If you are a government contractor, compliance is not something you get to check off your to-do list. Staying compliant is an ongoing process that requires daily work and ongoing continuing education. And while the risk of legal and financial penalties is always a concern, the administrative burden of compliance activities is daily reality. The time and work related to compliance and reporting can completely undermine the productivity of an entire office, leaving little time to handle other important tasks.
While there isn’t anything you can do about the growing list of compliance requirements for government contractors, you can make it easier for your company to stay compliant. The following tips can help you streamline your compliance and reporting, reduce errors, and improve your internal workflows.
But first, exactly what is compliance?
To accept government money for work you must agree to following specific laws that govern public works projects. This includes construction and service work paid for through government funding. Additionally, there may be federal, state and even municipal laws you must follow as well.
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 costs associated with them that exceed $2,500. 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.
Compliance simply refers to following the rules set forth in these laws. If you have followed every regulation, you are compliant. If you have not, even by simply making a mistake, you are not compliant. If you are not compliant, regardless of the reason, you might face financial and legal penalties, including debarment from government work. For most government contractors, certified payroll and related reporting are the most constant and burdensome compliance activities.
How to stay compliant
Compliance risk is real, but your staff’s time is also valuable. So compliance needs to be a priority but it can’t completely dominate your teams workload. This can be a difficult balance to achieve.
Here are a few steps you can take to proactively stay ahead of compliance regulations and streamline your internal compliance processes.
1. Prioritize ongoing compliance education.
You’re completely responsible for understanding and following the laws as a government contractor. This can be a daunting task, but the Department of Labor has compliance resources to help employers stay informed. You should bookmark this and other official resources to help your staff stay up to date. You’ll also want to find additional resources at the state and municipal information where applicable.
2. Understand and eliminate common errors
Some compliance related activities are more prone to errors than others. For instance, mistakes are common when it comes to tracking hours, tracking work classifications and using the correct wage determinations. By understanding where mistakes are more likely to occur, you can more effectively eliminate them. You can find tips on eliminating the most common certified payroll mistakes and work to eliminate them.
3. Create standard compliance processes.
It’s important that you standardize your processes when it comes to all compliance related activities. This will not only reduce time it takes your staff to stay compliant, but it will reduce errors and limit your risk. For instance, you should have a certified payroll checklist in place to make the process quicker and less error prone. You can find tips on streamlining this workflow in this article.
Starter compliance checklist
Your processes will vary, but you can use the following list to build compliance procedures and checklists to reflect your needs. This can help standardize your workflows and eliminate common errors when it comes to certified payroll.
- 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.
- Create a certified payroll schedule and assign specific tasks to team members. For example, you could assign someone to verify hours and worker classifications weekly before processing payroll.
Using software to stay compliant
Compliance software designed for construction companies can make the difference between being able to grow or being buried under reporting activities. By automating as many compliance related issues as possible, you’ll be able to catch, correct and avoid issues that lead to violations. This will allow you to reduce your company’s exposure to risk and grow your business.
Some of the types of issues that software may be able to automate includes:
Wage 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 all required reports, including certified payroll, union, fringe, apprenticeship, EEOC and OSHA reports.
When considering software, look for something that reduces manual entry wherever possible. You will also want built-in verifications and robust reporting capabilities.. To receive the greatest benefit, you should streamline everything from time tracking through reporting.
Read our article in Construction Executive on how to pick prevailing wage software.
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.