How to Conduct a Human Resource Risk Audit
Transcript of How to Conduct a Human Resource Risk Audit
How to Conduct aHuman Resource Risk Audit
Lorie Floyd, PHR
HR Consultant
This training is designed to provide general information about the subject matter covered. Neither TAC nor the
trainers are engaged in rendering legal advice. If you need legal advice, TAC
recommends that you seek the services of a competent attorney who is familiar
with your specific situation.
Course Objectives
•What are HR Risk Audits
•Benefits of an HR Risk Audits
• Types of HR Risk Audits
• Tools to conduct HR Risk Audits
What is an HR Risk Audit?
A method to review HR risks for improvement.
Purpose of HR Risk Audit
Reveal Strengths
Find Weaknesses
Find Areas of Non-
Compliance
Determine Areas of Risk
or Liability
Objectives of HR Risk Audit
Communicate Findings
Questioning Seek Answers
Review and Modify
Benefits of HR Risk Audit
Identify Contributions of HR
Identify Gaps
Encourage Greater Responsibility
Ensure Timely Compliance
General HR Risk Audit Method
• Develop an understanding of proper policies, practices, processes, procedures
• Develop an understanding of all federal and state regulations regarding area of audit
• Create a plan for how audit will be completed and who will be informed of outcome
• Audit and review documents, policies, procedures
• Create a plan for correction of any deficiencies
Frequency of HR Risk Audit
Conduct Continuously
Review Regularly
Types of HR Risk Audits
Compliance• Federal Laws
• State Laws
Types of HR Risk Audits
•Payroll
•Policy
•Record Retention
•Benefits
•Hiring Process
•Termination Process
Functions
HR Audit Best Practices
Workers Comp
Benefits
Policies
Software
Posters
Employees FLSA
I-9’s
Record
Retention
FMLA
I-9 Audit
Create Audit Checklist
List of Current Employees
List of Employees Terminated in the Past 3 Years
I-9 Audit
I-9 Audit
FMLA Audit
Create Audit Checklist
Policy
Reviewed and Updated in the last two years
Provided copies/notice to all employees within the last two years
Employees
List of Employees who Requested FMLA during past 2 years
Copies of each FMLA Form on each employee requesting FMLA last 2 years
What is required
• Review Notice of Eligibility on Each Employee
• Review Medical Certifications
• Review Designation Notice on Each Employee
• Required Benefits Continued
FMLA Audit
FMLA Audit
Reinstatement
• Review Fitness for Duty
• Review proper Job Reinstatement
• Review Benefits restarted properly for dependents if employee chose not to continue
FLSA Audit Create Audit Checklist
Policy
Reviewed and Updated in the last two years
Provided copies/notice to all employees during the last two years
Employees
List of Employees who terminated during past 2 years
List of all current employees
FLSA Audit
Policy Audit
• Overtime Policy
• Salary Structure or Compensation
• FLSA Status, including partial exemptions
• FLSA Safe Harbor Policy
FLSA Audit
Proper Wage Payment
• Hourly Salary correct with Budget
• Salary correct with Budget
• Regular Rate Calculation Correct
• Overtime Payment Correct
• Comp Balance Correct
FLSA Audit
Record Keeping
• Timesheets properly completed
• Accurate calculations
• Signatures
• Leave balances correct
• Comp balances correct
Wrap Up – HR Risk Audit
• HR Risk Audit is a process of examining Policies, Procedures, Practices, documentation and systems
• Purpose is to reveal strengths and weaknesses of county HR Risks
• HR Risk Audit works best when the focus in on analyzing and improving the county HR functions.
HR Risk Audit Tools
Human Resources Consultants
NorthwestDiana Cecil(512) 924-6360
NortheastMichele Arseneau(512) 461-1667
SouthwestDiana Cecil(512) 924-6360
SoutheastLorie Floyd(512) 765-2128
SoutheastSouthwest
NorthwestNortheast
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I-9 Audit Checklist
List of current employees hired since November 6, 1986.
