What is an HR Audit?
An HR audit is a careful examination of all of the HR functions, procedures, and policies in your company. It considers issues like:- Are your policies compliant with current employment law
- Do employee files have sufficient documents
- How effective is your performance review process
- Are your onboarding and offboarding procedures consistent
Why HR Audits Are Important
You don't need to get surprised by HR problems, like misclassified workers, missing documents, or outdated policies. An HR audit does it for you:- Reduce legal risk and fine exposure due to non-compliance
- Streamline efficiency by eliminating duplicative or redundant HR functions
- Build trust and transparency with your workers
- Develop consistency among departments and managers
- Adapt to change, like new regulations, business growth, and work-from-home.
The HR Audit Checklist
There should be a list of several key areas in an HR audit checklist:Policies and Compliance with Law
- Employee handbook is up-to-date
- Law-required postings and notices exist
- Policies are FLSA, FMLA, ADA, OSHA, and other applicable laws compliant
Employment Records and Documentation
- Personnel files contain required forms (I-9, W-4, etc.)
- Performance records and disciplinary records are up-to-date and in accordance
Recruitment and Onboarding
- Job descriptions exist as accurate duty descriptions
- Hiring and interviewing practices are consistent and documented
- New hire paperwork and background checks are completed
- Orientation and onboarding are done through a standard process
Payroll, Compensation, and Benefits
- Employees are properly categorized (exempt v. non-exempt)
- Wages and overtime are processed in accordance with the law
- Benefits are processed properly, including ACA, COBRA, and leave policies as needed
Performance Management and Employee Relations
- Scheduled performance reviews are completed and recorded
- Disciplinary action is fair and consistent
- Investigations and action taken are recorded
Training and HR Communication
- Managers are trained in documentation and compliance
- Harassment avoidance and anti-discrimination training are up to date
- Remote or hybrid work policies are clearly communicated
- Employees get transparent, equitable HR communications
The HR Audit Process
This is what the HR audit process typically includes:- Planning and Scope – Decide what areas of HR to review and whether the audit should be conducted for the entire firm or specific departments.
- Information Gathering – Collect employee files, policies, handbooks, payroll data, benefits information, and training records.
- Compliance Review – Compare your practices to current federal, state, and local law.
- Process and Practice Review – See how HR processes really work on a day-to-day level.
- Risk Assessment – Identify gaps, inconsistencies, and areas of possible legal or financial risk.
- Recommendations – Provide a priority list of what to do next.
- Follow-Through – Revise policies, train managers, and review processes regularly to keep it all up to date.
