how to conduct an hr audit

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CONDUCTING HUMAN RESOURCE (HR) AUDITS

By Donna Rogers, MEd., SPHR


APPROVED FOR 2.0 HRCI RECERTIFICATION CREDITS

HRCI program number sent to you via email upon program completion.


WELCOME

www.rogershr.com

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LEARNING OBJECTIVES

�  Know what to ask or where to look to determine the company effectiveness of the HR function

�  Identify any restraining forces that affect the achievement of company goals and strategies

�  Identify any potential compliance issues that can affect a company’s defense in an employment practices and polices case

� How to conduct an HR Audit

�  Practice using sample tools that can be tailored and used in your organization.

HR AUDIT What is it?


AUDITING THE HR FUNCTION Process involves 5 questioning steps:

Define What should our HR functions be?

Rate How important is each function?

Grade How well are functions performed?

Improve What needs improvement?

Feedback How effectively does each use resources?


WHAT DO WE WANT TO AVOID?

WHAT IS AN HR AUDIT

� Analyzes HR effectiveness. � Keeps executives current on HR activities. � Allows HR managers to cut or enhance

programs. � Use a checklist. Some basics include:

� Posters � Files � Reporting


IF YOU DON’T WHO WILL?

� Department of Labor (DOL) � Office of OFCCP � Occupational Security & Health Administration

(OSHA) � Equal Employment Opportunity Commission

(EEOC) � IL Human Rights � IL Workers Compensation Commission � U.S. Citizenship & Naturalization Services (INS)


EEOC COMPLAINT PROCESS

EEO complaint filed.EEO complaint filed.

EEOC notifies employer.EEOC notifies employer.

EEOC reviews charges andassesses "reasonable cause."

EEOC reviews charges andassesses "reasonable cause."

If reasonable cause isfound . . .

• EEOC attempts conciliation.• Employer required to provide

remedies to settle.

• EEOC attempts conciliation.• Employer required to provide

remedies to settle.

If reasonable cause is notfound . . .

• EEOC notifies both parties.• Complainant is notified of right to

sue.• EEOC involvement ends.

• EEOC notifies both parties.• Complainant is notified of right to

sue.• EEOC involvement ends.

Charge is settled or may go tolitigation with EEOC or private court.

Charge is settled or may go tolitigation with EEOC or private court. Complainant may sue in court.

Complainant may sue in court.


MINIMAL HR AUDIT RESOURCES

� Federal DOL Poster Page: http://www.dol.gov/compliance/topics/posters.htm

� IL DOL Poster Page: http://www.state.il.us/agency/idol/Posters/poster.htm

� OSHA Doc’s Order Page: http://www.osha.gov/pls/publications/pubindex.list

� IL Employment Law Links Page: http://www.state.il.us/agency/idol/laws/laws.HTM

� Poster company who only charges $40 a year to update (as of 2011) 1-877-321-4144


FEDERAL POSTING REQUIREMENTS

�  “Job Safety and Health Protection” �  “Equal Employment Opportunity is the Law” �  “Fair Labor Standards Act (FLSA)”

�  “Fair Labor Standards Act (FLSA) Minimum Wage Poster. “

�  “Employee Right for Workers with Disabilities/Special Minimum Wage Poster” �  “Your Rights Under the Family and Medical Leave Act” �  “Uniformed Services Employment and Reemployment Rights Act” �  “Notice to All Employees Working on Federal or Federally Financed Construction

Projects” �  “Notice to Employees Working on Government Contracts” �  “Notice: Employee Polygraph Protection Act” �  “Notice: Migrant and Seasonal Agricultural Worker Protection Act” �  “H2A”


ILLINOIS AS AN EXAMPLE: WHAT ARE YOUR STATE POSTING REQUIREMENTS?

�  “Notice to Employers and Employees” – *This poster includes the information needed for Payment of Wages, Child Labor Law, Minimum Wage Law, and the One Day Rest in Seven Act.

