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Processing union payroll for a construction company is different from that of other industries. Construction companies with union employees have to deal with:

• Collective bargaining agreements (CBAs)
• Complying with specific union regulations
• Union dues
• Multiple jobs with multiple unions and varying pay rates
• Multi-state payroll and taxation
• Preparing and submitting reports
• Staying in compliance with the guidelines set by the Davis-Bacon Act

It’s important for business owners and office staff of construction companies to be aware of the nuances of processing payroll for union employees and how to handle it efficiently and effectively.

These nuances can be difficult to keep track of, so we created the guide below to provide more clarification and to show how a union payroll company can help.

Article Highlights:

• Understanding the requirements of union payroll helps reduce the risk of errors and can help companies remain compliant.
• When creating union benefit formulas, you need to ensure accurate calculations and adherence to union requirements.
• Using a union payroll system can organize payroll compliantly and ensure that all union dues, benefits and wages are accurately paid.
• Employers must file certified payroll reports to the proper regulatory agencies detailing wages and benefits paid to union employees.
• Accurate and detailed recordkeeping is essential for maintaining transparency and avoiding potential fines or penalties.
• Work with a company that has experience managing union payrolls and can provide accurate compensation for your workforce.

Union Payroll in Construction

Union payroll in the construction industry is governed by specific requirements and regulations, particularly due to collective bargaining agreements (CBAs) between labor unions and contractors. These CBAs outline specific wage rates, benefits, working conditions and other terms of employment for unionized construction workers.

Managing union payroll in construction is important, as non-compliance can lead to penalties, legal disputes and strained labor relations. Understanding CBAs and labor union regulations and handling and interpreting real-time data are necessary for navigating the complexities of union payroll.

“Most who work outside of the construction industry don’t realize how much has to be checked and cross-referenced to get correct numbers — union rates, prevailing wages, fringe wages, overtime pay — and how much work that takes to do manually,” says Stephen Porritt in his article, The Top Construction Payroll of 2023.

He continues by saying, “A payroll solution that can’t automate this functionality is leaving a hefty burden on the user’s plate.”

Benefits of Working with a Union Payroll Company

When managing payroll for your construction business, the decision to work with a union payroll company can offer numerous benefits. From ensuring compliance with labor laws and industry regulations to providing access to specialized expertise and resources, partnering with a union payroll company can streamline your payroll processes. This will allow you to stay focused on running your business and improving relations with unions.

Important Aspects for Union Payroll

Processing union payroll can be complex. There are several critical aspects that need to be accounted for by union payroll providers, such as accurate time tracking, union rates and benefit packages.

Let’s look at some of the important aspects you need to be aware of for union payroll requirements and how a union payroll company can help.

Union Benefit Calculations

Calculating union benefits is an integral step in processing union payroll. When building union benefit formulas, it is crucial to understand the following concepts:

To ensure accurate calculations and adherence to union requirements, it is recommended to consult with union officials. For a more in-depth breakdown of union benefits and pay calculations, check out The Union Contractor’s Guide to Simplifying Payroll.

A union payroll company can ensure you remain compliant by doing all these calculations for you — eliminating hours of stressful work. This means your involvement with the payroll process can be as easy as submitting employee time tracking to the union payroll company and approving final payroll.

Certified Payroll Reporting

Certified payroll reports contain specific information, such as hours worked, wages paid and benefits provided to each employee who worked on a government-funded project. Certified payroll reports are submitted by the construction company to government agencies to prove it’s providing the prevailing wage for the area.

If a construction company is using union employees on their government-funded projects, it must submit union reports and certified payroll reports to the relevant regulatory agencies. To accurately prepare and submit certified payroll reports, start by documenting all compensation for union employees, including:

• Hourly rates
• Overtime hours
• Prevailing wages
• Any fringe benefits
• Taxes
• Insurance
• Retirement contributions

These need to be included in the report, and the reports must be submitted to the relevant regulatory agencies in a timely manner to maintain compliance with labor laws and regulations. Some union payroll companies can prepare accurate certified payroll reports and union reports right after payroll is completed, saving you time and ensuring compliance with labor laws and regulations.

