Revised Publication: April 2021
Original Publication: January 30, 2016
HR Compliance Audits
As Human Resources leaders we tend to avoid or procrastinate on conducting annual HR Audits for our organizations. Annual becomes Biannual and eventually the audit is all but forgotten. We easily forget the importance of the HR Audit and the legal implications that could be easily addressed if we hold ourselves accountable and our departments accountable to thoroughly conducting an annual HR Audit. As the new year has taken, now is the time to set a goal to conduct an HR Audit. Keeping in mind that not every file needs to be reviewed next week, take it one step at a time and set small goals for reviewing important HR files.
Below is a checklist of areas to focus on before beginning the HR Audit:
- Do job descriptions exist?
- Are job descriptions up to date?
- Are job descriptions signed?
- Are I-9 forms and acceptable documentation reviewed annually?
- Are applicant references checked?
- Are turnover rates monitored?
- Are selection processes used with reference to the Uniform Guidelines?
- Are all applicants required to fill out and sign an application form?
- Are applicants asked to voluntarily identify their affirmative action information? (If applicable)
- If applicable, do application forms and/or offer letters identify that the employment relationship at the organization “at-will”?
- Do employment applications refrain from requesting protected information?
- Are independent contractors accurately identified? (This is critical if you are using consultants, temp workers, etc.)
- If the organization has a qualifying federal contract, is there an affirmative action plan?
- Is the affirmative action plan up-to-date and submitted in the expected timeframe?
- Are I-9s and medical information kept separately from personnel files?
- Do new employees fill out W-4 forms?
- Do new hires fill out the required state tax forms?
- Do new hires have direct deposit information?
- Have we provided the required documentation on the rate an employee is receiving?
- Are workplace policies in place?
- Are policies up-to-date and accurate?
- Are policies communicated?
- Are employee’s trained on the policies? Do we have signatures from employees?
- Is there an employee handbook?
- Is the employee handbook specific to your workplace?
- When was the last time the handbook was updated?
- Do employee orientations take place?
- Are employees trained on discrimination issues?
- How often are we training employees?
RECORDKEEPING AND OTHER DOCUMENTATION
- Are personnel files current?
- Are all appropriate labor posters displayed in a conspicuous place?
- Are documents regarding employees kept for their required duration?
- Are compensation levels monitored and reviewed?
- Are employees correctly designated as exempt or nonexempt per FLSA? (Remember to watch for the new rules)
- Is there a formal pay structure?
- Is the compensation structured reviewed regularly?
- Is working time documented?
- Are we tracking vacation time, sick time, etc. consistently?
- Are non-exempt employees compensated at least one and one-half times their hourly wage for any hours worked beyond 40?
- Is the compensation plan communicated to all employees?
- Are appropriate payroll withholdings performed?
- Are employees informed about their benefits?
- Are Summary Plan Descriptions provided to plan participants?
- Are general COBRA notices provided to plan participants?
- Are employees allowed up to 12 weeks of leave under the FMLA?
- Are plan documents in compliance with ERISA?
- Are supervisors and managers trained to report employee absences of more than three days to HR for FMLA purposes?
- If there is a health care plan, is protected health information kept private? (HIPPA)
- Do we have signatures on the protected health information policy?
- Are we in compliance with all government rules and regulations regarding healthcare?
- Are all Form 5500s completed and reported?
DISCRIMINATION AND EMPLOYEE RIGHTS
- Are we administering discipline fair and consistent?
- Do we have a tracking system to manage our discipline process?
- Are employees trained on discrimination issues?
- Are supervisors and managers trained in anti-discriminatory practices?
- Are employment practices in line with the various anti-discrimination laws?
- Are effective policies in place that prohibit retaliation against employees who exercise their rights?
- Do exit interviews take place?
- Are we evaluating the feedback received on the exit interview form?
- Are final paychecks provided on time?
- Do we have a process in place to manage unemployment claims?
SAFETY AND SECURITY
- Are safety hazards reported to the appropriate personnel?
- Are workplace accidents, near-misses, injuries, and illnesses reported and investigated?
- Are measures in place to prevent intruders from entering the grounds or buildings?
- Is bright, effective lighting installed indoors and outdoors?
- Are measures in place (access badges, traffic control, etc.) to keep unauthorized persons from entering the facility through normal entrances?
- Is there a reliable response system in place in the event an alarm is triggered?
- Are employees encouraged to promptly report incidents, and suggest ways to reduce or eliminate risks?
- Are structures readily accessible to disabled employees?
- Are minors prohibited from performing hazardous work?
- Are injuries/incidents investigated?
- Is regular contact made with employees out on lost time?
- Are return-to-work programs checked for effectiveness?
- Is contact made with medical providers?
- Are insurance premiums and competitive quotes reviewed on a periodic basis?
