An internal HR audit reveals whether you’re complying with the law and helps you avoid potential liabilities and employee lawsuits. Below are some focal points to address during the audit.

Recruitment and Hiring

Job descriptions, postings and interviews are compliant with federal and state laws, including the Americans with Disabilities Act (ADA).
Interview questions are not discriminatory.
Background checks, reference checks and drug-testing policies adhere to federal and state laws.
Job offer letters clearly state that employment is at will.
Employees are properly classified as exempt or nonexempt.
Independent contractors are classified as such and not as employees.
I-9 forms are appropriately completed.
New-hire reporting requirements are met.
Completed tax forms for each new hire are on file.
Orientation and onboarding practices are in line with company policy.

Compensation

Pay practices, including minimum wage and overtime, comply with the Fair Labor Standards Act (FLSA) and state requirements.
Only permissible deductions are made from exempt employees’ pay.
Nonexempt employees are paid according to their timekeeping records.
Incentive pay and promotion programs are developed in an equitable manner.
Employees are paid no less frequently than required by state law.
The company has a formal compensation plan that aligns with business objectives.

Benefits

Voluntary benefits such as health, wellness and retirement plans are administered according to laws such as the ACA, ERISA, COBRA, EEO, ADA and IRC.
Benefit plan options and changes are effectively communicated to employees.
Disclosure and filing requirements are met.
Paid time-off policies are based on standardized procedures.
Mandatory benefits, such as workers’ compensation and FMLA leave, are provided as required by law.

Core Policies and Procedures

Company policies meet federal and state criteria, including those relating to equal employment opportunity, sexual harassment, and health and safety.
Each employee receives a handbook detailing the company’s policies and procedures, code of conduct, and terms of employment.
Labor law posters are displayed in conspicuous areas of the worksite.
Personnel files and other employment records are retained as mandated by law.
The company has a formal training plan, which describes training and development procedures for leaders and rank-and-file employees.
HR policies are applied consistently and fairly across the organization.

Performance Reviews

Evaluations are conducted on each employee at least annually.
Evaluations are done according to established guidelines.
Performance issues, corrective actions and disciplinary measures are carefully documented.

Termination

Terminations are based on company policy and the law.
Procedures are in place for collecting company property from departing employees.
Supporting documents, such as written warnings and resignation letters, are appropriately filed.
Separated employees receive a written notice explaining their post-termination benefits.
Final paychecks are delivered by the next regular payday or the state-mandated deadline.

An HR consultant can help you identify additional areas to cover during the audit.