HR Audit: Mid-Year Check-Up for a Healthy Workplace
As we reach the midpoint of the year, it's essential for organizations to conduct a comprehensive Human Resource (HR) audit to ensure all policies, procedures, and practices are up to date and compliant with current laws. A mid-year HR audit provides an opportunity to address potential issues, make necessary adjustments, and plan for the remainder of the year. This article explores the key components of an effective mid-year HR audit, focusing on pay/minimum wage, PTO/sick time, benefits deductions, and training review and revisions.
Pay/Minimum Wage Review and Revisions
1. Compliance Check:
Minimum Wage Updates: Ensure the organization complies with current state and local minimum wage laws, including any mid-year adjustments.
For California employers, the minimum wage increased to $16.00 per hour, regardless of size, at the beginning of the year. This change also affected salary thresholds for exemptions, such as the administrative, professional, and executive exemptions, which now have a minimum salary threshold of $66,560 per year. Some cities and counties have higher minimum wages effective July 1, 2024. Visit California’s Department of Industrial Relations Minimum Wage for more information.
Classification Review: Verify that all employees are correctly classified as exempt or non-exempt according to the Fair Labor Standards Act (FLSA) criteria.
Labor Law Notice Updates: Ensure current labor law notices are posted in common areas or distributed digitally to all employees.
2. Pay Equity:
Conduct Pay Audits: Perform a pay audit to identify and address any pay disparities based on gender, race, or other protected characteristics.
Adjust Salaries: Make necessary salary adjustments to ensure fair and equitable compensation for all employees.
3. Payroll Accuracy:
Check Payroll Processes: Review payroll processes to ensure accuracy in calculations, deductions, and timely payments. For multi-state employers and especially those with a remote workforce, confirm employees’ addresses are up-to-date to ensure state and local taxes are deducted correctly.
Update Payroll Systems: Update payroll systems to reflect any changes in tax laws, benefits deductions, and wage adjustments.
PTO/Sick Time
1. Policy Review:
Check Compliance: Ensure that PTO and sick leave policies comply with state and local regulations, including recent updates or changes.
Evaluate Usage: Analyze usage patterns to identify any issues, such as underutilization or excessive use, and address potential causes.
2. Accrual and Carryover:
Accrual Rates: Verify that accrual rates for PTO and sick time are correctly applied and adjust as needed.
Carryover Policies: Review carryover policies to ensure they align with legal requirements and organizational goals, and communicate any changes to employees.
3. Communication:
Employee Awareness: Ensure employees are aware of their PTO and sick leave entitlements, including how to request time off and report sick days.
Documentation: Maintain accurate records of PTO and sick time accrual and usage to avoid discrepancies and ensure transparency.
Benefits Deductions
1. Benefits Administration:
Review Deductions: Check that benefits deductions are accurately reflected in payroll, including health insurance, retirement contributions, and other employee benefits.
Update Records: Update benefits records to reflect any changes in employee status, such as new hires, terminations, or changes in coverage.
2. Communication:
Inform Employees: Communicate any mid-year changes in benefits plans, including changes in premiums, coverage options, or enrollment procedures.
Feedback: Gather employee feedback on benefits offerings to identify areas for improvement and address any concerns.
3. Compliance:
Regulatory Changes: Stay informed about any regulatory changes affecting benefits administration and ensure compliance with all applicable laws and regulations.
Audit Procedures: Implement regular audits of benefits deductions to identify and correct any discrepancies promptly.
Training
1. Compliance Training:
Review Current Programs: Assess the effectiveness of existing compliance training programs, including sexual harassment prevention, workplace safety, and diversity training.
Update Materials: Ensure training materials reflect any new laws or regulations that have come into effect during the first half of the year.
California employers must establish, implement, and maintain a Workplace Violence Prevention Plan, effective July 1, 2024, which includes an employee training component. Those not subject to this requirement are teleworking employees and places of employment with fewer than 10 employees and are not accessible to the public.
Schedule Refresher Courses: Plan and schedule refresher courses to keep employees informed and compliant with the latest standards and practices.
2. Skill Development:
Identify Gaps: Conduct a skills gap analysis to identify areas where employees may need additional training or development.
Plan Training Programs: Develop and implement training programs tailored to bridge these gaps and enhance overall workforce capabilities.
Evaluate Effectiveness: Use feedback and performance metrics to evaluate the effectiveness of training programs and make improvements as needed.
Conclusion
A mid-year HR audit is a vital tool for maintaining a healthy and compliant workplace. By focusing on pay/minimum wage, PTO/sick time, benefits deductions, and training programs, businesses can ensure they are meeting legal requirements, supporting their employees effectively, and positioning themselves for success in the second half of the year. Regular HR audits not only prevent potential issues but also contribute to a positive and productive work environment, fostering growth and stability for the organization and its workforce.
Need help with your organization’s mid-year Audit? We’re here to help!