Nothing strikes fear into the hearts of business owners quite like a letter from the Department of Labor or one of the many other regulatory agencies. This letter is to inform you that your business will be audited. The first thing to cross your mind (perhaps after a few choice four-letter words) is do I have everything the auditor will want to see? Followed maybe by what in the world is an I-9 and do I have one for every employee?
Basically, if your employee files aren’t complete, it may be too late by the time the Department of Labor or other auditor arrives. As an outsourced human resource agency, we know this for a fact. Quite frequently, we have clients that do not have the required and necessary systems and procedures in place that regulatory agencies require during an audit. Mismanaged employee files aren’t always the business owner’s fault. People simply don’t know what they don’t know when it comes to employee files and mandated documents.
Are you keeping taboo information in employee files?
Employee files are typically the number
one item that needs to be created or reviewed before luck runs out and you’re audited. Sometimes there are no files in place, but most of the time, they simply have items in the employee file that should never be kept in there in the first place. Information or documents regarding benefits information, copies of employees’ identification, etc. should not be stored in an employee file.
It’s not necessarily your fault
No one is born with human resources knowledge. It is a learned skill. When entrepreneurs decide to open a business, typically they are not thinking about what goes in an employee file and/or what paperwork they need to hire an employee. That’s an HR function, and few entrepreneurs are HR experts too. Business owners are focused on opening the business, hiring staff and getting busy. And it’s fine
for a while until the company has grown to the point where it needs an outsourced HR agency to act as its internal HR department.
Fast forward to three years later… Now there are numerous employees coming and going, and there is no HR system in place to manage all these employee files. No one, including the business owner, is thinking about the consequences of not having the proper human resource systems or employee files in place. But an outsourced HR agency would sure be beneficial be to the business before an audit happens.
What information should you keep in an employee file?
The benefits of having accurate employee data in an organized file are substantial. Being able to pull an employee file to see the last pay raise was or the latest performance evaluation is convenient at the least. Having accurate and up-to-date employee files saves a lot of time and effort when looking for even the most common information.
Getting your employee files updated and audit-worthy is as simple as using HRx. HRx is an HR Health Check that cures whatever human resource woes ail you. Our outsourced HR team comes to your location, checks to make sure you have everything in place and provides you with a report and prescription for getting your files in good shape.
hr-haven has been contracted to help companies prepare for audits and to clean up the mess after an audit. Our HR experts have seen and experienced audits good and bad. Our best advice is to always be prepared for an audit even if you do not think there will be one. Another benefit, you’ll sleep better at night knowing that you can stand up and say to any Department of Labor or agency auditor, “Bring it on. Let me show you how this is done.”