List of employees terminated in past three years.
Original or electronic copies of all I-9 forms (both current employee forms, as well as forms for terminated employees within current retention requirements).
I-9 Employer Handbook published by the USCIS (optional).
I-9 Document
Section 1
Name, address, maiden name and date of birth are completed.
Social Security number is voluntary, except for employers who participate in the E-Verify program.
Employee identified his or her citizen/immigration status.
Employee signed and dated the form on the date of hire.
Preparer or translator section is completed if someone other than the employee completed Section 1 on behalf of the employee.
Section 2
One document from List A is listed and completed or one document from List B and one from List C are listed and completed.
Proper document has been entered into the proper list. List B item is, in fact, listed under list B and not List C or List A.
Certification has been completed, and a representative of the company has signed and printed his or her name and dated the form within three days of date of hire.
Business name and full address are completed.
Section 3
Completed if the employee’s work authorization expired or if the employee was rehired.
Missing I-9s
Compare lists of current and terminated employees with I-9s to identify whether the I-9 is on file for each employee. Employees hired before November 6, 1986, are not required to have completed I-9s.
For current employees, require employee to present documentation and complete I-9 with current dates. Date of hire will be the employee’s actual date of hire, which may have been years earlier. Attach memo to the I-9 explaining the discrepancy between the date of hire and the date for completion of the I-9.
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For former employees, note the absence of the I-9 with a memo to the file and retain it with other I-9 forms.
I-9s with Errors
If the I-9 is easily corrected, corrections have been made on the I-9 form. Errors are crossed out with one line, corrected information is noted and initialed by the person making corrections.
If the I-9 is not easily corrected, employee completed a new I-9.
The old I-9 is attached to the new I-9. Do not throw away the old I-9.
Photocopies of List 2 documents, if they exist, are attached to the I-9 and are readable. It is not mandatory to make photocopies, but if they are made, they must be kept. And if photocopies are made for one, they must be made for all.
Memo is completed, dated and attached to I-9s for any terminated employees with missing or incorrect I-9 information. (Documenting this shows the employer made a good faith effort to have correct I-9s by performing an audit.)
Memo is completed with current date and explanation that an I-9 audit was completed and what was done to correct the I-9. Attach this memo to each I-9 that is corrected.
The list of the I-9s containing errors is completed. (This is the audit log that shows you have made a good faith effort to ensure I-9 compliance. The log should contain three columns: employee’s name, the errors and what actions were taken to rectify the error.)
The I-9 is filed in proper official I-9 file (either current employee or terminated employee).
I-9 Retention calculator
Employee Name __________________________
Date of hire: _______________+3 years = ____________________ Date A
Date of separation ______________+1 years = ________________ Date B
Take the later date (A or B) and enter in the box below:
I-9 RETENTION DATE
Retain this employee’s I-9 until this date
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FMLA Audit Checklist
Policy ___ Has policy been reviewed and updated in past 2 years? ___ Do all current employees have a policy acknowledgement signed within past 2 years? Employees ___ List of all employees who requested FMLA in past 2 years? ___ Copies of all completed FMLA paperwork during past 2 years? Forms ___ Have Notice of Eligibility on all employees who requested FMLA in past 2 years? ___ Have Designation Notice on all employees who requested FMLA in past 2 years? ___ Have Medical Certification on all employees as required by FMLA policy? Notice of Eligibility ___ Completed within 5 days of employee notice? ___ Name Correct? ___ Dates are correct? ___ Correct eligibility reason checked? ___ Notice to inform correct? ___ Contact name completed? ___ Where to find poster filled in? ___ Date of Medical Certification? ___ Contact for Insurance completed? ___ Leave Use checked per policy? ___ Periodic Reports? ___ Calculation per policy checked? ___ If Military Leave, date included for 26 week beginning? ___ Where to find policy completed? ___ Other leave conditions completed? ___ Contact completed?
