Government funded jobs can be lucrative, but they come with plenty of strings attached. Not only is competition fierce, the rules and regulations involved in these projects are burdensome. The risk involved in falling out of compliance is also real, including the threat of hefty penalties and even legal action. This makes staying compliant an ongoing issue for companies that work on public works projects.
What “compliance” means
Government funded work, both construction and service based, have certain requirements that must be met by all companies involved in the project. This includes construction companies and companies that provide service work, such as accountants or janitors. Additionally, there may be multiple layers of regulations at the federal, state and even the municipal level that must also be followed.
Here are some of the laws governing public works projects:
- The Davis Bacon and Related Acts applies to federally funded or assisted contracts that require construction, alteration, or repair of public buildings or public works and are in excess of $2,000.
- The Service Contract Act (SCA) applies to all contracts that have over $2,500 in associated costs. It comes with its own wage determinations and impacts service employees such as computer programmers, accounting clerks and other professionals.
- States and municipalities may also have prevailing wage and labor rules in place that must be followed.
Companies must strictly follow the requirements of all applicable laws in order to be considered “in compliance.” Not being compliant can lead to penalties, debarment from government work and even legal action.
Staying compliant
Compliance issues related to payroll and reporting often end up dominating administrative hours and sabotaging efficiency. There is also significant financial risk involved with making errors. This makes compliance a daily issue for contractors and subcontractors that do government funded work.
Software can help you stay compliant without adding to your administrative burden. This is one way small to mid-sized companies can reduce their risk and still compete for public works projects. If implementing a software solution isn’t possible at the moment, you can create processes to help prevent common mistakes that lead to violations.
Here are a few things you may want to include in your compliance procedures:
- Verify that reported work classifications are consistent with the work actually performed.
- Verify that the correct wage rates are being paid, following all prevailing wage requirements.
- Verify that overtime is correctly paid, based on federal and state requirements.
- Verify that apprentice program documentation is in your project files.
- Compare payrolls with wage determinations.
- Create a schedule for certified reporting so that you don’t fall behind.
- If pay discrepancies are found, make restitution as soon as possible and file an amended certified report.
If you’re in a state with additional labor regulations, you’ll need to include them in your procedures as well. For instance, if you do prevailing wage work in California, you’ll need to comply with state prevailing wage regulations, AB-3018 and AB-5.
Using software to stay compliant
One way you can make compliance easier is to find ways to automate as many compliance related issues as possible. By utilizing software that helps you catch, correct and avoid issues that lead to violations, you can reduce your company’s overall risk.
Some of the types of issues that software may be able to automate includes:
Rates: Auto assign prevailing & fringe rates by job/task/shift/scheduled increase.
Overtime calculation: Calculate weekly verses daily and “average rate” vs “in-effect rate” as required by state law.
Apprentice tracking: Track minimum and maximum hour ratios as required by state law.
City shifting: Calculate tax, workers’ comp, overtime & mandatory sick-pay based on combination of employee address and job-site address.
Easy reporting: Generate certified payroll, union, fringe, apprenticeship, EEOC and OSHA reports.
By creating a process verify information on an ongoing basis, you can find and fix errors that may lead to violations. This manual method of checks and balances is time consuming and requires diligence to be effective. If you’re looking for a more streamline way to reduce errors and risk, software can help. By reducing manual entry, automating reporting and built-in verifications, software can dramatically reduce your company’s risk for compliance violations.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.
