Contractors have to be ready for surprises, but they aren’t necessarily fans of them—especially ones that require extra work and may lead to fines. Surprises that involve the federal government? You can stop there.
It’s enough of a hassle to bid on jobs and manage schedules, budgets and subcontractors—even with the aid of good construction management software—without being interrupted by a Department of Labor (DOL) auditor or safety inspector who wants to take up your time and make you dig up records from years past.
One strategy would be to close your eyes and hope that all DOL auditors move to Cancún.
A better move might be to make yourself as audit-proof as possible by: a) complying with all safety and wage regulations, and b) making sure you can demonstrate your compliance in the event of an audit or investigation.
Why construction businesses get inspected or audited
Two of the Department of Labor’s primary divisions that conduct investigations are the Occupational Safety & Health Administration (OSHA) and the Wage and Hour Division (WHD). As you probably know, OSHA establishes and enforces the health and safety rules that U.S. businesses—including construction contractors—must follow.
Since construction sites can be deadly, construction regulations defined by OSHA consist of 29 subparts with hundreds of regulations and appendices that may or may not apply, depending on a given contractor’s area of work.
OSHA inspections are performed without advance notice. OSHA sometimes targets businesses at random in sectors of the industry with a high level of injury or fatality incidence. They also may respond to an employee or competitor report of a perceived violation.
If OSHA inspectors find noncompliance, citations and fines can follow. OSHA’s largest fines rose by 78 percent in 2015, so that a single violation can cost you over $12,000; a “willful or repeated” violation, over $120,000.
While OSHA aims to keep workers safe, the WHD enforces the (get ready for another acronym) Fair Labor Standards Act (FLSA), which regulates the federal minimum wage, overtime requirements, and child labor laws, among other regulations.
Chart compiled from statistics on Department of Labor website
Like OSHA inspections, WHD audits can be random, but often occur because employees report an alleged violation. Violations can result in back wages as well as fines, depending on the auditor’s assessment. The WHD collected more than $1.2 billion in back wages from 2012 to 2016.
If an employee feels the damages collected by the DOL aren’t sufficient, they might decide to sue. In fact, the U.S. government admitted in an accountability office report that insufficient education of employers about the FLSA has led to a surfeit of lawsuits.
How to avoid an audit
“Don’t wait for the auditor to send you a letter,” says Elizabeth Murphy, employment defense lawyer at Jackson Lewis in Los Angeles. “Every employer should know if they are complying with wage-hour law or not—and if they’re not, they should fix it.”
The OSHA and WHD web sites provide details on the laws that govern businesses and construction sites, as well as numbers you can call with questions. Murphy also suggests conducting a self-audit to ensure you are as compliant as you think.
Pie chart from ExakTime’s “Anatomy of an Audit“
In short, you can avoid having your business disrupted and getting hit with a big fine by staying compliant with the laws.
But whether you’d give yourself an A+ in compliance or a C-, remaining compliant is not a one-shot deal: it’s an ongoing effort to keep all of your employees’ records accurate, and to keep every job site safe.
Where apps and compliance meet
Because it’s an ongoing effort, you’ll need some help along the way, and there are tools and apps you can use to stay compliant.
There is no way contractors or HR administrators can keep every rule and regulation—or a tally of each worker’s hours—at the top of their mind. And with work sites and crews increasingly separated by time and distance, using the best aids available becomes essential for properly monitoring labor and maintaining accurate records.
Tracking safety measures or hours via a construction management app means that a virtual checklist or time sheet is always available through the app (no excuse for not filling it out or punching in). And with most apps syncing to the cloud, data is automatically stored for access anytime (and not easily lost, like paperwork).
This makes showing compliance much easier. But tracking with an app also means you have a good handle on the rules and regulations that govern you and your employees—which makes you less vulnerable to audits in the first place.
Apps that help keep the DOL away
New apps are popping up as fast as mushroom caps after a rain, and it’s easy to make a very basic app that tracks one thing or another. The key is finding the ones that are built with ease-of-use in mind and some forethought about what features will really help the end user.
SafetyCulture offers iAuditor, a safety inspection and audit checklist app. It lets you add in photos and locations to your custom safety checklists. A checklist can consist of whatever you need it to, whether it is for a monthly fire safety inspection or a daily personal protective (i.e. safety) equipment check. And unlike paperwork, a checklist in iAuditor is accessible for anyone with the app and the data is securely stored and reviewable in the office.
InTouchInsight is another solid option that lets you make custom forms and checklists with multiple choice questions, auto-calculation fields, and more.
ExakTime’s app syncs time and attendance records to the cloud as employees clock in and out, flagging overtime hours. It also features employee and supervisor time card approval, and mobile forms for worker sign off on breaks and safety.
When you know the rules and use an app to help you follow them, then you can monitor in real time whether you are succeeding, and correct course if necessary. You’ll also have peace of mind that you can easily prove your compliance to Uncle Sam.
Have you been through an OSHA audit?
Insider information is always helpful to people looking to avoid getting an OSHA audit. Have you gone through the experience yourself? What was it like, and what prompted it? What advice do you have for other construction managers? Join in on the discussion in the comments below.