HR Advisors Weblog

AUDITING YOUR HR FUNCTIONS

01/18/2012 02:00 AM

Evaluate Your Practices and Policies with an Independent Review

There are different types of HR Audits.  Some companies conduct an internal audit, a compliance audit that focuses on relevant regulatory requirements, and a processes and practices audit.

External expertise is crucial to the success of the audit.  HR auditors are well-versed on compliance requirements, risks and current best practices.  Obtaining the results of your HR audit will give you factual information about where you are and where you could be.  The company can then transform information into action, creating specific action plans and designing longer-term plans for continuous improvement.

For some employers, there might be a “Risk Mitigation” Audit performed.  This usually is triggered by a specific compliance violation or another major problem related to the violation of an HR rule or principle.  This type of audit is designed to ensure that existing policies and procedures are effective and are being followed.

These are the types of audit services that can be performed:

• Compliance Audit – covers federal and state regulations that impact recordkeeping, reporting and HR program administration.
• I-9 Audit – reviews active I-9 forms, terminated I-9 forms or both
• HR Program or function audits – covers a review of any individual HR-related functional area (i.e. recruitment function)
• Full HR Audit – covers a review and evaluation of areas noted above as well as an audit of all other HR functional areas, including staffing and recruitment, job analysis and job descriptions, compensation and benefits programs, performance management, training and development, employee relations and policies and HR metrics.

With a small or single-person HR department it isn’t easy to stay abreast of ever-changing regulatory compliance and human resources best practices. Audits bring HR expertise into the picture and can jump-start needed discussions and process changes for small companies. Larger companies may opt for a more comprehensive audit initially before refining subsequent audits to focus on more specific areas.

Payroll frequently represents a major component of HR audits because it represents the single largest expense in many organizations. One would be amazed at how many times we find issues with people inappropriately taking money through payroll.

The specific steps of an HR audit are set forth by the Society for Human Resource Management:

1. Determine the scope and type of audit
2. Develop the audit questionnaire
3. Collect the data
4. Benchmark the findings
5. Provide feedback about the results
6. Create action plans
7. Foster a climate of continuous improvement.

By knowing what to expect and being open to change, an HR audit can assist any size organization become better prepared to deal with the ever-changing laws and best practices that might come their way each year.

    HR Magazine

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WAGE AND HOUR HOT SPOTS FOR 2012

01/11/2012 10:53 AM

WHAT’S IN STORE AS WE BEGIN 2012?

Look for the DOL (Department of Labor) Wage and Hour Division to be even more aggressive in 2012! Where you used to receive a letter, then a phone call, and then an investigator, now you will get more than one approach at the same time.

Stacie Caraway, of Miller & Marin states that one of her clients is getting daily aggressive phone calls!

Where you used to be able to Self-Audit, the DOL will now insist that the investigator make back pay determinations.  Where you could typically resolve complaints with full back pay, the DOL will now likely want to assess civil penalties and those dollars go back to the Wage and Hour Division to fund more investigations.

The DOL is also increasingly teaming up with other agencies – state agencies, workers’ comp, unemployment and tax agencies, all of whom have an interest in failure to pay or underpayment of employees.

Another attorney, Charles Plumb of Macaffey and Taft says we can also expect:

• More aggressive action by all agencies
• More sharing of information between agencies
• Aggressive investigators that want to see every piece of paper
• Increased scrutiny of wage and hour settlement agreements
• The adding of state law claims to many federal claims
• Continued emphasis on independent contractors
• Increased activity from an increasingly more sophisticated and knowledgeable workforce.
• No end in sight in wage and hour litigation – the availability of attorneys’ fees makes this area a lucrative one.

With all of these changes either in place or on the horizon, it is crucial for you to get up-to-date on the latest employment law developments so you can keep your organization in compliance and avoid costly legal entanglements.

 

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Employee Handbook Pitfalls

11/17/2011 03:15 AM

Courtesy of the law firm of Lehr Middlebrooks & Vreeland, here are common pitfalls to avoid when you are writing your employee handbook:

1. Avoid “legalese” and jargon – Even lawyers should not write an employee handbook like lawyers.  Employment policies should be written in clear, easily understandable language.  Avoid jargon from your industry.  Remember:  the most important reader of your handbook in your new employee, who is unlikely to be familiar with acronyms or jargon.
2. Avoid ambiguity - Choose your language carefully.  Be sure that all of your employees will know what you’re talking about.  Ensure clarity.
3. Don’t overdo it - Don’t attempt to make your policies so comprehensive that a court might assume they’re intended to cover every conceivable situation.  A common mistake is to draft very specific policies and then disregard them.  Leave yourself flexibility in your policies and procedures.
4. Don’t underdo it - Your employee handbook is your opportunity to communicate critical information to employees about their legal rights under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, and their California counterparts – as well as other important terms and conditions of employment.
5. Make sure you don’t have contracts to sign – The last thing you want is to be contractually bound by an employee handbook.  The handbook is a tool to communicate with employees, not a contract.  Remember that employment is presumed to be “at will” in California unless you, as the employer, do something to mess it up.
6. How progressive should you be? - Many employers get caught in very rigid progressive discipline policies.  Progressive discipline should reserve flexibility for you to apply any step of discipline, including termination, at any time without having applied earlier steps or given previous warnings. Always leave yourself flexibility when drafting disciplinary policies.

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A Judge’s Tips for Staying Out of Court

11/15/2011 01:17 PM

The Honorable Denny Chin, former U.S. District Court Judge, and now Court of  Appeals judge, made his remarks at a Labor and Employment Law Seminar put on by attorneys in New York City.

