Can you afford NOT to conduct an HR Audit?

December 20, 2017

Guest Blog by Kimberly Prescott, SPHR, SHRM-SCP, Maryland Nonprofits Associate Consultant

Finances aren’t the only things that your organization should audit each year. Just as important is an audit of a business’ human resources policies and procedures. An HR audit gives organizations the opportunity to identify potentially problematic policies that may not be in compliance with federal or state regulations in an effort to reduce the risk of expensive lawsuits or fines.

To prove just how costly HR compliance lawsuits can be, take a look at the penalties assessed in these recent investigations conducted by the US Department of Labor (DOL):

The Safety Harbor Resort & Spa in Tampa, Florida, was required to pay 37 employees over $30,000 in back wages as a result of an investigation conducted by the Wage & Hour Division of the DOL after it was found to have violated several provisions of the Fair Labor Standards Act’s (FLSA) overtime, minimum wage and record-keeping regulations.

 A company based in Kentucky (Bowlin Group LLC) and one of its subsidiaries (Bowlin Services LLC) were required to pay 196 employees $1,075,000 in back wages and liquidated damages after an investigation conducted by the DOL found that the companies misclassified several employees as independent contractors and violated the FLSA’s overtime and record-keeping regulations.

Does your company need an HR audit?

  • Are your employees properly classified as exempt or non-exempt based on DOL regulations?
  • Are your employment files in compliance with federal and state laws?
  • Do you have written HR policies and procedures and are they distributed in written form to all staff?
  • Are you prepared to address a harassment or discrimination claim, should one arise?
  • Are you keeping appropriate safety records and filing the required OSHA reports?
  • Is your management properly trained regarding Equal Employment Opportunity issues?

Have you trained your management regarding:

  • Equal Employment Opportunity
  • Harassment (Sexual, Racial, Religious, etc.)
  • Corrective Counseling and Documentation
  • Basic Management Skills

Do you have written HR policies and procedures for:

  • Employment
  • Compensation and Benefits
  • Employee/Labor Relations
  • Safety and Health
  • HR Administrative Practices
  • Counseling and Termination
  • Training and Development

… If you answered “NO” to any of these questions, your organization will benefit from an HR Audit. Contact the Maryland Nonprofits Consulting Group at 443-791-3484 or email Wendy Wolff ( and schedule a 15-minute intake about your Human Resources needs.