Do an HR audit at the start of each year
Today’s protection against tomorrow’s employment law claims is a human resources audit.
An audit is essential to keep the firm’s employment processes accurate and current – and also followed, says Joseph Godwin, human resources consultant for F&H Solutions Group in Ashville, NC.
The audit needs to be done every year, because with time, things get overlooked. Or bad habits crop up and people take easier routes such as signing off on incomplete I-9 Forms. Or new managers come in with their own HR methods and change things.
The places that most need attention are overtime, job applications, and record keeping. That’s where the majority of the problems arise.
The biggie: FLSA
Put compliance with the Fair Labor Standards Act at the top of the audit list, Godwin says. There are more overtime law suits each year than suits “for all other types of discrimination combined.”
The major dangers come from three areas.
Hourly versus salaried
First is the classification of hourly and salaried employees – or who is getting overtime and who isn’t.
No matter how honest the mistake, a misclassified employee can demand the unpaid overtime.
Check to see if the job descriptions are updated, he says, “because jobs change from time to time.” And managers tend to let the descriptions go, because writing and revising them “is a thankless, tedious chore.”
His advice is each year to have staff write down what they do and use that information to update the descriptions and see if the hourly people are still hourly. Employees’ own descriptions of their work give the most accurate picture of what their jobs entail.
And as to who is eligible for overtime and who isn’t, the rule is simple: “if it’s difficult to determine whether employees are exempt or nonexempt, they are nonexempt,” he says.
“That comes right out of the FLSA.” Using that line of thinking, the office won’t miss.
Unpaid time
The second great overtime danger is not paying people for the total amount of time they work, and that happens often and innocently, particularly with lunch breaks and office social events.
Everybody knows that worked lunch time is paid time. But what firms often don’t realize is that even a catered lunch where employees are there “just to get to know each other” is paid time – if the meeting is mandatory.
Early-morning meetings before clock-in time count too. If staff are required to be there 15 minutes early to discuss the day’s game plan, that’s paid time.
The same for social events. If an hourly employee is required to attend, that’s work time.
On the other hand, if the firm brings in lunch for everybody and nobody is required to show up and no work is conducted during lunch, that’s not paid time. But if people are expected to attend, it is.
Time records for exempt people
The third overtime audit spot should be whether the firm is keeping records of the work time for the exempt employees.
There’s no requirement to do so, Godwin says, but if one of those employees claims overtime violations, those records will be the office’s only defense.
The real risk is people who are “marginally exempt.” There’s wiggle room for them to assert they were actually nonexempt and claim back overtime. And if they are adjudged to be nonexempt and the firm doesn’t have any record of their hours, they win.
Godwin adds that response time is also important.
If someone comes in and says “I should be getting overtime” and there’s not an immediate response, “the next thing you know you have the Department of Labor at your doorstep.”
Audit – the hiring process
The applications
With hiring, the first item to audit is whether the job applications request the same information from everybody so nobody can claim discrimination.
Equally important, they need to ask only for information that is directly related to the job.
Surprising discrimination claims arise there, he says. For example, many applications still ask for both a current and permanent address. But no employer “needs to know where somebody used to live.” And an applicant whose permanent address is, say, Mexico might claim discrimination due to national origin.
Don’t ask for personal references either. That’s not illegal, but it’s scarcely job related, because no applicant lists somebody “who is going to say bad stuff.”
And suppose a reference has a surname that’s indicative of a minority and the candidate isn’t hired. Now the office “has information it didn’t need and didn’t want to know,” and the turned-down applicant can claim discrimination because of it.
There’s also a caution few employers ever think of: use an application form. And require candidates to sign a statement at the bottom that the information is truthful and accurate.
Don’t rely on a resume. “A resume is a marketing tool, not an application.” It’s designed to sell the job seeker. By contrast, an application form sifts out the marketing and shows the actual facts.
The people doing the interviewing
Next is the interview process.
Here the audit needs to evaluate whether the people who are doing the interviewing have been EEOC trained “and aren’t asking illegal questions.”
People with no training or who use unstructured interviews are prone to “shoot the breeze and talk about dogs and vacations.” And in doing so, they risk going into forbidden territories such as child care arrangements or what a spouse does for a living or “how old are your kids?”
“Interviewing is a learned skill,” he says. Without training, even an attorney can make mistakes.
The rejection letters
Another item to audit is the rejection letters.
There needs to be a format for them. Otherwise, a letter can go into too much detail. If it says the firm has selected a more qualified candidate, for example, there’s room for argument on qualifications.
Neither should the letter say “we’ll keep your application on file.” That same candidate can now claim discrimination in a later job opening.
The only information the letter needs to impart is “your application was unsuccessful.” People might consider that rude, he says, but it isn’t open to interpretation. The firm will never have to defend it.
Audit the record retention time
Yet another audit item is the record retention.
There need to be retention guidelines for everything pertaining to employment – job applications, I-9 Forms, promotions, transfers, terminations, and so on.
Those guidelines have to follow both federal and state laws. And for safety, Godwin recommends setting a retention period that’s longer than what’s required.
For example, the standard retention time for job applications is 180 days, because that’s the length of time an applicant has to file an EEOC complaint. But employers should extend that to a year, and preferably a year and two months. And for good reason.
If the employee files the complaint with a local agency that takes in complaints, the length of time for filing a charge is extended. And if the filing is done on the last day of that extension, the firm could be caught with no records to defend itself.
Audit the policy manual
Audit too the office’s policy manual. It’s easy for it to slip out of date.
Godwin gives the example of the FMLA provision that says employees must apply for leave. That’s what the law says, but over the years it’s become the employer’s responsibility to recognize when a request for time off falls into the FMLA category, and that needs to be included in the procedure.
The same with anti-harassment policies. The law itself doesn’t require employers to conduct training, but Supreme Court decisions have held employers liable for harassment if they haven’t provided training and haven’t set up a process for making complaints.
Beyond that, a change in office size can make the manual obsolete. A firm that has grown from, say, 40 to 55 employees now has to provide FMLA leave. Similarly, a firm that has added locations in other states now has to comply with regulations in those states. And some states have more stringent requirements than the federal statutes set out.