Construction leaders and managers working for federal contractors wear many hats: staffing their job sites, ordering materials, training their crew and putting in the extra hours to meet project deadlines. With so many responsibilities, it can be difficult for federal contractors to keep up with changing compliance regulations from the Office of Federal Contract Compliance Programs (OFCCP), which exists to ensure fair access to federal contractor job opportunities. Unfortunately, noncompliance can end up costing construction companies a lot.
1. Negative Monetary Effects of Non-Compliance
The most significant cost of noncompliance is the financial burden companies face. In 2017, federal contractors that were found in violation of OFCCP policies were fined a total of $23,910,884.00. Fines can range from a couple of thousand dollars to millions of dollars and contractors can be required to pay in as little as 30 days (or less) from the day the violation settlement is approved. Imagine being faced with a fine ranging from tens of thousands of dollars to millions, and having less than a month to pay for it. Some businesses don’t have the financial means to recover from a situation like that, particularly smaller construction companies, making the risk extremely high for federal contractors without a compliance solution.
2. Non-Compliance Leads to Decreased Productivity
Fines aside, monetary consequences can continue when lost productivity results in missed project deadlines and delayed future projects. With the average audit lasting 720 days (just under two years), time is sure to be taken away from the jobsite as construction managers without a one-stop compliance solution work to track down all the documents required by an OFCCP auditor.
At a time when recruiting qualified construction workers and the construction skill gap presents challenges for many, construction companies may not have enough workers to cover high-skilled projects if the manager is away, or may be putting too much pressure on one individual employee, which can result in a burnout.
3. Poor Employee Engagement During Onboarding
In this market, employee onboarding often happens in different intervals, needing training, manager support and safety oversight. Having a strong construction onboarding program within a new construction employee’s first few weeks results in higher retention and employee engagement down the line.
When managers aren’t around, onboarding and ongoing training can be detrimental to employee engagement. We know that employee engagement is crucial because having disengaged employees:
- Leads to higher turnover rates
- Increases recruiting costs
- Prolongs project completion times
In this candidate market, managers just can’t afford any situations that jeopardize onboarding or employee engagement.
4. Negative Company Reputation
When employee morale and company culture start to shift, and unhappy employees receive little training and manager support, your employer brand could be in trouble. Your employer brand matters because it affects recruiting efforts. If employees complain about their work situation to friends or generally don’t enjoy being at work, it might actively discourage friends from applying when a new job opens up, or they might never mention an opening to their networks at all.
Additionally, the media has followed audit violation stories in the past, resulting in bad press that affected construction companies. With recruiting costs near $4,000 per open position, employee referrals and strong public relations can be a saving grace for companies with a small recruiting budget. When your employer brand has a negative perception, you can’t expect the skilled workers you want to flock to your company.
What You Can Do About It
Despite the high financial, employee and productivity costs, there are steps federal contracts can take to ensure they are always compliant.
Some ways to help when an audit is taking place are:
- Having a written AAP
- Implementing a cloud-based central filing system
- Using a compliant reporting tool
The goal of an audit is to pass without any violation and to pass quickly. By taking the necessary steps to become audit-ready now, your workforce and company can thrive in the future.
To learn how to overcome and avoid compliance issues, read Symptoms & Solutions with Bryan May: Don’t Let Labor Law Compliance Challenges Slow Your Hiring.
