Compliance audits are on the rise, meaning employers need to be aware of pitfalls that could result in penalties and fines.
Increasingly, state and federal audits are being conducted to ensure companies large and small are complying with employment laws. Syndeo helps companies get in and stay in compliance.
In Kansas, wage and hour audits for exempt/nonexempt classifications are common. Some employers are being hit with large fines and backpay for unpaid overtime for employees who were improperly classified as exempt.
Form I-9 audits also are on the rise, which puts companies more at risk for criminal penalties when there is a pattern of compliance violations for failing to verify a person’s identity and employment eligibility.
But companies can stay ahead of the curve by performing a series of self-audits. These are steps businesses can take to be proactive and prepared should an actual audit take place. Violations likely bring about significant financial implications for companies and could be particularly detrimental for small and privately owned businesses.
Here are five of the most important human resources self-audits a company should do.
- Employee File Audit – This type of audit should be done to ensure employee I-9 forms are stored in a separate file and that no medical documents are included. An employee file audit also helps companies check for consistency in forms and check for compliance.
- I-9 Audit – This audit will help a business make sure it has an I-9 on file for every employee that is filled out completely and correctly. An I-9 audit also should show forms of terminated employees are being retained for the proper amount of time.
- Pay Equity Audit – A pay equity audit is designed to ensure employers have consistent and compliant pay practices and that any pay disparities are resolved.
- FLSA Exempt Status Audit – This is a way for employers to make certain they are in compliance with the Fair Labor Standards Act. Conducting an FLSA audit would help companies compare job descriptions with employee duties and responsibilities to ensure they are properly classified as exempt or nonexempt. This audit takes on more importance with the likely change to the overtime pay threshold, which is expected to take effect in January 2020.
- Employee Handbook Audit – Companies should periodically review their employee handbooks to make sure state and federal regulations are included and no potentially discriminatory language is included.
These should be part of a company’s overall risk assessment strategy.
The Society for Human Resource Management (SHRM) has compiled an audit checklist for employers to reference.
I-9 scrutiny increases
Of the five most important HR audits, I-9 documentation is getting the most attention amid an increased push for immigration regulation.
The U.S. Immigration and Customs Enforcement (ICE) has upped its I-9 scrutiny in recent years, serving thousands of audit notices to businesses across the country. For example, the agency issued more than 5,000 I-9 audit notices in the first half of 2018 alone, according to the ICE website.
That agency wants to ensure businesses are complying with existing law. I-9 audits coupled with fines for violations are ways ICE ensures businesses are compliant.
The goal is to crack down on employers that knowingly break the law, the organization says.
Willful and repeat violators are hit with fines ranging from hundreds of dollars to thousands of dollars per violation. Those organizations also could face criminal penalties and civil fines.
Syndeo can help
Staying on top of all of these self-audits can be challenging for employers, but they aren’t alone.
Using Syndeo as an outsourced employer services provider is a way for employers to offload compliance audits.
Syndeo conducts self-audits on the employer’s behalf, alerting them to any potential compliance issues and making recommendations on necessary changes that need to be made.
More information about the human resources services Syndeo provides is available online.
Contact us to learn more about how we can help your business.
About us: As the Heartland’s leading employer services company, Syndeo partners with local business owners to help them minimize risk, improve efficiency and maximize profitability allowing them the freedom to focus on growth and fulfilling their mission. Syndeo fulfills its mission by taking on all of the HR responsibilities for our clients’ workforce, including employee relations, benefits, risk management and payroll.
~Josh Heck, Marketing Manager, Syndeo