�  “Employee Classification Act of 2008” �  “Minimum Wage Law” �  “Equal Pay Act of 2003” �  “Victims’ Economic Security and Safety Act (VESSA)” �  “Day and Temporary Labor Service Act” �  “Right-to-Know (Toxic Substances Disclosure)” �  “Workers’ Compensation Notice” �  “Notice to Workers About Unemployment Insurance Benefits” �  “Emergency Care for Choking”


WHO THE LAWS APPLY TO


Assessing the Effectiveness of Your HR Strategies (M&J p. 52)

Evaluating

•  Using Records •  HR Audit •  HR Research for Assessment •  HR Performance and Benchmarking •  Return on Investment (ROI) •  Economic Value Added (EVA) •  Human Resource Information Systems (HRIS)


HR AUDIT TOOLKIT HTTP://WWW.SHRM.ORG/RESEARCH/ARTICLES/ARTICLES/PAGES/HRBASICSHUMANRESOURCEAUDITS.ASPX


HR AUDIT, INC. HTTP://WWW.HRAUDIT.COM/

SOME AREAS TO CONSIDER

Big Picture The Details

�  Strategic Plan Implementation

� Communication

� Change Readiness

�  Turnover/Data Retention

�  Regulatory Compliance

� Administrative/Staffing Levels

�  The Employment Process

�  Policies/Employee Handbook

�  Job Descriptions

�  Performance Appraisal Process

� Compensation

� Affirmative Action

�  Training


STRATEGIC PLAN IMPLEMENTATION

� Are employees aware of the strategic initiatives

� Are these initiatives a part of job descriptions, performance appraisals, incentive compensation and developmental/training curriculum

� Great article on this topic available at: http://www.hraudit.com/auditing-the-strategic-contribution-of-hr-3.html

Mission: To support company-wide operations by providing the following services: • Company Vehicle Administration • Copy and Fax Machine Administration • Duplication Center Services • Forms Control & Promotional Item Admin to Field and HO • Forms Design (IS and HR Support) • HO and Assoc. Mailing Services • Micrographic Services • Policy Files/Central Records Retention & Dist • Shipping & Receiving Staff: 1 Manager 4 Supervisors 3 Forms Administrators 3 Shipping/Rec. Specialists 2 Duplication Tech 2 Assistant Supervisors 4 Screeners 7 Messengers 8 Assoc. Mail Sorters 2 Inserter Operators 3 Special Mail Clerks 18 Filers 3 Office Clerks 1 Graphics Designer 3 Micrographics Tech

Mission: To operate and maintain the home office facilities. • Building maintenance • Building mechanical operation • Cleaning/Custodial services • OSHA/EPA Compliance • Oversee contract services • Purchase/install furniture • Security/Safety services Staff: 2 Managers 1 Secretary 2 Supervisors 2 Grounds Maintenance Staff 6 Maintenance Staff 1 CAD Draftsman 7 Engineering Staff 1 Electrical Services 1 Facilities Coordinator

ORGANIZATIONAL SERVICES MISSION: TO PROVIDE QUALITY CUSTOMER SERVICE.

Mission: To meet the needs and exceed the expectations of the organization, our employees, and the community through effective partnerships which facilitate the development of a successful workforce, ensure fair and equitable treatment, and increase value to make The Franklin Life Insurance Company the best place to work. • Employee Relations • Employment/Recruiting • Food Services • Human Resource Data Base System/Payroll • Job Evaluation • Salary Administration • Training and Education Staff: 1 Associate Director 4 Managers 1 Supervisor 3 Analysts 4 Specialists 2 Corporate Trainers 2 Clerks 1 T&E Coordinator 1 Receptionist

