“My employees are doing fine”.
“The team is happy, they get along and talk all of the time”.
“I have really high employee survey scores, everything is great”.

Employees are satisfied…until they aren’t.  If you have indicators of strong employee engagement, that is fantastic!  Low turnover, good teamwork, positive vibe in the workplace – all great. This does not mean that we should forgo compliance audits because we think that everyone is happy, and no one would ever sue you.

All it would take is that 1 termination, that 1 person that decides to speak to an attorney.  Then one conversation about unfair treatment also becomes a conversation about meal breaks, promotions, consistency and KABLAM, it all goes crazy.

What gets measured gets done is the adage.  Same is true with compliance. If you audit, if you have solid recordkeeping and if you have accountability – then all of the items that you are tracking will get done.  If you never check on things, if you never have mini-audits, then you really have no idea of your risk and exposure.

Many times, a smaller company will not have an on-site HR.  Or even if you do have HR on-site, never assume that “all is fine”. HR Professionals can have varying degrees of experience, they could have been a specialist with a narrow scope of knowledge or they are new to your state and aren’t fully up to date on state specific laws (big challenge in CA!).

Performing HR Audits is a great practice to ensure strong, legally sound practices and procedures are consistently followed.  Being compliant with the many state and federal laws just makes smart business sense. The financial consequences are just too high to ignore it or to not be engaged in the HR function.

A good rule is to ensure all owners, GMs, all leaders are ALL “HR Leaders”.  They do not have to be fully versed in all employment rules, but they need to have an awareness of laws and rules and have enough knowledge to know when to call for support and help.

If you have no on-site HR, you can hire an HR Consultant to audit your business.  Many HR firms offer this service. It is always better to have self-discovery and correction rather than issues to be discovered through a lawsuit or state/federal agency audit.

If you have on-site HR or are interested in creating an audit yourself, there are many websites that can offer templates for no or low-cost.  They will at least get you on the right track. It may feel daunting to tackle a full HR audit in one sitting.

Breaking up the large audit and completing a manageable category once a week, or once a month may be more manageable. Don’t forget, in addition to the audit, you will be adding to the “to do” list along the way.  As you discover opportunities, you should be fixing those items as you encounter them, with a focus on state/federal compliance as a top priority.

A few areas in which you should include in your HR Audit:

·      Compliance (I-9, Confidentiality, Human Trafficking, CA (or other state) Sexual Harassment training, LOA processes, employee file, confidentiality files and Information Protection Agreements).

·      Payroll (records retention, meal breaks (CA), accuracy of payroll, manual punch edits, split shifts, tip credits, service charges, Wage Theft notices (CA) and CA Sick Time).

·      Wages and Benefits (wage scales, bonuses, 401 K compliance, incumbent wage reviews, Equal Pay Act).

·      Risk (JSAs, MSDS, work comp processes, Housekeeping MIPP (CA) and IIPP)

·      Talent Acquisition (lawful ads and job postings, consistent/lawful interviewing, records retention, onboarding and new hire paperwork).