Construction Payroll: Software Solutions and Best Practices

In the construction industry, managing payroll presents unique challenges, from navigating fluctuating workforce sizes to adhering to complex regulatory requirements. By addressing the specific demands of project-based work and the diverse needs of both union and non-union employees, construction payroll software is an essential tool for ensuring accurate, compliant, and efficient payroll processes.

This practical guide explores how smartly leveraging technology can significantly ease the administrative burden, allowing construction companies to focus on their core business operations.

What is Construction Payroll?

Construction payroll, as the name suggests, is the process through which construction companies pay employees their wages. It’s a huge, vital administrative task that involves accurately tracking hours on timesheets, calculating benefits, adhering to tax and union regulations, and filing reports.

Though businesses in every industry struggle with payroll intricacies, those in the construction industry are subject to unique challenges that take it to the next level. For example, consider the project-based nature of construction.

Each construction project has its own specific requirements. Timelines, budgets, and equipment needs will vary, as will the amount of labor required to complete the project on time and in budget. It’s a difficult task to find skilled laborers to complete these projects when the construction industry is facing a shortfall of 500,000 workers—all while managing payroll that constantly changes due to this fluctuating workforce.

Other challenges that complicate the construction payroll process include:

• Union vs. Non-Union Laborers: Union workers’ wages, benefits, and working conditions are outlined by collective bargaining agreements (CBAs) between the labor union and the construction company. Typically, union workers have higher wages and greater benefits that non-union workers—along with union dues, potential reporting requirements, and deductions. A construction company is responsible for accurately processing each worker’s pay based on their union or non-union status.
• Multi-State Payroll: Many construction companies contract projects in different states and hire workers that live in other states—meaning that varying local, state, and federal taxes apply to each situation. Construction companies must know all the tax requirements to which they must adhere and be aware that these requirements can and do change.
• Prevailing Wages: For federal or state-funded public construction projects, prevailing wage laws may apply. This means that workers must be paid a similar wage in a certain location to what other workers are being paid based on rates set by the U.S. Department of Labor. However, every state may have its own prevailing wage laws as well. Employers will need to ensure they’re applying the correct job codes and pay rates during the payroll process.
• Certified Payroll Requirements: Government-funded federal construction projects require construction companies to submit weekly reports (payroll form WH347) certifying that they have paid the correct prevailing wage.

The rates workers are paid can also vary according to which tasks and projects they’re working on and where those projects are located. These challenges are burdensome for construction companies—especially those that manually process their construction payroll. Fortunately, they can ease the burden with sophisticated construction payroll software.

Construction Payroll Software

Construction payroll software simplifies and automates payroll for contractors. It is designed to help businesses manage multiple pay rates, track work hours, update and properly apply payroll taxes, and complete accurate timesheets with an integrated time and attendance tracking system.

With construction payroll software, businesses can also maintain regulatory compliance. Adherence to federal, state, and local payroll laws, employment regulations, and deadlines is assured through software that is up to date on current laws and regulations, delivers automated calculations, and supplies reporting capabilities with the click of a button.

Construction payroll software should also seamlessly integrate with a business’s project management and accounting systems. This gives every team member access to the updated, precise information they need to process payroll and effectively track and manage essential project costs, like materials, labor, and equipment.

Benefits of Adopting Construction Payroll Software

Adopting construction payroll software delivers a number of business-enhancing benefits.

1. Operational Efficiency

Automated and streamlined payroll processes reduce the time accounting teams spend on construction payroll, increasing their efficiency. This increased efficiency allows team members to focus their energies on other, value-adding endeavors.

2. Enhanced Compliance Accuracy

Automated compliance through modern construction payroll software ensures compliance accuracy. Errors brought on by manually researching and applying compliance requirements and labor laws are eliminated—freeing construction companies from the fear of lawsuits and penalties due to inadvertently over- or under-paying their employees.

3. Improved Financial Management

Construction payroll software—when integrated with a comprehensive enterprise resource planning (ERP) solution—equips construction businesses with financial management capabilities. Better budgeting, enhanced project cost tracking, and sophisticated financial reporting provide them with a holistic understanding of their current and future projects’ profitability.

Implementing Payroll Solutions in Construction Companies

Because there are many payroll solutions available, construction companies will need to carefully assess each option based on whether it provides the following must-have features:

• Pay Groups
• Employee Classes
• Tax Rates
• Payroll Attributes
• Overtime Rules
• Deductions and Benefits
• Reporting and Dashboards
• Mobile Support

Conclusion

From consistent labor shortages to inflation to supply chain disruptions, construction companies are no strangers to challenges. Thankfully, construction payroll problems don’t have to be on the list.

With construction payroll software, like Acumatica Payroll, businesses are equipped with a complete payroll management system that eliminates manual data entry processes, streamlines taxes and government reporting, and accelerates decision-making. Acumatica is adaptable, intuitive, and built on a modern cloud platform, empowering construction companies to grow their businesses on their own terms.

To learn more about Acumatica Payroll, contact our team today.