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Are You Prepared for a Department of Labor Audit?

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If you think you’re ready … think again!

It is no secret that compliance requirements have been increasing over the last few years and will most likely continue to do so. Whether it is HIPAA compliance, OSHA/facility compliance, or anything in between, organizations have to be forward thinking in regards to every action they take.

Human Resource (HR) compliance is often a forgotten area, but should not be ignored in an overall compliance strategy. From ensuring legal compliance to management of compensation and benefits, the HR function represents a complex and important component of leading an organization and its people. Because of the changing regulatory requirements and criticality of the HR compliance function, Department of Labor (DOL) audits are on the rise.

Here are some of the common compliance issues to review when preparing for a DOL audit.

Hiring Process

Organizations can often times be inconsistent in their hiring practices — including completing reference checks on some candidates, but not all; retaining handwritten notes on resumes in personnel files; and missing key hiring documents, such as an application or resume. It is important to create a formal, defined process and train all hiring managers on the facilitation of the hiring process. It is also key to implement quality control measures to ensure legal compliance, consistency, and standards are met.

Employee Handbook/Personnel Manual

Surprisingly, it is not a legal requirement for an organization to have an employee handbook. However, it is recommended to have one. When reviewing your employee handbook, keep in mind some of the most common missed policies: Americans with Disabilities Act (ADA), lactation accommodations for nursing mothers, and meal and break periods. Also, it is important for your handbook to be easily accessible for all employees, which can include posting on your intranet or providing printed copies to every employee, including all amendments or changes.

File Management

File management issues exist in multiple filing processes — employee files (active and terminated), manager desk files, I-9 filing, etc. The issues found within file management are usually human errors and miseducation. For example, did you know that I-9s are supposed to be retained separately from employee files? That any medical documentation from your employees needs to be filed in its own secure location? Also, that employee files retained at a manager’s desk will be subject to review under an audit? It is important for anyone maintaining employee files to understand and follow strict file management guidelines.

Legal Compliance

Legal compliance is a wide umbrella of items, including required workplace posters (federal, state and local), the location of these posters, EEO-1 reporting, and compliance with Fair Labor Standards Act (FLSA) requirements. Legal compliance, on a majority of items, will vary based on industry, physical location, size of organization, etc. The recommendation for ensuring legal compliance is to conduct research on requirements based on your business and pay particular attention to industry, size (number of employees), and physical location.


Love them or hate them, it’s not an area to disregard in terms of compliance. Organizations need to ensure they have all plan documents, are distributing required health and welfare notices (e.g., HIPAA), and are complying with current ACA reporting requirements. If you currently work with a benefits broker, they should be able to assist in assessing benefits compliance for your organization.

Still think you’re ready?

Don’t assume you’ll never be audited. The question today is when you will be audited, not if you will be audited. You have the opportunity to be diligent and prepare for a potential audit. An initial HR audit can be overwhelming, especially while resources are already spread thin, but it can save you and your organization a future experience that could be costly.

Because of the changing regulatory requirements and criticality of the HR compliance function, DOL audits are on the rise … The question today is when you will be audited, not if you will be audited.

Jeff Ricketts, SHRM-CP, is a human resources consultant with Dean Dorton. He can be reached at