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What Is A Human Resources Audit?


A human resources (HR) audit is an organized way to review a company’s human resources policies, procedures, and documentation, and to create a plan for bringing all of those into compliance for the company.

Why Is An HR Audit So Important?

Having all of the correct documentation in place can prevent unnecessary conflicts by ensuring that the company is following the appropriate steps when making employee decisions.

When Should The Audit Be Performed?

Any company that has employees should have their human resources policies established by a human resources attorney.

What Are The Typical Principal Points In An HR Audit?

The typical principal points in an HR audit include

  • the employee handbook,
  • the different job descriptions,
  • methods and amounts of compensation,
  • hiring methods and hiring policies,
  • training and orientation,
  • procedures to evaluate employees,
  • and discipline and termination procedures.
What Should Be Included In The Employee Handbook?

The employee handbook is the centerpiece of human resources documents and should contain all of the information that the employee needs in order to understand their relationship with the company, such as:

  • policies regarding the hours for the job,
  • the use and allowance of overtime hours,
  • dress code,
  • contract versus at-will employees,
  • grievance and harassment reporting procedures,
  • benefits,
  • holiday pay, vacation, and sick leave,
  • conflicts of interest,
  • and discipline procedures.
How Much Will The Audit Cost?

An audit itself will cost approximately $2,500. The cost of implementing the recommended actions and/or correcting deficiencies identified in the audit will vary from company to company, but most audits will cost no more than $10,000 in total.

Who Performs The Audit?

The company’s attorney will perform an audit with the assistance of the company’s accountant in dealing with certain tax issues.

Does Every Company Need An HR Audit?

Unless a company has a professional human resources management team, an audit should be done. If a company has a professional human resources director or someone who is very familiar with human resources issues and is keeping up to date on them, then it may not be necessary to have the audit, but smaller companies without a dedicated human resources department should have an audit done.

How Do I Prepare For An Audit?

The attorney performing the audit will probably provide a checklist of items that will be necessary in order to move forward with an audit. These items include the employee handbook and all other employee forms, as well as internal documents or descriptions concerning the company’s policies with regard to different issues, such as employee discipline, harassment reporting, etc.

How Long Does The Audit Generally Take?

A basic audit takes about one month, and the implementation of the recommended actions could take as long as three months.

Who Should See The Results?

The results should be reviewed by everyone in management, and in some cases, they should be viewed by all employees. For example, if the recommended action were a revision of the employee handbook, then all of the employees would see the documentation associated with that revision.

What Would We Do With Those Results?

The most important aspect of the auditing process is the actual implementation of the recommended changes and the correction of deficiencies.

How Often Should We Repeat An Audit?

It’s a good idea to conduct a brief review of human resources materials every couple of years to be sure that any changes related to employment laws have been addressed. Once an audit has been done, the attorney should keep track of such changes and notify employers of any necessary actions with regard to changes in employment law.

For more information on Human Resources Audit In California, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (626) 385-6303 today.

Newell & Havens Attorney At Law

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