As we kick off 2025, it’s time for employers to conduct an in-depth Employment Practices Audit. This audit isn’t just a checklist—it’s an essential step to ensure your workplace remains compliant with California’s ever-evolving employment laws. By auditing key areas of your business, you can reduce legal risks, promote a positive workplace culture, and avoid potential disputes with employees.
Let’s take a closer look at how to audit each important area.
1. Hiring Practices: Ensuring Fairness and Compliance
Review all job descriptions to ensure they align with California’s anti-discrimination laws (e.g. no questions about prior pay, disabilities, criminal records, and a new one…having a valid driver’s license). Examine your interview questions and selection processes to make sure they are free from bias. Also, ensure that your background check policies comply with state and federal laws, particularly those surrounding criminal records.
2. Wage and Hour Compliance: A Critical Review
Wage and hour compliance is a priority for California employers. To avoid costly lawsuits or penalties, you’ll want to ensure:
- Employees are properly classified (exempt vs. non-exempt).
- Overtime pay and breaks are in line with state law.
- Pay records are accurate and up to date.
Given recent updates to the Private Attorneys General Act (PAGA), it’s crucial that your business is fully compliant with California’s unique wage laws. A small oversight can lead to significant legal issues, and good faith attempts to fix mistakes could reduce your exposure significantly so don’t skip this step!
3. End-of-Employment Procedures: Handling Exits Correctly
Whether employees are leaving voluntarily or being terminated, handling the end-of-employment process properly is crucial. Review your procedures for:
- Final paychecks: In California, final wages must be paid immediately upon termination or within specific timelines for voluntary resignations.
- Severance packages: If applicable, ensure these are compliant and meet legal requirements.
- COBRA notifications: Review how you notify employees of their right to continued health benefits.
By ensuring proper exit procedures, you mitigate the risk of wrongful termination claims.
4. Anti-Harassment Policies: Creating a Safe and Productive Workplace
California law requires employers to have clear and effective anti-harassment policies. Review your policies to ensure they:
- Outline procedures for reporting harassment.
- Provide clear guidelines for investigating complaints.
- Include regular training programs for all employees, especially supervisors, on harassment prevention.
By auditing your policies and training programs, you help create a safer, more respectful, and productive workplace for everyone.
5. Records Management: Protecting Sensitive Data
Effective records management ensures compliance with California’s data protection laws. Review your record retention policies to ensure:
- Employee records are kept for the required period.
- Sensitive information, such as medical records or tax documents, is securely stored.
- You comply with the California Consumer Privacy Act (CCPA) for employee data.
You must have systems in place to track, store, and properly dispose of records that are no longer required.
Why Conduct an Employment Practices Audit?
An annual employment practices audit is more than just a compliance measure—it’s an opportunity to spot gaps, mitigate risk, and ensure your workplace is fair, inclusive, and legally sound. With California’s complex employment laws, conducting this audit will protect your business from legal disputes and costly penalties.
The goal is to be proactive, not reactive. Performing an audit now will save your business from larger headaches down the road.
Next Steps: Get Started on Your 2025 Employment Practices Audit
Now is the time to begin your 2025 Employment Practices Audit. If you need help auditing your employment practices, we are here to guide you through the process. Whether it’s reviewing policies, correcting records, or ensuring wage compliance, we provide the support you need to ensure your business stays on the right side of California law.