Union Rates

Hourly wage rates for union workers in the construction industry can be affected by several factors, including:

• Location– If a union employee is working in multiple states across multiple jobs, their compensation and tax rates will vary. This information must be thoroughly documented in union reports and submitted to regulatory agencies.
• Union workers with more experience will likely earn more on a given project.

Wage rates are typically outlined in CBAs between labor unions and construction contractor associations. These agreements specify the minimum hourly wages contractors must pay their union workers for various job roles and experience levels, ensuring they receive fair and standardized compensation for their labor.

Union payroll companies understand the unique challenges presented by union wage rates. Some union payroll companies give contractors access to free reports, such as union reporting and tracking, job hour variance and job labor reports, so you can have a better understanding of labor costs.

Union Dues

Managing union dues is a crucial aspect of the overall payroll process within an organization. Accurate management of union payroll and dues ensures compliance with CBAs and labor regulations. Unions negotiate contracts outlining specific payroll terms, including wages, benefits and dues deductions. Adhering to these agreements is critical to fostering positive labor relations and avoiding potential legal disputes. Failure to accurately calculate and disburse these payments could result in grievances, fines or legal actions against the organization.

Additionally, handling union dues accurately and efficiently is essential for maintaining the financial stability of both the union and its members. Timely and precise deductions guarantee that union members’ contributions are collected and forwarded appropriately. Mishandling these dues could lead to financial discrepancies, affecting the union’s ability to provide services and representation for its members.

Union payroll companies are uniquely equipped with experts who can manage union payroll and dues for you, so you stay in compliance with CBAs and labor regulations.

Fringe Benefits

Union labor often receives a number of fringe benefits as part of their employment package. This may include:

• Contributions to health and welfare funds
• Health insurance
• Life insurance
• Disability insurance
• Paid time off
• Pension funds
• Other employee benefit programs

Accurately calculating and reporting these fringe benefits is crucial for contractors. It ensures compliance with labor laws and union contracts, reduces the risk of costly penalties or legal disputes and helps accurately determine the total cost of labor for a project. Some union payroll companies have built-in reporting capabilities that can accurately calculate and compile this information into reports for you to submit and analyze.

Accurate Recordkeeping

Construction companies maintaining mobile workforces face administrative difficulties managing and tracking each employee’s work hours, overtime and travel expenses. For legal protection, it’s important to know where employees worked, what they did and how long they were on the jobsite, regardless of how many localities are involved.

If your company ends up in litigation due to a payroll dispute, having an accurate record of payroll basics (such as a log of all employees’ hours, tax withholdings and pay) is important.

Further, contractors performing publicly and federally funded jobs must keep an accurate and organized record of payroll while work is being completed and for at least three years after, according to the Davis-Bacon Act.

These records must include the name, address and social security number of all the laborers who worked on the job. These reports can be intricate and time-consuming to generate, especially when working in multiple states.

Adding to the challenge, publicly and federally funded jobs mandate prevailing wages and weekly certified payroll reports. If these jobs cross state lines, prevailing wages may be different even for the same project.

Accurate recordkeeping is not only vital for in-house payroll but is also required for companies to comply with labor laws, including the Fair Labor Standards Act (FLSA). Union payroll companies provide accurate recordkeeping via cloud-based storage and documented audit trails that adhere to all union, municipality, state or federal regulations.

Let Construction-Specific Payroll Companies Handle Your Union Payroll

Construction-specific software and services can automate the payroll process and help companies remain compliant, especially when looking at multi-state jobs.

You need a construction payroll company that automatically calculates multiple rates, states and trades, ensuring accuracy. These construction-specific payroll systems can also generate a variety of payroll and job costing reports in minutes, saving companies hours of administrative time.

Construction-specific payroll processing services can take the burden of payroll off a contractor’s shoulders. You need a company that has the experience and a wealth of knowledge to make sure you’re in compliance with union payroll.

Payroll4Construction can easily process multiple states, rates and trades on a single timecard and generate dozens of free construction reports. Our team can also help you by compiling and submitting accurate reports — including union and certified payroll — to union halls and government agencies.

Construction payroll is challenging, but we can offer you the business solutions you need by addressing the industry’s unique complexities. See how we can give you a stress-free union payroll processing experience.