Why HR Audit And Importance Of Audit

Why HR Audits?

Statistics compiled by Jury Verdict Research show that employment lawsuits have risen 400% in the last 20 years, with the average compensatory reward   in federal employment cases now exceeding $490,000.

Compliance Regulations are innumerable!



The (EEOC) Enforcement collected 372.1 million in 2015.  The average cost to employers $165,000 without Lawyer, with a lawyer could be $1,000,000.   An employer could land in prison for ignoring the Compliance Laws.  Over 44% of managers say that they are not able to keep up with changing laws.  Over 70% of employers are not fully F.M.L.A. compliant.

Here is one example,

The September 18th 2017 verdict from (ICE) and (DOL) lead to charges against the Pennsylvania Asplundh Tree Experts, CO.  The company was ordered to pay 95 Million for civil and criminal penalties for hiring and rehiring undocumented workers over a six year period.  I-9 and E-Verify is very important for recruiting employees.  Here are some penalties for violations.

Can you afford to be fined up to 50% of your gross annual revenue? If not, then you need to read this…

  1. If you are not compliant with I-9’s, you can be fined up to half of your annual revenue.
  2. If you are not compliant with the Department of Labor’s FLSA status, you can be fined $1,100 per violation.
  3. If you are not compliant with the Affordable Care Act’s offer of coverage, you can be fined $2,160 per employee over the first 30 employees.
  4. If you are not compliant with ACA reporting, you can be fined $50 per (employee) report if you are 30 days late up to a maximum of $500,000.  Forms filed late but by August 1st, fines go up to $100 per (employee) report up to $1.500,000.  Forms filed after a final date or not at all, fines can go up to $3,000,000.  There are multiple forms.  Which ones?  Our ACA and Compliance Toolkits have all the specifics to get you on the right track and compliant!
  5. And more…

Unfortunately, some companies do not perform third party Human Resources audits with the misconception that there is probably nothing serious that needs to be addressed.  They may be scared of what they will find, or they may not know what to look for.  Other companies just do not think that certain regulations apply to them.  Due to the extensive amount of agencies and regulations that exist, the scary truth is that there are so many legislative and regulatory updates that can be easily overlooked.      

In this volatile environment companies open themselves up to penalties, fines, employee grievances and even could land in prison due to violations.  When a company does not perform periodic reviews then its policies & procedures may be outdated, exposing the company to the risk of non-compliance.  These are headaches that you do not want to address with these agencies. 

Regulatory Audits are very cold and uncomfortable, not to mention time consuming and stressful for your staff.  Preparation is the only way to avoid or reduce a company’s risk of penalties.  

Look to pinpoint problems with HR administration practices and legal compliance that are ambiguous, deficient or non existent.  Compliance Toolkit will fine tune your policies, procedures and HR administration practices to ensure that the company is following key regulations.

Statistic: 75%-90% of employers are not compliant according to DOL.  They know companies are not compliant!  30,000 new officials are now employed to audit every company in AMERICA!  Now is the time to be compliant! 

Why Audits are Important?

Why HR Audits are important?  Here are a list of agencies that penalize companies financially.  Here are 67 important reasons: 

