The Issue
During a recent monthly review meeting with a pharmaceutical R&D client of 90 employees, we discussed their confidence with the accuracy and completeness of internal HR practices and processes. Although they felt reasonably comfortable that they were compliant in most areas, they admitted their rapid growth and the constantly evolving realm of benefits and HR related legislation left them unsure.
Our Solution
We suggested an audit of HR and benefit policies and procedures, covering areas including:
- Onboarding process and practices
- Employee handbook
- Employee personnel files
- Compensation system
- Performance evaluation procedures
- Employee and management training programs
- Discrimination and harassment
- ACA Compliance
The Summary
The audit revealed that although the company was compliant with roughly 95% of the areas tested, there were a few corrections that needed to be made with the most significant issue involving 2 occurrences of employee misclassification where individuals were inaccurately classified as 1099 when they were actually W-2 employees. These were corrected immediately, but fines, penalties and interest for employee misclassification, even when unintentional, could be costly. Had the issues been discovered by the IRS at the time of our audit, they could have resulted in a total cost to the company of as much as $65,000. If more time passed before they were discovered, the fines would have been even higher, since they are calculated from the point of misclassification