Office Services Human Resources Facilities Services


COMMUNICATIONS

�  Employee idea collection, analysis and response process

� Newsletter/Web-site

� How is information disseminated

� Dispute resolution process

�  Employee (satisfaction) survey

�  Internal communication program


CHANGE READINESS

�  Performance measurement criteria alignment with objectives

�  Sense of urgency to implement key initiatives


THE EMPLOYMENT PROCESS

�  Recruitment process

�  Interviewing

�  Sourcing

�  Screening

POLICIES &/OR EMPLOYEE HANDBOOK

� When written/revised

� Content

� Documented

� Up-to-date

�  Followed consistently

� Diversity

� Drug

�  Privacy

� Harassment

�  Violence

� Disciplinary

� Dispute-conflict mediation-resolution


JOB DESCRIPTIONS

� Available for all positions

� ADA compliant

� Up-to-date and in alignment with strategic plan

�  Job Classifications – Profile and Number

�  Job re-classification process


PERFORMANCE APPRAISAL PROCESS

�  Formal process

�  Regularly scheduled

� Have reviewers received training

� On-time completion monitors

� Analysis of organization-wide results

ONGOING COACHING CYCLE

Set Objectives & Observe Performance Behavior Expectations

Give Immediate Feedback and Coach

Give Summarize Summary Feedback Observations

Evaluate Feedback


COMPENSATION

� Grades and ranges � Internal equity analysis � External equity analysis � Merit pay � Bonus plan


SAMPLE ANALYSIS Grade Female

Salary Yrs in Grade

Male Salary

Yrs in Grade

Female Sal. Diff.

Female-Yrs In Grade Diff.

14 $76,699 1.7 $84,346 2.5 –$7,647 –.8

10 $49,115 1.6 $49,382 2.3 –$267 -.7

6 $31,074 3.2 $27,900 2.8 $3,174 0.4


INDEPENDENT CONTRACTOR UNEMPLOYMENT TAX & IRS ISSUE


FLSA: COMMON ERRORS TO AVOID

� Assuming that all employees paid a salary are not due overtime

� Improperly applying an exemption � Failing to pay for all hours an employee is “suffered or permitted” to work

� Limiting the number of hours employees are allowed to record


COMMON ERRORS TO AVOID

� Failing to include all pay required to be included in calculating the regular rate for overtime

� Failing to add all hours worked in separate establishments for the same employer when calculating overtime due


COMMON ERRORS TO AVOID

� Making improper deductions from wages that cut into the required minimum wage or overtime. Examples: shortages, drive-offs, damage, tools, and uniforms

� Treating an employee as an independent contractor

� Confusing Federal law and State law


TURNOVER DATA/RETENTION

� Information available � Analysis conducted � Exit interviews conducted


REGULATORY COMPLIANCE

� ADA policy

�  FMLA policy

� COBRA

� HIPAA

�  FLSA

�  EEO-1

�  State & Federal notices posted

�  Litigation and complaints


IMPORTANCE OF FEDERAL AND STATE LAW COMPLIANCE

� Essential in avoiding serious and costly legal ramifications: � In recent years, the Employment Standards

Administration’s Wage and Hour Division (WHD) recovered more than $220 million in back wages for over 341,000 employees.

� A current statistical pole shows that more than 311k employees received a total of $180.7 million in minimum wage and overtime back wages as a result of Fair Labor Standards Act (FLSA) violations.



� The latest investigative findings by the U.S. Department of Labor show a total of 4,672 minors found illegally employed, an average of 3.7 minors illegally employed per investigation.

� The average compensatory award for new discrimination cases is $485,298. This reflects a continuing upward trend.

� In any employment case filed in Federal court, there is a 16% chance that the award will exceed $1 million and a 67% chance that the award will exceed $100,000.



� State courts continue to offer plaintiffs higher awards in discrimination cases. Compensatory awards are 39% higher in State court cases overall. Wrongful termination claims are 260% higher in State court cases.

� If an employment lawsuit goes to trial, plaintiffs are more likely to win than the defendant/employer. In State court, plaintiffs won 67% of all trials (63% in Federal court).


Posting Violations

Federal Equal Employment Opportunity is the Law

Contract sanctions can be imposed for uncorrected violations.

Federal FMLA $100 per offense

Federal Employee Polygraph Protection Act

Secretary of Labor can bring court actions and assess civil penalties for failing to post.

Notice to Migrant and Seasonal Agricultural Worker Protection Act

A civil money penalty may be assessed.

