What Can Make You Fail Your HR Compliance Audit?

 I heard some horror stories the other day from a freshly minted HR generalist who, soon after starting her job, was startled by a Paul Revere-like cry from the company’s general manager rushing into the HR department. “The auditors are coming!”, she declared. “Who here knows how to handle the HR compliance audits?” Blank stares were her only reply. Apparently the departed HR generalist had handled that task before, but in the intervening months before the new hire, no one had backfilled her functions. Unfortunately for this company, the generalist had never taught any of the other HR representatives how to do these audits. As this awareness dawned on her, the new hire was sitting there thinking, “Uh oh.”

And she was right: this wasn’t going to be a quick study. Preparation for the compliance audit consisted of plowing her way through a tall stack of policy manuals and legal tomes. She began her dizzying introduction to the alphabet soup world of FMLA, FLSA, USERRA, ERISA, and EEOC. The ACA (Affordable Care Act) hasn’t even kicked in yet but that’s got to be high on her reading list to prepare for the changes required in 2014. She learned that even if no lawsuit occurs, there are plenty of other circumstances that can cost you, such as having to pay back wages to non-exempt employees.

This is a lot of information for an inexperienced line worker to absorb, not to mention a lot of responsibility in terms of discernment and interpretation required to make sure her company isn’t guilty of unlawful employment practices.

What boggles my mind is how many companies rely on newbies like this as their front line of defense when it comes to addressing the multitude of compliance issues affecting treatment of employees. While I applaud the hardworking and intelligent corps of recent graduates and new initiates to the field of HR administration, I think they could use some backup – and so could their companies.

A good HRIS system will have compliance audit features built in, using data that automatically percolates throughout the system as employee actions are decided and executed. It will have controls that prevent legal mistakes, without forcing every new employee to suddenly become an expert on employment law. When your HR processes are thoughtfully guided, with automatic stops and alerts to prevent careless or rookie mistakes, you don’t have to rely on a member of the class of 2011 or 2012 to tell you if the company has exposure to employment lawsuits.

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