How to tell if company is HR Compliant

How to tell if company is HR Compliant 

Are You Compliant? Are You Willing to Bet Your Business On It?

Non-Compliance can shut down a business quicker than you can blink your eyes.   It just takes one wrong move, and the business that you put your sweat and heart into can be taken away.  With ever changing regulation, compliance can be complicated, time consuming and frustrating to many business owners and CEO’s.   

In this HR Legal Compliance Series throughout the coming weeks, I will be sharing exceptional tools to ensure that your business remains or becomes compliant with legal regulations.   Let me show you that auditing your current process is a lot easier than you think!  And You Will Become Compliant in the process.

In order for auditing (in general) to be effective, it requires consistent and systematic review of organizational practices, accomplishments, company policies, legal requirements and professional standards.   Effective audits pinpoint the gaps between “what is” and “what should/could be.”   HR Audits can be completed for each and every area of your business. 

In this series you will receive auditing tools and proven solutions that are geared specifically towards your business’ legal compliance.  Compliance auditing involves the systematic comparison of human resources practices against policy and/or legal requirements.  The output of the audit is a list of gaps between what is required and what is being done.  

By closing or minimizing gaps, an organization can increase legal compliance, ensuring that your business avoids fines, penalties and even imprisonment.   Most business owners are not trying to be negligent.  They are usually busy trying to create products and grow their companies.

Their business usually faces fines because they do not fully understand or are not aware of regulations.  In finance, auditing is routine.  Financial audits are regularly performed and their findings submitted to management. 

In human resources, auditing is not routine.  There are no laws or regulations requiring employers to audit company policies and practices.  However, because of the complexity of state and federal labor laws and regulations, it is common for employers to rely on their attorneys to review HR policies and practices.

Larger and more established organizations spend tons of money to develop internal guidelines for self-appraisal or independent review.  This compliance audit series will allow you to take care of your business’ HR Compliance without hefty legal fees and time consuming steps.  By using these audits, you can focus on what is really important to you…growing your business!

Here are a few examples of the most common compliance violations and possible penalties:

  • Wage Payment – Violation: A small business owner works the hourly, non-exempt employees nearly 50 hours each week, but only pays them for 40 hours.  Another business owner also works her employees 50 hours each week, and although she pays them for 50 hours, she only pays the regular straight time rate without overtime pay.  HR Tip!  The Fair Labor Standards Act requires employers to pay non-exempt employees time and a half for every hour over 40 hours.   Possible Action: FLSA violation – Several employees file “Wage & Hour” charges, which in turn lead to audits of ALL payroll records. Both employers are found to be non-compliant, one is required to repay two years of back pay, while the other is required to repay three years of back pay because it was determined that the violations were knowingly and willfully committed. (Even employees who did not file will receive back pay.)  If this actively continues for a second conviction, the violators can face imprisonment.
  • Employee LeaveViolation: A business owner with over 50 workers will not allow unpaid leave to an employee who requests time off to take care of a seriously ill parent.  This employee has been a full time employee (working 40 hours every week) with the company for over three years.  The employee was terminated for attendance due to the requested leave.  HR Tip!  Since the employee has worked more than the required 1,250 hours over the previous 12 months, they are eligible for FMLA Family Leave.  The Family and Medical Leave Act entitles an eligible employee to take up to 12 workweeks of job-protected unpaid leave to care for a parent with a serious health condition. See 29 USC 2612(a)(1)(C).  Federal law also requires employers with more than 50 employees to follow FMLA regulations.  In some states, the employee number can be as low as 25 employees.  Check with your state for specific employee counts for FMLA.   Possible action: The employee files a complaint with the Department of Labor, which leads to a DOL investigation and sanctions, as well as a very expensive employee lawsuit.  This FMLA Violation can cost your business: damages done including salary, benefits, anything incurred during the time up to 12 weeks.
  • Hiring – Violation: A small business owner asks an applicant if he has children during an interview.  The applicant is not hired, and she assumes it is because she said that she has three small children.   HR Tip!  Hiring Manager, Recruiters and anyone who interviews applicants should be trained on Equal Employment Opportunity regulations.  This should be refreshed annually.  Possible Action: The applicant files an EEO charge and ultimately a suit against the business.  The business owner is forced to pay extensive legal fees to defend against the suit.
  • Unemployment Compensation –Violation: A small company terminates an employee for work-related misconduct.  However, the company never provided the employee with an employee handbook, so he never signed a policy and procedure acknowledgment.  In addition, the company neglected to maintain a written file of the employee’s misconduct, so there is no documentation of the employee’s disciplinary history.  HR Tip!  It is imperative to have a thorough employee handbook along with signed acknowledgments from each employee.  For more information visit Startup Raw for products and tools to build an effective employee handbook.  Another tip!  Document, Document, Document!  Managers should be trained on Documentation.  Possible Action: Because the company cannot present documented evidence of the employee’s misconduct nor can it demonstrate that the employee should have known of the company policy, the company is charged with a costly unemployment claim.
  • Discrimination – Violation: An owner of a mid-sized construction company repeatedly overlooks a proven and capable female employee for promotion.  HR Tip!  Create an Affirmative Action Plan to avoid overlooking potential talent and avoiding costly fines.  Title VII violations are very costly and can be avoided with a proper AAP – Affirmative Action Plan.  Possible Action: The woman files an Equal Employment Opportunity charge.  The EEO investigation reveals that the employer has a history of only promoting men and has no legitimate business reason for not promoting her.  The company is forced to pay the female employee a large settlement to avoid a potentially more costly lawsuit.

And this list is just a few samples of simple cases.  It is nearly impossible for a business owner to keep up with all the regulations governing employee issues, so how do you avoid making a costly mistake?  How to tell if company is HR Compliant?  Are You Compliant? Are You Willing to Bet Your Business On It? 


Are you prepared for a governmental audit?  Do you know where your gaps are (everyone has gaps)?  Do you know how to close those gaps?  Do you want to give your company’s profits to government agencies?

Startup Raw is the answer!  We have made it easier for you to audit your compliance requirements.  This Compliance Audit Toolkit will make it easier for you to find those costly gaps and close them.  This tool will give you insight into your business’ HR functions, ensuring that you do not fall into compliance traps.  It will help you to remain compliant with Federal Regulations while avoiding substantial penalties!   The work is done for you! Just answers questions, and you can start eliminating those risky gaps!

Purchase Your Compliance Audit Tools Today! 

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