Common HR Audits & Nightmares Across All Stages

Aaron Betts • July 28, 2025

Common HR Audits & Nightmares Across All Stages

As your business grows, so does your exposure to HR audits and nightmares. No matter the size of your company, it’s essential to prepare for the Department of Labor (DOL), IRS, EEOC, and other potential audits that could arise. Here’s what you need to know to avoid common mistakes and potential headaches.

1. Department of Labor (DOL) Audits

A DOL audit can be triggered by a wage/hour complaint or even random selection. Ensuring you are compliant with federal wage laws, properly classifying employees, and adhering to overtime regulations can save you from costly audits and penalties.

2. IRS/State Tax Agency Audits

Misfiling payroll taxes or making late deposits could trigger an audit from the IRS or your state’s tax agency. Keeping your tax filings up to date and accurate is essential to avoiding legal complications and fines.

3. EEOC Investigations

If an employee files a complaint related to discrimination or harassment, your business could face an EEOC investigation. Not having proper documentation or policies in place can put your business at risk of fines, legal fees, and damage to your reputation.

4. HIPAA Breaches

For businesses that handle health data or offer self-funded plans, a HIPAA breach can be costly and damaging. Ensure that your business complies with all data security standards to protect your employees' sensitive information.

5. OSHA Investigations

If your business has employees in tech hardware or field-based teams, you could face an OSHA investigation for workplace safety issues. Ensure that your company adheres to all safety regulations and has the right procedures in place to protect your team.

Common HR Nightmares:

  • Terminating an Employee Without Documentation: This can quickly lead to lawsuits, especially if the termination is viewed as unfair.


  • Not Paying Final Wages on Time: This can lead to penalties and fines, especially if it varies by state.


  • Remote Worker Laws Not Followed: States like CA, NY, and CO have strict remote work laws that must be followed.


  • Retaliation Claims: If employees feel penalized after a performance review or complaints, it can result in costly retaliation claims.


  • Mismanaging FMLA or ADA Leave: Without HR expertise, you risk violating federal leave laws, which could lead to penalties.

By proactively addressing these common audits and nightmares, your business can avoid unnecessary legal and financial risks. It’s crucial to have the right systems in place, and a PEO can help manage these concerns.

Pro Tip:

There are over 600 PEOs nationwide. Work with a PEO Broker (like us!) to get side-by-side comparisons and unbiased guidance—at no cost to your business.

Need help getting started?

📧 Email: Suzanna@PEOForTheCEO.com

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Stay tuned for the next post in this series, where we’ll explore when a PEO makes the most sense for your business!