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Fines, Fees, and Penalties: The High Price of Bypassing Your HR Audit

Posted by David Dee on May 15, 2021

In a busy healthcare practice, you put your patients first. Time-consuming tasks that don’t contribute to patient care are low priority. Often, HR audits fall into that category. After all, your office manager doesn't have any time to spare. Going through piles of employment paperwork can always be put off for another day, right?

Your HR audit is one pile of paperwork that can’t be put off. A small HR error can lead to big legal trouble, and you can’t identify and correct the issues if you don’t know about them. For example, if your vet techs aren't taking required meal breaks, you might not notice unless you review their timesheets.

Failure to comply with federal, state, and local employment regulations can result in substantial penalties — and that says nothing of the fines, legal fees, and bad press that follow. HR audits are intended to prevent problems before regulatory agencies get involved. 

Understanding how to conduct an HR audit quickly, efficiently, and accurately ensures you don’t find yourself explaining errors and omissions to the Department of Labor, the National Labor Relations Board, or one of the other agencies in charge of working conditions.

Table of Contents
What Is a Human Resources Audit?
Purpose of HR Audit
Types of HR Audits
I-9 Audit
HR Policies & Procedures
Departmental HR Audits
Safety in Healthcare
Hiring & Onboarding
Employee Training
Benefits & Compensation
How HR for Health Can Help


What Is a Human Resources Audit?

HR audits have a lot in common with other types of audits conducted in the healthcare field, such as quality audits and financial audits. However, instead of focusing on quality or financial data, they are a structured, deliberate review of your practice’s handling of employment from start to finish.

Through your HR audit, you examine your policies and procedures for staffing, managing performance, compensating your team, and providing a safe, productive work environment that complies with all federal, state, and local regulations. 

Purpose of HR Audit

During an HR audit, it is common to discover that you have the right policies and procedures in place, but your practice isn’t executing them consistently. You might find errors, areas where processes aren’t efficient, or missing documentation that is critical to meeting regulatory requirements. 

The HR audit gives you an opportunity to uncover and correct issues proactively, so you don’t find out about them through complaints from your team. Better still, once you have all the HR audit data in front of you, you are likely to notice opportunities to improve working conditions, increase engagement, and position yourself as an employer of choice.  

Types of HR Audits

The question of how to conduct an HR audit comes down to the type of HR audit you plan to complete. In most cases, you can partner with an HR professional to prepare an HR audit checklist with the relevant items, then conduct a systematic review to ensure every box is checked. 

The following are types of HR audits that belong on your to-do list.

I-9 Audit

One of the fastest ways to get unwanted attention from regulatory agencies is to have issues with employees’ I-9 documentation. The I-9 form was created with the 1986 Immigration Reform and Control Act (IRCA), and it essentially ensures that you have verified the identity of your employees and confirmed that they are authorized to work in the United States. 

I-9 forms should be the very first step in onboarding new team members, but mistakes happen. People forget to bring in the necessary identification, and no one follows up, or signatures are missing from the form. When you conduct an I-9 audit, you are verifying that you have an I-9 on file for every employee and that each document is fully and accurately completed. 

The U.S. Citizenship and Immigration Services division conducts I-9 audits from time to time. If your practice is selected and you are missing required forms, you can be sure fines, penalties, and legal fees will follow. 

HR Policies & Procedures

Ensuring you have the right policies in your employee handbook is a good first step in your HR audit. The second is to double-check that your policies comply with federal, state, and local regulations. 

Pay special attention to policies around attendance and leaves of absence. Many areas have laws that require paid sick time. These same laws  also prohibit adverse employment action against employees who take advantage of their mandated sick time. For example, if your hygienist uses all of their state-mandated sick time, you can't issue disciplinary action for attendance. Be sure your policies don’t conflict with these regulations.

Departmental HR Audits 

Sometimes, it isn’t practical to conduct an HR audit of your entire practice at once. In those cases, you may wish to go category by category. For example, you can start with ensuring basic employment records are up-to-date, then move on to validating payroll data, updating policies, and confirming completion of required training modules. 

Safety in Healthcare

Keeping your employees safe is a top priority — and certain safety measures are required by law. For example, you are expected to provide your team with appropriate personal protective equipment, and that goes for everyone from veterinary technicians to dental hygienists. Your HR audit is a good time to review safety procedures for compliance with workplace safety regulations. 

Keep in mind that many employers are required to post certain safety information. Your HR audit checklist should include a list of required posts. Once you have validated that you have them up, look to see whether any need to be updated. 

Hiring & Onboarding

There are all sorts of HR pitfalls during the hiring process, from which questions you can ask to the list of required forms. Including prohibited questions on your employment applications or failing to collect legally required information can lead to a variety of legal problems. 

As you work through your HR audit, check your hiring and selection procedure for any potential issues. For example, during the interview, you can’t ask candidates for office manager whether they have or are planning to have children, even if your practice specializes in pediatrics. 

Make sure all legally required new hire forms are part of your standard onboarding process and review the files of your current employees to validate that you have up-to-date information. During your HR audit, you might determine that it’s time to update and automate your new hire process to prevent incomplete or misplaced information. 

Employee Training

Your HR audit should cover your training programs because there can be an element of compliance here. For example, some states require training on discrimination and harassment, so it is critical to ensure you have documentation that every employee has completed it. 

Many of your employees have continuing education requirements that directly impact their license to practice. This includes all of your physicians and nurses. In certain states, it might also apply to technicians. 

Benefits & Compensation

When conducting an HR audit of your benefits and compensation package, the primary goal is to be sure you are complying with the law. For example, check that you haven’t missed any changes in the minimum wage. If you discover you have been underpaying an employee, now is the time to get the rate corrected. 

You may also want to take this opportunity to look at your compensation and benefits strategy. Are you staying competitive with other practices? That’s important for attracting and retaining top talent. 

How HR for Health Can Help

Conducting an HR audit is a lot of work. Creating your HR audit checklist, reviewing relevant materials, and compiling your results is just the beginning. Once you have identified concerns, you have to put together a plan to correct the issues. 

However, you can avoid the pain of an HR audit with tools and support from HR for Health. Save time and money by getting the right HR infrastructure in place from the start. Contact HR for Health here to learn more. 

Topics: HR Audit, HR Audit Checklist, How to Conduct HR Audit

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