Payroll4Construction's Blogs

In the fast-paced world of commercial construction, managing payroll accurately is crucial not only for maintaining productivity and a healthy cash flow but also for ensuring compliance with labor laws.

Payroll errors can lead to significant issues that affect a contractor’s entire business.

That is why 61% of companies outsource some or all of their payroll operations, according to B2B Reviews.

Contractors leverage construction payroll services to help them avoid errors related to:

• Certified payroll reporting
• Inaccurate union tracking
• Multi-trade/rate/state issues

In this article, we’ll discuss what construction payroll errors look like and how they can easily be avoided so your company can reduce errors and save money.

Key Takeaways

• Construction payroll services can automate tracking and calculate wages and hours worked for each employee — simplifying certified payroll reporting.
• With construction payroll services, contractors can easily track wage rates, overtime, and benefits across multiple collective bargaining agreements (CBAs) to adhere to union and government regulations.
• Contractors can leverage construction payroll services to automatically calculate payroll even when employees work as multiple trades across various locations during a single pay period.

Common Construction Payroll Pitfalls: Certified Payroll, Union Reporting, and Multi-Trade/Rate/State Issues

Certified payroll, union reporting and multi-trade/rate/state payroll are each under harsh scrutiny by unions and federal and state government agencies.

It’s important to understand the challenges of each and the role construction payroll services play in simplifying them.

Incorrect Certified Payroll

Certified payroll reporting is a mandatory requirement for construction projects funded by federal government contracts, also referred to as Davis-Bacon jobs.

These weekly reports are required for each employee, and they ensure that workers are paid according to those doing similar work in their area.

Submitting accurate certified payroll is crucial to avoiding penalties and fines from regulatory agencies.

One common certified payroll error relates to inaccurate reporting of wages and hours worked.

This can result from simple data entry mistakes or an employee working in multiple locations with different prevailing wages.

How a Construction Payroll Service Can Help Manage Certified Payroll

A construction payroll service can significantly reduce errors in certified payroll reporting.

They can automate the process of tracking hours worked, applying the correct wage rates, and automatically generate accurate certified payroll reports immediately after construction payroll is processed.

By using these services, contractors can avoid costly penalties and maintain compliance with federal regulations.

Inaccurate Union Tracking

Unionized construction projects often require meticulous tracking of union-related information, including dues, benefits, and working hours under different CBAs.

Errors in tracking can occur if union requirements are not properly documented or if there is a lack of clarity in the application of different union contracts.

This can lead to disputes with union representatives and potential legal challenges.

How a Construction Payroll Service Can Help Monitor Unions

Construction payroll services are equipped to handle complex union tracking requirements.

These services can automate calculations for different wage rates and benefits to simplify union reporting.

One of the most helpful features involves union tables, which allow users to combine data from multiple locations into a single table and automatically filter out duplicate values.

This reduces the risk of errors and helps develop and maintain positive relationships with union workers and their representatives.

Multi-Trade/Rate/State Issues

Oftentimes, construction workers perform different tasks across multiple jobsites at varying rates of pay depending on their trade or job classification and the established prevailing wage.

For instance, a worker might perform carpentry duties at one rate and then plumbing tasks at a different jobsite the next. Depending on the size of the company, this could be incredibly challenging to accurately track and calculate on a day-to-day basis for each employee.

Managing these multi-trade/rate/state issues manually can be complex and prone to errors, leading to incorrect pay rates and potential disputes with workers.

How a Construction Payroll Service Can Help

A construction payroll service can efficiently manage multi-trade/rate/state scenarios by tracking the trades, locations and rates of each employee for each pay period.

These services then automatically calculate payroll based on this information — drastically reducing construction payroll errors.

Additional Best Practices to Avoid Construction Payroll Errors

While construction payroll services offer substantial benefits, there are additional steps you can take to further reduce payroll errors:

1. Invest in Training: Ensure that your payroll staff is well-trained in construction payroll requirements, including certified payroll and union tracking.
   1. With a knowledgeable staff, you can significantly reduce the risk of errors.
2. Regular Audits: Conduct regular audits of construction payroll records to identify and address errors early.
   1. This can help catch discrepancies before they become significant issues that could lead to compliance issues as well as disputes with unions and workers.
3. Stay Updated on Regulations: Construction payroll regulations can change, so staying informed about updates to wage laws, union agreements, and certified payroll requirements is essential for maintaining compliance.
4. Clear Payroll Documentation: Maintain clear and accurate documentation of all payroll-related activities, including timecards, wage rates, and union agreements. Proper documentation supports accurate construction payroll processing and helps resolve disputes and compliance concerns if they arise.
5. Software Integrations: Construction payroll services integrate with construction accounting software, human resource software, and construction time tracking software to ease contractors’ administrative burden.

Establishing a Construction Payroll Process with a Construction Payroll Service

Accurate payroll management in construction is essential for legal compliance and operational efficiency.

Payroll services put complicated payroll calculations in the hands of experts, relieving much of the administrative burden from contractors.

Construction payroll services can help contractors avoid errors involving certified payroll reporting, union reporting, and multi-trade/rate/job with:

• Automated calculations
• Free reports
• Union reporting and tracking capabilities

Investing in a construction-specific payroll service — like Payroll4Construction — can help you simplify your payroll processes.

With the right construction payroll service, you can mitigate construction payroll errors and avoid costly fines and payroll disputes.

Chat with a payroll specialist to learn more.