Federal OSHA Poster A civil penalty of up to $7,000

CAL/OSHA Poster (California) A penalty of up to $1,000 per violation


OSHA:

Citation Penalties

Willful Violations $5,000 to $70,000 (depends on severity of violation)

Failure to post OSHA Poster $1,000


Department of Labor: Citation Penalties Violations of Equal Employment Opportunity is the Law

Appropriate contact sanctions may be imposed for uncorrected violations.

Violations of Fair Labor Standards (Minimum Wage) Up to $10,000 per violation for violations of Child

Labor provisions; up to $1,000 per violation of Minimum Wage or Overtime Pay provisions

Violations of Employee Polygraph Protection Act Secretary of Labor can bring court action to restrain violators and assess civil money penalties up to $10,000 per violation. The violator may also be liable for the employee or prospective employee’s legal fees and any lost wages and benefits.


ILLINOIS AS AN EXAMPLE: WHAT ARE YOUR STATE LAW COMPLIANCE REQUIREMENTS?

� Child Labor Law. � Day and Temporary Labor Services Act. �  Farm Labor Contractor Certification Act. �  Industrial Homework Law. � Minimum Wage Law. � One Day Rest in Seven Act. �  School Visitation Rights Act. �  Street Trades Law. �  IL Wage Payment and Collection Act – State and Federal government

employees are exempt. �  Employee Classification Act.


CONTD

� Employment of IL Workers on Public Works Projects Act. � Environmental Protection Act. � Labor Arbitration Services Act. � Prevailing Wage Act. �  Illinois Procurement Code. � Worker Adjustment and Retraining Notification Act (WARN) –

This is both a Federal and State law. The State law is more restrictive on the employer. This Act applies to employers with 75 or more full-time employees and does not apply to Federal, State, or local governments.


CONTD

�  Child Care Act of 1969. �  Personnel Records Review Act. �  Right to Privacy in the Workplace Act. �  Administrative Hearing Rules – The Rules of Procedure apply to all

administrative hearings conducted under the jurisdiction of the Illinois Department of Labor.

�  Carnival and Amusement Rides Safety Act. �  Health and Safety Act – Applies to public workers; private sector employees

have similar protections under OSHA. �  Safety Inspection and Education Act. �  Toxic Substance Disclosure to Employees Act. �  Equal Pay Act of 2003 – Applies to employers with 4 or more employees.


CONTD

�  Victims’ Economic Security and Safety Act – Applies to employers defined as “the State or any agency of the State; any unit of local government or school district; or any person that employees at least 50 employees.

� Displaced Homemakers Assistance Act.

� Nurse Agency Licensing Act.

�  Private Employment Agencies Act.


CONTD

�  *End Note: Effective October 1, 1998, State and Federal laws require all employers to report each new and rehired employee to a State Directory of New Hires (20 Illinois Compiled Statute 1020, and section 313, Personal Responsibility Work Opportunity Reconciliation Act of 1996, 42 U.S.C. 653A). Congress and the States adopted these laws to increase child support collections on both State and National levels and reduce fraudulent unemployment and worker's compensation payments. In Illinois, employers submit information on newly hired or rehired employees to the Illinois Department of Employment Security (IDES), New Hire Directory. IDES then forwards the data to the Federal Office of Child Support Enforcement (OCSE), where it becomes a part of the National Directory of New Hires.


AFFIRMATIVE ACTION

� Data

� Numbers

� Actions


TRAINING

� Budgeted � Needs analysis conducted and documented � How are needs determined � Providers � Record of Company-wide skills inventory � Record of individual training record � Training results evaluation system

SAFETY

� Signs � Training � HAZCOM � Exposure Control � Emergency Evac � EMOD � MSDS


ADMINISTRATIVE STAFFING LEVELS

� Experience level and expertise of staff � Training and developmental resources � Use of technology � Growth history and projections � Performance expectations � Organizational culture


WHAT QUESTIONS DO YOU HAVE?

[email protected] 217-414-1297


APPROVED FOR 2.0 HRCI RECERTIFICATION CREDITS

HRCI program number sent to you via email upon program completion.


THANK YOU!

Donna Rogers | www.rogershr.com

how to conduct an hr audit

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