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Managing complex payroll in the American construction industry

Monday, March 9, 2020

Payroll in construction is complex.

A typical construction company will need to maintain payroll compliance with a large number and variety of collective bargaining agreements, each with its own set of complexities. In some cases, the number of agreements can be several hundred. Maintaining compliance helps build solid relationships with unions and their employees, while keeping grievances to a minimum.

Additionally, capturing time effectively means no errors and omissions, paying employees correctly, avoiding time theft, and provides visibility into whether labor costs are on or off budget.

Most construction companies have employees working on projects in different tax jurisdictions. State, local and even school district taxes can be onerous to manage, and if you don’t get it right it can be costly.

By automating and streamlining time capture, payroll, and tax management into a comprehensive end-to-end process, construction companies benefit financially and operationally – and employees win as well. Make sure the following capabilities are in your payroll solution.

Handling compliance

Construction organizations are required to manage compliance across a variety of legislation set by local, state and federal governments, and union collective bargaining agreements. Payroll applications with excel-like calculation engines allow organizations to comprehensively set up payroll for each project. This means organizations can maintain payroll on their own, quickly and in real time to avoid the costs and penalties of non-compliance.

Accounting for local tax variations

It’s very common for construction organizations to have work sites in multiple states and need employees to be assigned to jobs in two different states at once. This means HR teams need to account for the varying local taxes in each state. Leveraging a payroll system that applies local tax rules automatically and allows employees to be allocated to multi-state projects enables HR to confidently know where the work is taking place and that taxes are applied correctly, in real time.

Ensuring effective time capturing

Many construction companies employ a mix of both salaried and hourly workers. This makes calculating an employee’s earned wages difficult. Effective time capturing is the backbone of paying workers correctly as a single time record can be recorded against the correct project for budgeting, but also trigger the correct rate for that project role, the applicable taxation rules, and fringe benefits to apply. With an advanced payroll solution, organizations can capture their workers’ hours in field and in real time, then use this information as a basis for paying its employees. Each hour worked can also be allocated to a specific project, which enables management and stakeholders to see the amount of time worked accrue against project budgets. In the event the hours worked aren’t aligning with the project budget, stakeholders can intervene in real time to get back on target.

Like what you read? Learn more about what an advanced payroll system can do for you.

Chenessa Mok, Senior Presales Consultant, LOKI Systems

Chenessa is a senior Presales Consultant at LOKI Systems with over 5 years of experience working with organizations investigating payroll solutions across the globe and in industries from private sector to public sector, and retail to highly unionized construction environments

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