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Designation Notice ___ Completed within 5 days of Medical Certification Return or if no Medical Certification sent with Notice of Eligibility? ___ If FMLA approved, checked? ___ If continuous leave, number of weeks filled in? ___ Intermittent Leave, this box checked instead? ___ How leave use is per policy and correct box checked? ___ Fitness for Duty Box Checked and Job Description attached? ___ If leave not approved, what additional information is needed is completed? ___ If leave not approved, box checked that states why? Medical Certification ___ Policy followed for the requirement of medical certification? ___ Medical Certification is complete and has doctor’s signature? FMLA Employee Reinstatement ___ Fitness for Duty paperwork was provided by employee prior to reinstatement? ___ Employee reinstated to same or equivalent job? ___ Benefits properly restarted for dependents on day of return, if employee stopped them?
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FMLA Administration Checklist
___ Does the county have 50 employees or more, not including elected officials?
___ FMLA policy in place that is updated in the past 2 years?
___ Under 50 employees needs a policy – TAC sample available.
___ Completed forms and records for all employees taking leave are available and accurately
completed within 5 days of employee notifying county.
___ Complete records of dates and hours of FMLA leave taken
___ Job descriptions attached when ‘Fit for duty” is required.
___ Have you provided employees with General Notice of FMLA Rights? (Poster)
___ Is the employee eligible? 12 months and 1250 hours?
___ Use the department of labor provided forms for accurate notice of status to the employee.
___ Do you have a fair and consistent policy regarding medical certifications?
___ Is the medical certification complete?
___ Do you have a process in place to address incomplete medical certifications?
___ Did the employee get the proper time to get medical certification completed?
___ Have a statement for employee to sign who refuses to cooperate in the FMLA process.
___ Have a process in place in case there is a need for second and third medical opinions.
___ Do you have a process in place for Military Family Leave issues?
___ Do you have a process in place for Military Care Giver Leave?
___ Have you provided designation of leave in writing to employee?
___ Has the county policy clearly designated the 12 month leave year?
___ Does the county policy require substitution of comp, sick and vacation to provide paid FMLA?
___ Does the county maintain health benefits for the FMLA period?
___ Does the county have a process in place to collect employee contributions where required?
___ Does the county have a policy in place to contact employee when FMLA leave is about to
expire?
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FLSA Audit Checklist Policy
___ Has policy been reviewed and updated in past 2 years? ___ Do all current employees have a policy acknowledgement signed, that includes the use of Compensatory time, in the past 2 years? ___ Does County have separate overtime policies for regular employees and law enforcement employees. ___ Does County have a description of Exempt and Non-exempt employee’s status? Employees
___ List of all current employees? ___ List of all employees terminated in past 2 years? ___ Are all salaries correct with budget? ___ Are non-exempt hourly salaries calculated correctly? ___ Are non-exempt employees regular rate calculation correct and include all salary?
___ Longevity ___ Certification Pay ___ Stipends ___ All other salary, except what is exempted by FLSA regulation
___ Overtime pay calculations are accurate and according to timesheet? ___ Compensatory balances are accurate and according to timesheet? Timesheets
___ Timesheets for all required positions? ___ Timesheets are properly completed by employee? ___ Timesheets have accurate calculations? ___ Timesheets have employee and supervisor signatures? ___ All leave balances are accurate? ___ Sick ___ Vacation ___ Compensatory Time
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FLSA Recordkeeping Checklist
___ Are you paying overtime/comp time to nonexempt employees who work more than 40 hours in
a work week?
