compliance checkup

Employment Compliance Checkup

The employment laws that apply to an organization are based on the number of employees, states where they have employees, whether or not business is done with the government and which benefit plans are offered.

The following compliance checkup questions and analysis will help you understand if you have areas of concern.

Functional Analysis

Reviewing all employment practices function by  function is the best method to uncover missing practices or violations. Having a comprehensive professional review done by an independent organization is recommended to ensure you are not missing something important.

  • Recruitment, Selection & Staffing – Do your recruitment ads, job applications, interview questions and selection practices inadvertently obtain information on candidate’s age, sex, religion, race, national origin, color, genetics or sexual preference? Is there intentional or unintentional bias or discrimination in your hiring practices? Are all communications, questions and selection practices job related?  Do you and others involved in candidate selection save the necessary information to defend hiring decisions?

Do you keep resumes, applications and interview notes for at least 6 months? Are all supervisors involved in interviewing and selection trained to ask the right questions, avoid the wrong ones and make decisions absent of illegal discrimination?

  • New Hire & Onboarding – Do you establish a clear understanding of “at will” employment through your job offer letters, employee agreements, new hire documents, and employee policy manuals? Have you created unintended employment agreements, contracts or benefits? Do you collect fully completed I-9 documents, W- 4s, benefit enrollment forms and other required documents? Do you classify employees correctly as exempt or non-exempt from the Fair Labor Standards Act? Do exempt employees meet both the salary and job tests? Do your independent contractor arrangements meet all requirements for a 1099 classification? Do you meet new hire reporting requirements with your local Work Force Services organization? Do you have workers’ compensation insurance on all employees?
  • Wage & Hour – Do you collect and track hours for all nonexempt employees? Do you pay overtime for work hours in excess of 40 hours per week? Do you meet state specific requirements for minimum wage and overtime? Do you pay for required training time, unauthorized work time, prep time & travel time? If bonuses are paid, do you calculate overtime based on total average wage? Are exempt employees paid a regular set wage? Do you pay exempt employees for the entire day for any day where they work any time? Do you meet state lunch and break requirements? Do you have written authorization for all payroll deductions? If you employ minors under the age of 18, do you meet special work hours, breaks and job restriction requirements?

Employment Files & Posting Requirements

Do you keep employee files and information restricted and secured? Do files keep confidential information separate from supervisor accessible information?  Do you display all required state and federal workplace posters?

  • Leave Management: FMLA, Military, and Maternity– If applicable, do you follow family medical leave requirements? Do you have a qualifying process and use proper documentation for all FMLA situations? Do you notify employees of their FMLA leave rights? Are supervisors trained to handle requests for medical, maternity and military leave? Do you have clear policies for all leave situations, especially medical, maternity and military leave?
  • Disability – Do you make reasonable accommodations, if requested by disabled employees? Are supervisors trained in how to respond to requests for work accommodations related to a disability? Do you have a formal process to review and approve requests for accommodation?
  • Terminations – Are you wrongfully terminating employees?  Do you meet WARN requirements for reductions in force? Do you meet federal and/or state requirements for final paychecks, payment of wages and unused vacation/PTO? Do you properly handle COBRA for qualified individuals? When discharging employees, are they handled professionally without escalating conflict or anger?
  • Corrective Action – Do you handle all employment decisions and actions consistently and fairly? Do you have defined disciplinary actions? Do you clearly define expectations and situations that warrant corrective action? Are leaders trained in how to coach employees and resolve non-performance issues?
  • Policies and Procedures – Do you have an up-to- date employee handbook? Are you missing any critical policies or procedures? Do you collect an acknowledgment of receipt from all employees? Are policy changes clearly communicated? Are all policies followed? Do you state that you have the right to modify your policies and practices? Are supervisors restricted from making binding statements contrary to policy in your handbook?
  • Benefit Administration – Are employees enrolled or provided with a waiver of medical and dental benefits within 30 days of eligibility?  Do you meet employee health and welfare notification requirements? Do you have COBRA administration in place that meets all federal and state COBRA requirements? Are you compliant with HIPAA regulations? Do you provide a Summary Plan Description or SPD Wrap for all health and welfare benefits?
  • Compensation – Do you pay similar wages for individuals in the same position? Do you have a method to assign pay differences that is job related? Can you defend pay differences for women and minorities in comparison to white, male employees?
  • OSHA/Safety – If applicable, do you meet all OSHA requirements? Do you have safety policies and practices that address all safety risks? Do you have required protective gear? Are employees trained in safety requirements? Do you have a hazards communication program? Do you maintain required OSHA log 300 for all accidents? Do you meet hazard communication requirements?  Do you have EPA concerns?

Knowing where your employment laws risks are and taking steps to comply are essential in today’s ever changing, increased enforcement environment.

by Ken Spencer, President, HR Service, Inc.

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