All businesses must comply with a number of State and Federal employment regulations. If you don’t know about employment laws and regulations, or if you know and do not follow them, your business could be required to pay fees or be in danger of being sued. What can smart companies do? Proactively conduct a human resources audit.

A human resources audit is a comprehensive review of your employment policies and practices. The auditor will review areas like your employee handbook, your recruiting and hiring process, how you onboard new employees, compensation and benefits, safety, performance management, and training. In addition, the auditor will want to know about issues such as employee turnover, employee satisfaction, and the number of employee complaints.

Just like going to a doctor for an annual check-up, an HR audit can help your company determine the health of your HR systems. If you find areas that are out of compliance, the auditor can provide recommendations and best practices.

Below are five common areas of risk that are found in HR audits.

  1. Misclassification of exempt and no