HR Assessment Risk Summary

In summarizing the potential for risk in the human resources and personnel practices of organizations visited over the past few years, the highest risk of audits, investigations, grievances and the resulting potential for penalties, fines and legal concerns come from six primary sources.  The main reason for concerns are because certain federal and state agencies are making it a priority to investigate:

• Misclassification of employees as exempt, Illinois led the nation in active investigations 3,635 involving 19,765 misclassifications, 245.6 million in unreported taxable wages, 5.1 million in unemployment tax unreported, 270,570 employees impacted.
• The U.S. Equal Employment Opportunity Commission (EEOC) recently announced that 84,254 workplace discrimination charges were filed with the federal agency nationwide during fiscal year (FY) 2017, and secured $398 million for victims in the private sector and state and local government workplaces through voluntary resolutions and litigation.
• Illinois ranks 6^th in the nation in the number of EEOC charges filed by employees, of those charges 54.2% were regarding retaliation by an employer.
•  Employee Eligibility Verification I-9 compliance, $110 per form, $110 per error, up to $1,100 per error 3^rd offense.
• Fair Credit Reporting Act compliance willful $100 to $1,100 per violation plus damages, fines and legal fees.
• Independent Contractor misclassification unpaid federal, state & other withholding, unpaid WC & unemployment premiums, work expenses, overtime, along with interest & penalties levied.  Claims have been staggering amounts to employers.  ACA in 2015 fines $2,000 per employee not covered.

It is these six that are both common outcomes of the assessments done and the most likely for future risk. However, the risks don’t end with these six.  Related concern for employer problems comes from a variety of HR Forms not being used at all or used in outdate and non-compliant manner.

•  job applications
• employee handbooks or policy manuals
•  I-9 Forms
• EEO-1 or EEO-4
• VETS-4212
• FMLA Applications
• Notification, rights, release and signature authorization  of all background inquiries, particularly credit checks under FCRA

Collectively, human resource documents being inconsistently used throughout organizations, in various versions, or not at all can add to the additional risks related to personnel files and records management and retention. Recommended areas for additional human resources consulting would begin with the following:

• EEOC compliance and Affirmative Action Plan development (to include EEO-4 & VETS-100)
• Compensation & Benefits Analysis and Wage Studies
• Exempt/Non-Exempt Audits (to include independent Contractors)
• Employee Eligibility Verification I-9 Training (E-Verify)
• HR Forms Audit and Form Development
• FMLA Training for all Management and Department Heads
• Recruiting & Hiring Best Practices Training
• Personnel Files and Records Retention Training