuring that their carrier is charging them correctly and that employees are paying for the level of coverage they receive. Are all waiting periods correctly adhered to for new hires? Inconsistencies here can leave a business exposed to potential legal issues.

Leave Administration and Attendance Policies – With Oregon sick time, OFLA, FMLA, and USERRA all coming into play, things can get confusing quickly when trying to administer an attendance program on top of that. By having a clear understanding of the leave laws and their requirements, companies can design clear procedures ahead of time that minimize their risk of inadvertently administering leave and attendance policies in a way that end up favoring one employee over another.

The areas outlined above are just a few of the most common trouble areas that turn up on HR Audits. Identifying your company’s unique target areas can help leaders avoid potential legal issues and, perhaps even more importantly, provide key indicators about how competitive the HR program is.