HR audits help practices comply with laws, but can also offer peace of mind

January 9, 2020

Start your new year on the right foot by auditing your human resources systems and records. To diminish the possibility of legal issues and to ensure that your practice seeks to comply with labor and employment laws, it is important to perform an HR audit. An audit can include all of the following.


Accurate timekeeping is one of the most crucial aspects of a successful business. State and federal laws require that employers maintain an accurate record of their nonexempt employees’ work hours and compensation on file for at least four years.

Review your employees’ time periodically during the year to ensure that they are accurately recording the start and end of their meal periods. Time records should reflect that the meal period was provided to your employee no later than four hours and 59 minutes into a nonexempt employee's workday. As a best practice, employers should review meal and rest break policies and discuss any barriers to employees taking compliant breaks.

California employers can round employee timecard entries up to the nearest quarter of an hour. Employers who use rounding practices should audit the practices to ensure that they are neutral, clear and evident, meaning that, over time, they don’t favor either the employer or the employee. Employers will want to confirm that the rounding practices don’t fail to compensate employees properly.

Timekeeping practices must also capture overtime, “off the clock” or “de minimis” time. Employees who routinely work off the clock generally must be paid for their off-the-clock work. This situation might occur when an employee arrives ahead of scheduled work hours to open the office, prepare for patients, review records or participate in a morning huddle. At the end of the day, the employee might stay past scheduled work hours to handle closing tasks.

Employees should be paid for all hours worked, not just scheduled time; if employees are currently performing off-the-clock work, employers should be paying their employees for this time.

Wage statements

California law contains very specific requirements for the information employers must put on employees’ wage statements and imposes financial penalties on employers who don’t follow those requirements.

Employers must know the legal requirements for compliant wage statements as defined by Labor Code Section 226. Employers who use a payroll company to prepare wage statements are responsible for providing the payroll company with all information that must be contained in the wage statement. Generally, payroll companies are not responsible for omissions or errors.

Are you including paid sick leave balances in your employees’ wage statements? Paid sick leave laws require that employers do so. Furthermore, employers should verify that paid sick leave and time-off limits or “caps” are in place and that employees aren’t earning more than the employer’s policies indicate. If an employee were to earn more time than allotted by an employer policy, the employer cannot take this time away from the employee. 


Employers are required to have some written policies in place. Several state and federal laws require that employers have written policies in place and have collected signed acknowledgements of receipt and understanding from their employees. While it is a best practice to have an employee manual, a manual itself isn’t required. Because laws change annually, employers should review and update their manuals or policies, distribute any new or updated policies to employees and obtain new acknowledgments from employees.  

Recruiting and hiring

Several laws and court decisions have altered hiring practices in the last few years. Employers should audit hiring practices annually to ensure that they are not seeking prior salary or criminal history and comply by using California-specific applications, obtaining signatures before performing any reference checks and providing written conditional offers of employment prior to performing any background checks. Additionally, there are state and federal obligations to follow, such as completing new employee forms and providing access to legally required pamphlets to new employees on their first day of employment.

Job descriptions are valuable but often overlooked documents. A well-crafted job description that lists essential functions of the job can be used with supporting employee classifications, compensation, managing reasonable accommodation requests under disability laws, and setting expectations for performance. As a practice grows, the duties of the employees can change, and an annual review may reveal any inconsistencies between what the job descriptions says and what the employees do.   

Employee records

Document, document, document: Just like with patient records, it is important to maintain accurate employment records with signed required forms and acknowledgements, documentation of performance reviews, job descriptions, current licensure, certificates of mandatory training, requests for reasonable accommodation, disciplinary actions, hiring and termination records.

Employee records must be accurately maintained and, if kept up to date, they can be invaluable for preventing a frivolous lawsuit. An accurate and updated employee record not only records employee information but also any issues that led to termination or reprimands. 

Wrapping it up

Whether you choose to audit just one system or all of them, it is a valuable exercise that will help your practice stay up to date and compliant and perhaps even provide you some peace of mind.

Find resources on employment practicesin the CDA Practice Support resource library.


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