___ Does your timekeeping system accurately record all hours worked?
___ Do you have controls in place to prevent off the clock work?
___ Do you have written documentation (FLSA test) to prove exempt status is accurate?
___ Does the employee meet all requirements for exemption?
___ Are you complying with the salary test?
___ Do you have accurate job descriptions to support exempt status?
___ Are you including allowed breaks in hours worked?
___ Are you properly paying dispatchers as 40 hour employees?
___ Are you properly accounting for time on timesheets for officers caring for policy dogs?
___ Have you calculated non-exempt employee’s regular rate in accordance with the FLSA?
___ Regular rate includes:
___ Salary or hourly rate of pay
___ Longevity
___ Unaccounted uniform allowance
___ Unaccounted cell phone allowance
___ Shift differentials
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Application Process Checklist
___ Do you have a policy? If so, follow it. ___ Do you take unsolicited applications? ___ Are you properly collecting EEO-4 data? ___ Is your job application in legal compliance with no illegal questions asked? ___ Do you use a standard application. Require all applicants to use it. ___ Do you have FMLA Poster where applicants can review? ___ Follow application retention rules. (2 years) ___ Review job description for changes and updates. Make changes. ___ Post all job openings per your policy. ___ Make sure position is budgeted. ___ Job opportunities are made available to individuals without regard to any protected status
(race, sex, national origin, religion, color, etc.) except where allowed by law. ___ If you use third parties for recruitment, review contracts for compliance with all federal and
state laws. ___ Best practice is a standardized hiring process, if not training is crucial
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Hiring Checklist
___ Have you conducted reference checks?
___ Have you conducted criminal background checks?
___ Have you conducted pre-employment drug testing?
___ Have you conducted pre-employment physical, where required?
___ Has new employee received an employee handbook?
___ Has new employee returned signed handbook acknowledgment?
___ Is employee properly classified as non-exempt/exempt.
___ Have you completed all new hire paperwork?
___ Review applicants not hired for any red flags.
___ Has employee attended or been scheduled for new employee orientation?
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Performance Evaluation Checklist
___ Conducted at least annually, in a timely manner.
___ Use standardized form.
___ Avoid subjective and inappropriate comments.
___ Use job related, objective factors to evaluate.
___ Complete forms completely.
___ Attach any supporting documentation.
___ Include positive and negative assessments.
___ Not over rated meets expectation employees.
___ Conduct face to face meeting to go over the document with the employee.
___ Revisit as appropriate to monitor deficiencies and corrections offered at face to face meeting.
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Discrimination Checklist
Go through the following statements to ensure that you are not discriminating against an
employee or applicant.
___ Identify the “essential functions” of each job and have a written job description.
___ Are all employment decisions focused on “job-related” abilities and skills?
___ Is your employee’s individual performance of the essential duties of their job how you make
employment decisions?
___ Are there any protected status red flags? If there are red flags when making employment
decisions, proceed with caution.
___ Did you clearly and concisely document everything you did with your legal reasons for making
your decisions? If not, stop action and consult with HR or legal counsel.
___ Did you make hiring decisions based on appearance, associations or personal habits? Did
you take age into your employment decision? Did you make any employment decision based
on military service, workers’ comp claims or any whistleblower activities? These may not be
legal reasons to make your decision.
___ If you received a complaint, did you take it seriously? Make certain all complaints of
discrimination or harassment are immediately investigated.
___ Do you use an exit interview to find out where problems may exist?
___ Do you conduct audits of your employees work environment to make certain they do not have
any inappropriate items such as, posters, cartoons, jokes etc. displayed?
___ Do you talk with your employees about discrimination and harassment and emphasize that you
expect them to behave appropriately and that you do not allow any inappropriate behavior?
___ Do you allow for alternative religious holidays and arrange for your employees to have time off
if needed?
___ Do you treat pregnant woman who are unable to work the same as any other temporarily
disabled employee?
___ Do you treat all requests for accommodations seriously and get outside assistance when
needed to make the right choices on accommodations? Make certain you listen to your
employees and recognize their requests for accommodation.
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Records Retention Checklist
___ Obtain a copy of the county records retention schedule from the State Library.
___ Clearly define what is meant by a record.
___ Identify the HR retention periods for the different documents kept by HR (HR meaning
designated department responsible for Employee Records).
