HR Compliance Checklist: A Guide for Business Owners

When preparing for an audit, business owners can use a Human Resource (HR) compliance checklist to keep them on track. It is also a great tool to have around to help keep business practices in compliance. When it comes to HR, “too safe” does not exist. Labor laws are constantly evolving and business owners who do not keep up with these changes could be putting their business at risk.

Start with the basics and build from there.

Every employer should have an employee handbook. The employee handbook is the best way to communicate expectations to employees. It also keeps employees and employers on the same page when it comes to policies and procedures. Because the handbook is so important, business owners should make it a priority to ensure everything is outlined appropriately and kept up to date. A well-written handbook can reduce the risk of misunderstandings between employers and employees.

Consider these fundamental components when creating or updating an employee handbook.

  • Handbook acknowledgment – This is a notice acknowledging that the employee understands that the handbook is not a contract for employment and that the handbook is subject to change.
  • At-will employment policy – Iowa is an at-will state, meaning that the employer or the employee can terminate the employment at any time and for any reason. Provide information pertaining to at-will employment policies to avoid confusion and to ensure you receive the appropriate protection.
  • Code of Conduct – The code of conduct should express the business mission statement and values. This section should also include standards and professional expectations. A well-written code of conduct can help foster a positive and productive work environment.
  • Benefits – Use this section to introduce employees to the suite of benefits that are offered at the company. Address all offered benefits in this section:

Additional topics to keep in mind when creating an employee handbook include leave of absence, overtime, parental leave, and more.

Everything from an initial interview with an employee through their termination should be included in the compliance checklist.

Hiring Process.

The hiring process is where it all begins. Having a clear outline of the hiring process helps the employer stay consistent – and compliant. Take time to periodically review job application forms, job descriptions, offer of employment letter templates, contracts, and the onboarding process. Keep these documents and procedures current with internal changes, as well as with laws and regulations. Staying current will help the business stay one step ahead when it comes time for an audit.

I-9 Form.

The I-9 form is used to verify if an employee is legally authorized to work in the United States. The I-9 is generally completed during the onboarding process. Every employee should have a completed I-9 in their records. This document is kept separate from the employee’s personal file.

Personnel File.

A personnel file is a folder used for storing employee-specific HR documents. The personnel file should include the employee’s application, any recognition or disciplinary notices they have received, and copies of performance reviews. The personnel file should not include any private or personal information regarding the employee, information about their background checks, or drug screens. Private or personal information should be kept in a confidential file for the employee.

Working Time.

What is working time? Simple. Any hours that an employee has worked. Employers are required to pay employees for any time they have worked – even if it is unauthorized. Time can also be paid in the form of reimbursements. Such as:

  • Travel (mileage)
  • Lodging
  • Meals

Working time also includes overtime and hours worked off-site (meetings, working at home, etc.). This is especially important for non-exempt employees who are paid based on an hourly rate. Employees who are classified as exempt receive a steady salary for the work they perform. Understand the difference and be sure that employees are properly classified.

  • Exempt – Employees who are classified as exempt are not entitled to overtime pay. These employees are paid a salary – never an hourly rate.
  • Non-exempt – Non-exempt employees are entitled to overtime pay (1.5 times their pay rate). These employees can either be paid an hourly rate or a salary. There is no weekly minimum that non-exempt employees must meet. However, remember to keep minimum wage laws in mind.

Not all employees are eligible for unemployment benefits. Generally, employees who are terminated for performance reasons will receive unemployment benefits. On the other hand, employees who are terminated for conduct reasons or those who leave without cause are not eligible for unemployment benefits. Employees are only eligible for unemployment benefits if they have surpassed the probationary period. This period is usually 90 days from the date of hire.

This is just the tip of the iceberg.

Laws and regulations are constantly changing, which means keeping up with internal business practices is more critical than ever. Use this checklist as a starting point when creating your company-specific checklist. A business that is not compliant may incur fines and even lawsuits. For growing business owners who do not have a designated human resource manager on staff, outsourcing human resource administration could be the answer.

Iowa’s Premier Professional Employer Organization.

Focus OneSource is Iowa’s premier Professional Employer Organization (PEO). What sets us apart from other PEO’s is our flexibility to offer services above and beyond the competition. We understand that the PEO model may not be the right fit for every business. In an effort to better meet the needs of our customers, we have split our PEO services into a la carte options.

We offer human resource outsourcing to help our customers feel confident about their policies and procedures. Keeping our customers compliant is our top priority. Business owners who outsource their human resource needs can focus on growing their business with the assurance that their HR needs are being taken care of. For those customers who are looking for more help with their small business, we also offer:

Focus OneSource is a one-stop-shop for business owners and their business needs. Could your business benefit from additional HR assistance? Contact us today for a free HR consultation – we’ve got you covered!