Here are Judge Chin’s tips to avoid seeing him in his court:

1. Don’t Discriminate.  Know the rules and make sure your decisions are based on legal business reasons.
2. Supervise your supervisors.  Communicate with them, train them, watch them, and deal with infractions.
3. Be brutally honest with employees.  Terminated employees who believe that they had no warning that their work was substandard are angry and juries are sympathetic.  If you withhold information, you will pay.
4. Grade low.  If a “poor” performance rating follows a string of “high” ratings, it looks suspicious.
5. Never say or write anything you will regret.  One bad sentence in an otherwise routine communication will catch the jury’s attention.  Also, remember that many employees will surreptitiously record conversations.
6. Make a record, but not unfairly.  If you have written no memos for years, and then you write a sudden string of memos right after the employee makes a complaint, the jury will construe a case of discrimination.
7. Don’t let a weak discrimination case become a strong retaliation case.  Remember that employees have a right to make complaints without retaliation.  All too often the discrimination case is thrown out but the retaliation case sticks.
8. Be fair even if you don’t have to as a matter of law.  Staying out of court – which is an HR priority is a challenge given the change in the laws, stretched budgets, and over-worked people.

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Plan, Prevent, Protect

09/30/2011 10:25 AM

The Department of Labor (DOL) is beginning increased enforcement and they expect to generate $7 Billion of additional revenue over the next 10 years.

The DOL’s Goals are to implement the PLAN – PREVENT – PROTECT Program designed to assure that employers regulated by the DOL take responsibility for employment law compliance as Congress requires.

The Regulations will require:

• PLAN – Require employers to prepare a written plan for identifying and remediating risks of legal violations (for example: explain why certain workers are classified as independent contractors)
• PREVENT - Require employers to implement the plan in a manner that prevents legal violations and risks to workers.
• PROTECT - Requires employers to ensure that the plan’s objectives are met – for example: implement a misclassification initiative, including working with the IRS and state labor agencies to target employers who are not classifying workers properly.

What should a company do? – the answer is:  AUDIT – AUDIT – AUDIT!!

It’s back to basics.  Attorneys Gray and Joseph suggest that you look closely at the following areas:

• Exempt/Non-Exempt classifications
• Independent Contractor Classifications
• Improper Deductions/Docking
• Recordkeeping
• Posters
• Paying for all “Work” – Bonuses Calculated in Overtime, Travel Time, Waiting Time/On-Call, Working off-the-clock, etc.

The DOL isn’t the only source of challenges – the IRS is also mobilizing to combat misclassification with a National Research Program that will target 6,000 businesses. Targets will be selected at random and will cover five employment tax-related issues:

• Worker Misclassification
• Fringe Benefits
• Non-Filers
• Officers’ Compensation
• Employee Expense Reimbursements

 

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Termination? Do you have the correct policies?

09/20/2011 01:30 AM

The most lawsuits occur when employers terminate an employee.  Your termination policy is critical!

Types of Termination:

Voluntary:  written resignations, job abandonment, extended absences without proper notification, retirement, refusal of a transfer after job elimination, failure to report for light duty, failure to report status during a leave of absence, and failure to return after leave of absence.

Involuntary:  Permanent layoffs, discharge for cause, death, disability

Policies:

Severance Pay: What are your guidelines (how many years of service to obtain certain levels of severance)? Are there any situations where severance will not be granted?

Unemployment compensation: Do you have required procedures or paperwork?

Sick Leave/Vacation Pay/PTO: Does a terminating employee receive pay in lieu of unused time?

Health/Life Insurance:  When does insurance terminate? What opportunities exist to continue coverage? How about COBRA coverage?

Compensation: What rules govern final paychecks? What will be the status of bonus payments and commissions? Stock options, etc.?

Repayment of Debt: What provisions will cover repayment of loans or advances or other outstanding debts?

Perqs: What policies govern the return or purchase of company cars? What will happen with club or gym memberships?

Dismissal Procedures and Responsibilities: Who makes the final decisions about terminations? Who must approve? Who must be notified, when and how?

Company Property: Whose responsibility will it be to ensure that the employee returns all company property, drawings, tools, reference data, uniforms, ID cards, credit cards, keys, etc? Computers, BlackBerry, and other electronic equipment?

Reference Letters: What will the policy be with respect to letters of reference?

Exit/Termination Interview: Will you require exit interviews? Who will conduct them? 

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MORE REASONS EMPLOYERS GET SUED

05/07/2011 02:00 AM

In our last blog, we looked at five of the TOP TEN reason employers gets sued.  Here are the next 5:

6.  Uninformed Supervisors. You must train your supervisors and update them on your policies and relevant workplace laws and do that before you distribute new policies to employees.

7.  Uninformed Managers. The same goes for your managers, only more so!  If managers resist HR Training, Janus says a powerful motivator is telling them that, in some cases, a court may find them individually responsible if a lawsuit ensues.  And in every case, causing enormous liability for the company is not usually a good career move.

8. Incorrect Exempt/Non-Exempt Decisions. It is imperative that everyone with compensation responsibilities be trained in the requirements of the FLSA – Fair Labor Standards Act on this issue.  And, warns Janus, “The longer unlawful overtime exemption situations exist, the more expensive they become.”

9. Docking Employees Illegally. Legal ways of reducing employees’ pay for disciplinary reasons are very limited, so managers are advised to consult with HR before taking this step.  Janus notes that “substantial penalties apply” for illegal docking.

10.  Illegal Reduction in Overtime Rate. Some workers “make deals” with their employers to work overtime at less than the required rate.  This is illegal, warns Janus.  “Employees cannot waive their right to overtime.”

 

- HR Daily Advisor

 

 

 

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