Employment audits can help prevent disputes

On Behalf of | Sep 9, 2021 | Business Disputes, Outsourced Business Counsel |

Business owners draft partnership agreements, employment contracts and a host of other agreements and documents. Ideally, they initially were drafted using binding language that makes them enforceable. Over time, the relationships outlined in the contract may evolve, and applicable laws and regulations also can change. Suddenly, the owner or manager wonders whether they misclassified employees, or that discrimination or harassment guidelines are outdated.

Employment audits help update policies

Employment audits are a process where employers review all their rules, guidelines, protocols, and employment practices. Companies can preemptively conduct them to avoid lawsuits or provide protection if the Department of Labor chooses to audit the company after receiving an employee complaint. Whether ordered by the DOL or voluntary, the employment auditors look for compliance issues or gaps regarding:

  • Employment records
  • Job descriptions
  • Compensation and pay
  • Employee handbooks, including disclaimers and signature requirements
  • Disciplinary policies and practices
  • Employee evaluations
  • Anti-harassment policies

Businesses will then get the results and guidance from auditors they hired, implementing all, some or none of the suggestions. The DOL will also provide results of the investigation, possibly along with penalties, required corrective actions and potential settlements.

Self-audits are the better option

These help companies avoid official action by the DOL and provide confidence that they are compliant under current laws. The audits can also help prioritize changes. Generally speaking, all changes are less expensive and easier to implement before there is an outside audit, which can be disruptive to business and become a public relations nightmare. Nevertheless, employers can also fight back if they wish to dispute the DOL’s audit.