  1. ADA Accommodations
  2. Affordable Care Act
  3. Affirmative Action
  4. Age Discrimination Employment Act (ADEA)
  5. Age Harassment 
  6. Age Discrimination
  7. COBRA Requirement Notice
  8. Consolidated Omnibus Reconciliation Act (COBRA)
  9. Cost of living adjustments (COLA)
  10. Consumer Credit Protection Act of 1968
  11. Disability Discrimination
  12. Documents
  13. Drug Free Workplace Act
  14. E-Verify
  15. Electronic Communications Privacy Act (ECPA)
  16. Employment Leave
  17. Employee Retirement Income Securities Act (ERISA)
  18. Equal Employment Opportunity Commission (EEOC)
  19. Equal Pay Act (EPA)
  20. Exempt And Non-Exempt Employees
  21. Employees Polygraph Protection Act
  22. Fair and Accurate Credit Transactions Act of 2003 (FACT)
  23. Fair Credit Reporting Act (FCRA)
  24. Fair Labor Standards Act (FLSA)
  25. Family And Medical Leave Act (FMLA)
  26. Federal Insurance Contributions Act of 1935 (FICA)
  27. Firing And Terminations
  28. Genetic Information With Disabilities Act (GINA)
  29. Handbooks
  30. Health Insurance Portability And Accountability Act (HIPPA)
  31. Hiring Incentives to Restore Employment Act of 2010 (HIRE)
  32. Immigration Reform And Control Act (IRCA)
  33. Independent Contractors
  34. Interviewing Process And Questions
  35. Lilly Ledbetter Fair Pay Act of 2007 & 2009
  36. Mental Health Parity And Addiction Equity Act (MHPAEA)
  37. National Labor Relations Act (NLRA)
  38. National Origin Discrimination And Harassment
  39. Occupational Safety And Health Administration (OSHA)
  40. Older Workers Benefits Protection Act (OWBPA)
  41. Overtime
  42. Problem Employees
  43. Racial Harassment
  44. Religious Discrimination And Harassment
  45. Sarbanes -Oxley Act of 2002
  46. Self-Employed Contributions Act (SECA)
  47. Sexual Harassment
  48. Severance Agreements
  49. Temporary Employees
  50. Title VII of the Civil Rights Act of 1964 (Title VII)
  51. Transgender Employees
  52. Uniformed Services Employment And Reemployment Rights Act (USERRA)
  53. Unions
  54. National Labor Relations Act (NLRA) Wagner Act
  55. If Company Has Contracts or Government Contracts (VEVRAA)
  56. Wage And Hour Law
  57. Workers Adjustment And Retraining Notification Act of 1988 (WARN)
  58. Outdated Polices From Regulation Updates
  59. Processes in place to communicate policies and procedures to all employees
  60. Process for recruitment and plan to reach every group for compliance
  61. Process for training on-boarding
  62. Classifications of positions for exempt or not exempt
  63. Employee benefits comply with regulations
  64. Employee behavior policies
  65. Employment fairness practices
  66. Policies regarding harassment are explicit in the workplace
  67. There are multiple forms that need to be completed and sent out throughout the year to agencies.

Regulations Continue To Increase  

The amount of regulations climb each year.  Here is a chart with the regulations that were enacted through Law for compliance from the 1900’s, 1940’S, 1980’S and in 2018.  This is why HR Audits are important.  The compliance agencies know that 75% of companies are violators of compliance.  The agencies change the Laws each year on some of these regulations making it harder for companies to keep compliant.  They are penalizing companies with civil and criminal penalties.  People are being ordered to pay fines and some are even incarcerated.  The penalties are adjusted each year and there is an increase of agency audits up to 78% each year.  Here is the chart of regulations from 1900 to 2018.

How To conduct An HR Audit?

DIY Option: HR Compliance Product

We offer a less costly option for HR Audits for people with a budget.  We understand that companies are struggling and need reliable options that they can trust.  Our certified professional expert developed a toolkit for small companies to perform the audit themselves with guides to follow to correct problems themselves for a fraction of the cost.  The product will guide you in process of HR audit. The HR audit process has annual calendars and HR audit checklist 2020 with procedures and filings to ensure compliance HR audit template.  Human resources audit program with HR audit checklist in excel and HR audit spreadsheet.

You Can Audit Your Company 


What The Human Resources Audit Toolkit Will Audit?

HR records audit: It reviews that the correct forms are present in employee files and that you have specific forms separated on each employee in another file.  There is a third file folder for a specific form as well.

I-9 audit: This audit review is for every employee I-9 form to verify that each form is filled out correctly.

HR policy or handbook audit: This audit reviews the policies to ensure that the company is up to date on the current Laws.

HR Hiring process audit: This type of audit is for the hiring process to ensure non-discriminatory towards candidates and that there is a plan that offers opportunities in place to protect your company from allegations.

HR compensation and benefits audit: This audit reviews benefits packages that they meet certain requirements, filings of records being spate from employees files and cobra policy requirements are compliant.

Wage and hour practices audit: This type of audit reviews the wage status of employees that should be exempt or non-exempt.  The scope of overtime practices in the company and lunch breaks within certain time frames of a shift.

HR functional audit: The communication from each function to the C-Suite to ensure that other areas of HR are performing tasks.

Job description audit: This type of audit reviews job descriptions and update them for accuracy and compliance.

Training and development audit: This type of audit assesses the employee onboarding and analyzes gaps in training.

HR hiring process audit: This type of audit is for the hiring process to ensure non-discriminatory towards candidates and that there is a plan that offers opportunities in place to protect your company from allegations.