- Employment Application and Background Check Documentation
- Legal Employment Application
- Background Check Documentation
- Interviewing process, guidelines, or forms
- Interview questions
- Offer Letters and Employment Contracts
- Current offer letters and language
- Employment Handbook/Policy and Procedures
- Review handbook for legal compliance
- Labor and Employment Posters
- Review current posters and recommend upcoming changes
- Employee Benefit Documents
- Compliance under ERISA and other state and federal laws
- Immigration Forms
- Forms I-9 are filled out
- Filing forms
- Wage and Hour (Payroll)
- Review classification of employees as exempt or non-exempt with current and potential changing overtime laws
- Review 1099 (contractor status)
- Personnel Files
- Review personnel files to ensure they are maintained
- Ensure legal separation of certain documents
- Sound procedures to control access to files
- Filing process
- Recordkeeping Requirements
- Review recordkeeping requirements for current and past employees for compliance.
- Affirmative Action Plans
- Is one required?
- Review current plan
- Performance Review Forms and Disciplinary Forms
- Consistency and legality
- Manager and Employee Training
- Policy and procedure training
- Intellectual Property
- Intellectual property protection
- Any agreements need to be reviewed
- Benefit Folders
- Review folders (benefits, 401K)
- Tax Information (Federal and State)
- Review files pertaining to employee taxes
- Termination Paperwork
- Review resignation or termination paperwork
- Unemployment Paperwork
- Review past or current unemployment
- Payroll Files
- Review timekeeping process
- Electronic and paper payroll files
- Worker’s Compensation
- Review worker’s compensation claims
- Required State Law Forms
- Wage notices under New York State DOL
- Commission, Salary, Bonus, Other Compensation and Performance
- Review records related to compensation
- Electronic Files
- Discuss any electronic recordkeeping
Follow-Up Action Items: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Record Retention Requirements
New York State Recordkeeping Requirements:
Record-Keeping Policy – Record Maintenance, Retention and Destruction
The human resources (HR) department retains and destroys personnel records in accordance with [Company Name’s] corporate policies on business records retention, as well as federal and state laws governing record retention. Below is an outline of the HR department’s operating procedures for personnel record retention and destruction of documents when such retention periods have passed. If [Company Name’s] retention procedure is not of sufficient duration for any state in which the company does business, this procedure will be superseded by state requirements.
The HR department maintains both employee record information and government compliance reports. Both are subject to the following retention requirements and destruction procedures.
Maintenance of Employee Records
The following employee information records are maintained in segregated personnel files:
1) Pre-employment testing results and background check information.
2) I-9 forms.
3) Benefits plan and employee medical records.
4) Health and safety records.
5) General employee personnel records.
Government compliance reports are maintained in reverse chronological sequence and filed separately from the above employee information records.
Destruction of Employee and Applicant Records
All paper personnel records and confidential employee data maintained by the HR department will be destroyed by shredding after retention dates have passed; this procedure pertains to all personnel records, not just those governed by the Fair and Accurate Credit Transactions Act (FACTA).
Employment application materials submitted by applicants who were never employed are also to be shredded.
When a confidential record must be discarded or destroyed, it shall be marked as confidential and given to the Administrative Services Department to be destroyed in accordance with the record destruction policies. Alternatively, hardcopy confidential records may be shredded using a locked shredder on the [Company Name] premises. In the case of remote employees, employees are discouraged from printing out or creating hard copies of confidential records where possible. If hard copies must be printed, created, or kept, they should be stored in a locked cabinet, drawer, or other secure location until they are no longer needed, or until the maximum retention period has ended. Remote employees must then destroy all confidential files by shredding them in a locked shredder on the [Company Name] premises, or otherwise rendering the documents unusable or unreadable.
Personnel records include electronic as well as paper records. The HR department will work with the IT department periodically but no less than twice annually to review and ensure that the HR department’s electronic records relating to employee information and compliance reports are properly purged.
When [Company Name] is involved in or anticipates that it may be involved in litigation, the General Counsel’s office will issue a litigation hold. This means that all documents relating to the litigation matter must be kept in order to preserve any potential evidence. If we fail to do so, [Company Name] can be sanctioned by the court for destroying evidence. A court has broad authority to impose these sanctions, which may include anything from unfavorable procedural rulings during a trial to payment of monetary damages.
In the event that the [Company Name] General Counsel announces a litigation hold on any or all [Company Name] records as a result of pending or anticipated litigation, all records covered by such litigation hold MUST NOT be discarded, deleted, or destroyed. Further, the IT department will suspend the automatic deletion of emails for all individuals covered by the litigation hold. Any questions about the litigation should be directed to the General Counsel.
Retention of Terminated Employees’ Records
Record Types and Retention Periods