Top 3 Construction Compliance Challenges
The top construction compliance challenges include navigating complex federal and state regulations—especially for companies with federal contracts subject to OFCCP audits requiring annual Affirmative Action Plans for diverse hiring—which is made more difficult by industry-wide staffing shortages, but can be mitigated through specialized hiring software that streamlines affirmative action data collection and reporting.
Industry-Wide Challenges
The Associated General Contractors of America (AGC) is a leading construction organization that monitors the construction industry nationwide. In their 2018 Member Outlook survey, one fourth of respondents expressed concern about the growth of federal and state regulations.
Regulations exist in nearly every industry, but construction companies face additional regulations if they work on federal contracts. The Office of Federal Contract Compliance (OFCCP) creates regulations and conducts audits to ensure companies are hiring fairly and in accordance with the law. In 2017, the OFCCP collected over $23 million from failed audits, highlighting why increased regulations are a concern for construction leaders. Other regulatory agencies, such as the Occupational Safety and Health Administration (OSHA), also play a role, making compliance a complex task.
With the ongoing industry-wide skills gap, many construction companies are already short-staffed. Assigning employees to track and manage regulatory changes and create procedures can be challenging for companies experiencing staffing issues.
Challenge #1: Affirmative Action Planning
An Affirmative Action Plan (AAP) is essential for passing an OFCCP audit. It should outline proactive measures to hire a diverse workforce and must be updated annually. Generally, AAPs are required for federal contractors who meet these criteria:
- Federal contract or subcontract of $50,000 or more
- 50 or more employees
The type of federal contract can also affect AAP requirements. Adding affirmative action planning with intricate criteria can be burdensome for busy construction leaders.
The Solution
With the right hiring software, managers can actively implement their AAP. An applicant tracking system with a voluntary self-identification questionnaire allows managers to gather AAP-related information tied to each candidate and report on hiring decisions throughout the hiring process.
Challenge #2: Paperwork and Recordkeeping
Paperwork is unavoidable, especially for federal contractors. During an audit, all employee-related paperwork must be available for review. This can be difficult for contractors with multiple locations or those who accept applications or onboarding paperwork away from the office. Ensuring each manager knows the correct process for handling paperwork is essential, but documents can still be misplaced in a paper-based system.
Maintaining physical documents in a centralized location requires a skilled administrator and a clear process. If an administrator leaves or documents are lost, companies may face compliance issues. Additionally, maintaining records for the required number of years can require significant space and secure storage.
Federal contractors must keep records for:
- 1 year: Contractors with fewer than 150 employees or a contract of at least $150,000
- 2 years: Contractors with over 150 employees and a contract of at least $150,000
Larger companies face greater risks of fines if paperwork is unavailable. Contractors of all sizes can achieve compliance through a paperless record management system.
The Solution
A cloud-based, centralized document storage solution makes it easy to transition from a paper-based system. With online record management, managers can access employee information and generate reports quickly. This simplifies providing accurate reporting during audits.
Challenge #3: Tracking and Reporting Good Faith Recruiting Efforts
Recruiting is already challenging, and the OFCCP requires tracking of good faith recruiting efforts for women, minorities, individuals with disabilities, and protected veterans. Federal contractors must distribute jobs to the appropriate workforce agencies and track and report on these efforts for every job opening.
Busy contractors may lack the tools to properly distribute job postings or may forget to send openings to the appropriate agencies.
The Solution
An applicant tracking system with built-in job distribution functionality is essential for managers seeking an easier way to practice and report on good faith recruiting. This functionality should be configurable to automatically send jobs to the appropriate agencies for each position and company.
Although federal contractors may face challenges in staying compliant, solutions exist to address these issues. Updating recruitment strategies and leveraging technology can help companies find better candidates and maintain compliance.
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