Compliance Challenges in the Construction Industry

Industry-Wide Challenges

The Associated General Contractors of America (AGC) is a leading construction organization that works to maintain a pulse on the construction industry nationwide. In their 2018 Member Outlook survey, one fourth of respondents stated they were concerned about growth of federal and state regulations.

Regulations exist in nearly every industry, but construction companies have more regulations to adhere to if they're working on federal contracts. The Office of Federal Contract Compliance (OFCCP) creates regulations and conducts audits to determine whether companies are hiring fairly and in accordance to the law. Considering the OFCCP collected over $23 million from failed audits in 2017, it's easy to see why growth in these regulations concern construction leaders nationwide. When other regulatory agencies like Occupational Safety and Health Administration (OSHA) come into play, maintaining compliance can seem like an overwhelming task.

With the industry-wide skills gap in full swing, many construction companies are already short-staffed. Designating one or several employees to track and manage regulatory changes and create procedures based on those changes can be challenging for companies that are already experiencing staffing issues.

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Challenge #1: Affirmative Action Planning

An Affirmative Action Plan (AAP) is the first line of defense against a failed OFCCP audit. It should outline the proactive measures companies take to hire a diverse workforce and must be updated annually. Generally, AAPs are required for federal contractors who fit these criteria:

  • Federal contract or subcontract of $50,000 or more
  • 50 or more employees

However, the type of federal contract can also affect AAP requirements. As anyone could imagine, adding affirmative action planning with such intricate criteria can take a toll on busy construction leaders with an already full workload.

The Solution

With the right hiring software, managers can actively put their AAP to work. Look for an applicant tracking system that has a voluntary self-identification questionnaire within the application. This way, managers can gather AAP-related information that's tied to each candidate and report on hiring decisions as the candidate moves through the hiring process.

Challenge #2: Paperwork and Recordkeeping

Paperwork is unavoidable for companies of all industries, but particularly for federal contractors. When an auditor comes knocking, they will perform a desk audit and all employee-related paperwork must be available for review.

This can be tricky for federal contractors with multiple locations or those who accept applications or onboarding paperwork on the jobsite or away from the office. Ensuring each manager knows who to give paperwork to and how to deliver it is essential with a paper-based system, but required documents can still slip through the cracks.

Keeping physical documents in a centralized location takes a savvy administrator and a prescribed process. If an administrator leaves or something happens to the physical documents, companies might find themselves in hot water. In addition, maintaining records for a number of years as required by the OFCCP can require a lot of space and secure place to store them.

How long do federal contractors need to keep records, anyway?

  • Contractors with fewer than 150 employees or a contract of at least $150,000=1 year
  • Contractors with over 150 employees and a contract of at least $150,000=2 years

The bigger the company, the bigger the risk of hefty fines if paperwork is unavailable. Contractors of all sizes can gain peace of mind and complete compliance through a paperless record management system.

The Solution

A cloud-based, centralized document storage solution is an easy way to transition from a paper-based system. With an online record management solution, managers can access employee information and pull reports with a few clicks. When an auditor comes along, providing accurate reporting in a short amount of time is a breeze.

Challenge #3: Tracking and Reporting Good Faith Recruiting Efforts

Recruiting is already hard enough as it is, and adding another layer of job distribution and reporting can take even more time away from recruiting efforts. The OFCCP requires the tracking of good faith recruiting efforts for women, minorities, individuals with disabilities and protected veterans. To fulfill these requirements, federal contractors must distribute jobs to the proper workforce agencies and also track and report on their efforts.

The challenge is, the OFCCP requires this for each and every job opening. Busy contractors don't always have the tools to properly distribute job postings, or might forget to distribute openings to the appropriate workforce agencies.

The Solution

An applicant tracking system with built-in job distribution functionality is essential for managers who want an easier, faster way to practice and report on good faith recruiting. This functionality should be configurable to automatically send jobs to the appropriate agencies per position and company.

Although federal contractors may face challenges in staying compliant, there is a solution that can meet each of these challenges and more. Get started today on updating your recruitment strategy, finding better candidates and, most importantly, staying compliant.

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