___ When there is a conflict in retention period, always retain for the longer period.
___ Limit access to HR documents to only those with a legitimate business need.
___ Designate the location and format of each record you are maintaining.
___ Ensure the physical security of the records, no matter the format the record is in.
___ Identify how the records will be disposed of once retention requirement is met.
___ Always protect employee privacy.
___ Retention rules must be consistently applied to ensure compliance.
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Poster Compliance Checklist
These are the posters that you need to have up for both federal and state laws:
___ Workers' Compensation Program–You need Notice 6, Notice 8 (for building sites) and Notice 9; All forms: https://www.tdi.texas.gov/forms/form20employer.html Notice 6: https://www.tdi.texas.gov/forms/dwc/notice6.pdf (01/13) Notice 8 (for building sites): https://www.tdi.texas.gov/forms/dwc/notice8.pdf (12/15) Notice 9: https://www.tdi.texas.gov/forms/dwc/notice9.pdf (12/15)
___ Employer's Notification of Ombudsman Program to Employees
https://www.oiec.texas.gov/resources/notice.html (9/1/13)
___ Uniformed Services Employment and Reemployment Rights Act
https://www.dol.gov/agencies/vets/programs/userra/poster (April 2017)
___ Fair Labor Standards Act https://www.dol.gov/agencies/whd/posters/flsa (07/16)
___ Family Medical Leave Act https://www.dol.gov/agencies/whd/posters/fmla (04/2016)
___ Equal Employment Opportunity Act and Americans with Disabilities Act
https://www.eeoc.gov/employers/eeo-law-poster (11/09)
___ You Have the Right to Not Remain Silent (Whistleblower)
https://www.texasattorneygeneral.gov/sites/default/files/files/divisions/general-
oag/WhistleblowerPoster.pdf (7/12)
___ Texas Hazard Communication Act https://www.dshs.texas.gov/hazcom/publications.aspx
(05/2018)
___ COBRA https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-
center/publications/protecting-retirement-and-health-benefits-after-job-loss.pdf (September
2018)
You can go to the links below and print your own posters.
http://www.twc.state.tx.us/ui/lablaw/posters.html
http://www.tdi.texas.gov/forms/form20employer.html
https://www.dol.gov/general/topics/posters/
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Policies Checklist
The following list are only those policies that should be included in the county personnel manual to
ensure compliance with federal and state employment laws. You will naturally have other county
policies in addition to these.
___ Fair Labor Standards Act (FLSA)
___ FLSA Safe Harbor policy
___ Consolidated Omnibus Budget Reconciliation Act (COBRA)
___ Health Insurance Portability and Accountability Act (HIPAA)
___ Americans with Disability Act as Amended (ADAAA)
___ Anti-Discrimination policies
___ Family and Medical Leave Act (FMLA)
___ Workers Compensation policies
___ Drug Free Workplace
___ Uniformed Services Employment and Reemployment Rights Act (USERRA)
___ Employment at will policy
___ Equal Employment Opportunity
___ Nepotism
___ Conflict of Interest
___ Anti-Harassment and Sexual Harassment
___ Political Activities
___ Nursing Mothers Breaks
___ Drug and Alcohol – All employees
___ Drug and Alcohol – Commercial Driver’s License Holders (CDL)
___ Workplace Violence
___ Retiree Rehires
___ Social Security/Medicare
___ Retaliation
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Job Descriptions Checklist
___ Do you have a written job description for every job?
___ Is the job title correct and not inflated?
___ Is the FLSA status included?
___ Are the essential job duties clearly defined and separated from all other duties?
___ Are the educational requirements included and not inflated?
___ Are the job qualifications and skills included and not inflated?
___ Are the physical requirements listed for each essential duty and clearly described?
___ Are the working or special conditions properly identified?
___ Has the employee signed the job description signifying they can complete all essential
functions and physical requirements?
___ Has the job description been updated and re-issued within the last two years?
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Pre-Termination Checklist Before terminating an employee, make sure to go through this checklist to reduce the risk of
litigation.
___ Have well publicized rules of conduct. This includes county wide policies, as well as
department policies. Make your expectations well known.
___ Communicate your performance expectations. Use written documentation and be extremely
honest and concise. Do not over evaluate your favorites or under evaluate your least favorite.
Fairness must rule.
