5 Ways Not Complying with OFCCP Regulation Can Cost You - Arcoro
Noncompliance with OFCCP regulations can cost federal construction contractors significantly through hefty fines, decreased productivity due to lengthy audits diverting management attention, and poor employee engagement during onboarding that leads to higher turnover, increased recruiting expenses, and delayed project completion.
Construction leaders and managers working for federal contractors have numerous responsibilities, including staffing job sites, ordering materials, training crews, and meeting project deadlines. Amid these duties, keeping up with changing compliance regulations from the Office of Federal Contract Compliance Programs (OFCCP) can be challenging. Noncompliance, however, can be costly for construction companies.
1. Negative Monetary Effects of Non-Compliance
The most significant cost of noncompliance is the financial burden. In 2017, federal contractors found in violation of OFCCP policies were fined a total of $23,910,884. Fines can range from a few thousand dollars to millions, and contractors may be required to pay within 30 days or less from the day the violation settlement is approved. For smaller construction companies, such fines can be devastating and difficult to recover from, making the risk of noncompliance extremely high without a compliance solution.
2. Non-Compliance Leads to Decreased Productivity
Beyond fines, noncompliance can lead to lost productivity, missed project deadlines, and delayed future projects. The average audit lasts 720 days (just under two years), which can take significant time away from the jobsite as managers work to gather required documents for OFCCP auditors. With ongoing challenges in recruiting qualified construction workers, managers being away can leave companies short-staffed or put excessive pressure on individual employees, increasing the risk of burnout.
3. Poor Employee Engagement During Onboarding
Employee onboarding in construction often occurs at different intervals and requires training, manager support, and safety oversight. A strong onboarding program within the first few weeks leads to higher retention and engagement. When managers are unavailable, onboarding and ongoing training can suffer, resulting in:
- Higher turnover rates
- Increased recruiting costs
- Prolonged project completion times
In a competitive job market, managers cannot afford to jeopardize onboarding or employee engagement.
4. Negative Company Reputation
A decline in employee morale and company culture, coupled with inadequate training and support, can harm your employer brand. This affects recruiting efforts, as dissatisfied employees may discourage others from applying or fail to refer candidates. Media coverage of audit violations can also result in bad press. With recruiting costs averaging $4,000 per open position, employee referrals and positive public relations are crucial, especially for companies with limited recruiting budgets. A negative employer brand can deter skilled workers from joining your company.
What You Can Do About It
Despite the high costs associated with noncompliance, federal contractors can take steps to ensure compliance:
- Maintain a written Affirmative Action Program (AAP)
- Implement a cloud-based central filing system
- Use a compliant reporting tool
The goal of an audit is to pass without violations and to do so quickly. Taking proactive steps to become audit-ready helps ensure your workforce and company can thrive in the future.
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