Have You Audited Your HR Practices?

For CPA firms and other businesses in the accounting industry, the stress of delivering optimal results for clients in light of a complex, ever-changing tax code can detract from effective workforce management and compliance with employment laws. However, it is crucial for employers in any industry to periodically review their HR practices to ensure that they are legally sound and designed to maximize workforce success. The benefits of taking the time to conduct a comprehensive, objective HR “audit” at least once per year include a diminished likelihood of costly lawsuits or penalties.

As an owner or manager of a CPA firm, have you audited your organization’s HR practices recently? If not, here are a few questions to ask as part of your next audit:


Have you reviewed your hiring procedures to ensure that they comply with state and local law?

With a goal of removing barriers to employment for certain groups of applicants and improving equality in the workplace, numerous cities and states across the country are enacting laws that limit the types of information employers may seek during the hiring process. For example, 30 states—including Arizona, Nevada, and Utah—have adopted ban-the-box initiatives prohibiting public employers from asking applicants about their criminal histories. In California, this prohibition now extends to private sector employers.

Additionally, several cities, as well as states like California and Oregon, restrict employers from inquiring about applicants’ salary histories. Given the continuing expansion of ban-the-box initiatives, salary history bans, and similar employment laws, employers should review their job applications and interview questions to ensure that they do not seek prohibited information.

Is your firm compliant with applicable minimum wage rates and paid sick leave laws?

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Considering that the federal minimum wage of $7.25 per hour has not changed since 2009, another employment trend sweeping the country advocates for higher rates at the state and local levels. Arizona and California, for example, recently enacted laws that will raise their state minimum wage rates incrementally each year until they reach certain amounts—in California, $15 per hour by 2023 and in Arizona, $12 per hour by 2020.

Many cities and states have also begun requiring employers to provide employees with paid sick leave. In Arizona, for instance, organizations with fewer than 15 employees must offer up to 24 hours of paid sick leave each year, while those with 15 or more employees must provide up to 40 hours per year. As these laws continue to gain popularity, it is crucial for employers to review the current minimum wage rates and determine whether paid sick leave laws apply in any locations where they have staff.

Have you updated and bolstered recruitment efforts?

Due to factors like a low national unemployment rate and the ongoing exodus of Baby Boomers from the workforce, many CPA firms have cited the recruitment and retention of qualified staff as their top HR challenges in recent years. The problem is amplified for small and mid-sized firms, which are often overlooked by job candidates who favor larger firms in a highly competitive market. To succeed in the “talent wars” and build strong workforces, firms must invest in their recruitment processes and leverage a variety of strategies. For example, offering competitive benefits packages, scouting passive candidates (or those who are not actively seeking employment), and investing in employee training and development initiatives will help firms attract and retain the qualified employees they need to drive their organizations’ success.

Have you reviewed your firm’s employee handbooks and workplace policies to ensure that they minimize your liability?

Since 2015, the National Labor Relations Board (NLRB)—which enforces workers’ rights under the National Labor Relations Act (NLRA)—has been applying heightened scrutiny to employee handbooks and any workplace rules that could be perceived as infringing on Section 7 activity. Section 7 of the NLRA guarantees workers the rights to unionize, collectively bargain, discuss their wages or conditions of employment, or otherwise participate in concerted activity designed to safeguard their interests. In recent years, the NLRB has struck down several seemingly innocuous employee handbook provisions, such as those requiring employees to be respectful of their coworkers and bosses or prohibiting employees from discussing customer or employer information outside of work.

Another recent trend impacting the workplace is the “#MeToo” movement and the growing number of high-profile sexual harassment cases. With victims of harassment and other types of offensive conduct feeling empowered to speak up, it is more important than ever for employers to review their workplace policies and procedures to ensure that they clearly define prohibited behavior and establish an effective mechanism through which employees may voice their concerns. In light of the #MeToo movement, as well as the NLRB’s recent actions, employers in all industries should consult an HR expert to verify that their workplace policies are up to date.

Are your employees classified properly?

For taxation purposes, it is essential that employers properly classify workers as either employees
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or independent contractors. While there are numerous factors to consider in making this designation, independent contractors generally retain control over the methods by wh
ich their work is completed. Employers do not have to withhold income taxes from independent contractors like they do from employees. Organizations may be subjec

t to hefty fines from the IRS for improperly classifying employees as independent contractors.

Another important distinction that employers must make involves exempt versus non-exempt employees under the federal Fair Labor Standards Act (FLSA). The FLSA requires employers to provide overtime pay for non-exempt employees when they work more than 40 hours in a week. On the other hand, exempt employees—who generally earn more than $23,660 per year, are paid on a salary basis, and meet other requirements for “exempt” job duties—are not entitled to overtime. Properly classifying exempt and non-exempt employees is particularly important for CPA firms, which often require their employees to work far more than 40 hours per week during tax season.

Do you offer health insurance—particularly if your firm is subject to the Affordable Care Act (ACA)?

Although the Trump Administration has begun taking steps to dismantle the ACA, the controversial federal healthcare law is currently still in effect. As a result, applicable large employers (ALEs)—or those with 50 or more full-time employees—must continue to provide affordable, minimum essential health insurance coverage for full-time employees and their dependents. However, even for smaller firms that are not subject to the ACA, offering health insurance and other benefits is an excellent way to attract and retain talent.

Have you reviewed your firm’s policies and practices with an HR expert?

From local, state and federal laws governing employment practices to regulations issued by agencies like the IRS and the NLRB, staying on top of the latest HR requirements can be overwhelming for businesses. Consulting HR experts like the team at CBR will help you ensure that your firm is taking all the steps needed to build a strong workforce and avoid costly fines and lawsuits. Through our various service offerings, such as employee benefits administration, recruitment services, and HR compliance, we will work with you to develop HR solutions customized for your firm’s unique needs.

Is it time to audit your CPA firm’s HR practices? Call CBR today at (602) 200-8500 or contact us online (https://cbri.com/contact/) to speak with one of our HR experts!

(Sources: www.irs.gov, www.journalofaccountancy.com)