___ You must be candid when communicating to employees on their day to day performance and
conduct. Let them know frequently how they are doing.
___ You must be uniform and consistent in your application of all standards and rules, you must
effectively monitor your employee’s performance and behavior.
___ You must document all of your actions. If you give a verbal warning, document it. Be specific.
What is the infraction, when did you tell the employee, how you told the employee, what
correction did you specify, did you give a timeframe for improvement. Make sure that you
have everything in writing, that the employee signs and acknowledges the warning(s), and that
you give the employee a copy of the documentation.
___ If behavior continues, follow-up immediately. Do not procrastinate. Do a complete
investigation if there are allegations of misconduct.
___ Take prompt action on disciplinary and performance problems.
___ Appropriately use progressive discipline, when possible. Counsel employees when there
performance or behavior is below standard.
___ Have another manager or legal counsel review your basis for significant employment
decisions.
___ You should always, in advance, know when, where, and how you will terminate someone’s
employment. The meeting should be in person, in private, and timed to avoid unnecessary
embarrassment.
___ Only involve other personnel as needed. Everyone in the office should not be involved or
included. Do not use any one person as an example to others.
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What to Include in Personnel Files
Employment
Employee's original employment application and or resume Prescreening application notes Employment interview report form Education verification Employment verification Other background verification Rejection letter Employment offer letter Employment agency agreement if hired through an agency Employee Handbook acknowledgment form showing receipt of Handbook Checklist from new employee orientation showing subjects covered Veterans/Disabled self-identification form
Payroll
W-4 Form Weekly time sheets Individual attendance record Garnishment orders and records Authorization for release of private information Authorization for all other payroll actions
Performance Appraisals
New employee progress reports Performance appraisal forms Performance improvement program records Written performance warnings
Training and Development
Training history records Skills inventory questionnaire Training evaluation forms In-house training notification letters Training expense reimbursement records
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Employee Separations
Exit interview form Final employee performance appraisal Exit interviewer's comment form Record of documents given with final paycheck
Wage/Salary Administration
Job description form Job analysis questionnaire Payroll authorization form Fair Labor Standards Act exemption test Compensation history record Compensation recommendations Notification of wage and or salary increase/decrease
Employee Relations
Report of coaching/counseling session Employee Assistance Program consent form Commendations Employee written warning notice Completed employee suggestion forms Suggestion status reports
Employee Benefits Other Than Medical
Vacation accrual/taken form Request for non-medical leave of absence Retirement application Payroll deduction authorizations Safety training/meeting attendance/summary forms
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What Should Not Be in A Personnel File
Maintain Separate Files
The Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires employers and health care providers to protect medical records as confidential, separate and apart from other business records. That means we may no longer retain medical information in a personnel file. Here are some examples of information you should extract from your personnel files and place in separately protected files as medical information:
Health insurance application form Life insurance application form Request for medical leave of absence regardless of reason Personal accident reports Workers' compensation report of injury or illness Any other form or document which contains private medical information for a specific
employee.
Benefits
Medical/Dental/Vision coverage waiver/drop form COBRA notification/election Hazardous substance notification and or reports Annual benefits statement acknowledgment
Medical Records
Physician records of examination Diagnostic records Laboratory test records Drug screening records Any of the records listed above in the discussion on HIPAA Any other medical records with personally identifiable information about individual employees
Investigation Records
Discrimination complaint investigation information Legal case data Accusations of policy/legal violations
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Workers Compensation Files
First Report of Injury and Subsequent Worker’s Comp Reports Physician records and documentation Notifications and correspondence from Worker’s Comp Carrier Safety Records
I-9 should be kept separate and apart from employee personnel files. (Many government agencies
are authorized to inspect your I-9 forms when they visit your location. If you have them in your
personnel files, it may raise additional questions or issues.)
Should Not Be Kept in Any File
Insupportable Opinions
Marginal notes on any document indicating management bias or discrimination (e.g.: "This guy's too fat. He'd never make it," or "She's too old for this job.")