How to Manage Overtime Tracking for Construction Crews

Managing construction costs is essential for your project’s overall profitability, but labor costs like overtime can quickly eat into your profits if they’re not handled properly. Using an accurate and efficient way to track overtime hours, such as cloud-based time tracking software, gives in-field and back-office personnel access to overtime data as it occurs.  

This technology allows you to track and manage project costs more timely while helping your company stay in compliance with overtime regulations. It’s a win-win for your construction company, as you gain greater insight into your projects to help control costs while ensuring your employees are paid fairly and on time, increasing their satisfaction.  

Challenges of OT Tracking in Construction 

In the construction industry, overtime (OT) hours begin once a worker completes 40 hours of work within their workweek. At that point, crewmembers then earn 1.5x their normal pay for every OT hour. While tracking overtime hours may seem straightforward, the nature of construction work makes it more complex.  

Unique Challenges in Construction 

Both employees and your payroll team must first understand what hours qualify for overtime and ensure time is entered correctly for each job on every construction site. This task can be challenging, given the diversity of work happening on numerous construction sites simultaneously. On top of that, construction workers’ hours can be inconsistent from week to week, depending on project timelines and where they’re needed. 

For example, a plumber may work five hours at site A one day, then three hours at site B and another hour at site C the next day, and so on. Each site may use separate job codes for similar tasks (including different codes for regular and overtime pay for each task), which a crewmember must be able to distinguish between when entering their time. Even though they may have completed their hours at different sites, they all count towards the same weekly total. 

You may run into discrepancies if your construction company still relies on paper timesheets to track overtime. A field worker may unknowingly enter the wrong information on their timesheet, or a payroll employee may easily misread the worker’s handwriting. It’s also easier to transpose numbers or make other data entry errors when manually entering information.  

Common Pain Points 

All construction companies can struggle with tracking time across multiple construction projects, especially if they’re not using the right tools. Traditional time tracking methods often mean a lag between when the work was performed and when your back office staff receives the information. Then, they have to consolidate hours from multiple projects for job costing and payroll purposes. Any delay during this period can lead to difficulty meeting payroll deadlines or more significant problems like failure to comply with state and federal regulations regarding labor and overtime laws. 

OT Tracking in Construction: Why Accuracy Matters 

Accuracy in overtime tracking is essential, as a few errors could harm your company’s bottom line or legal standing. 

Financial Implications 

Since overtime pay is 1.5x a worker’s prevailing wage, your project’s costs can grow quickly. If you’re working with a tight budget, it could mean the difference between the project successfully turning a profit or taking a loss. Your team may need to plan for OT pay while developing a project’s budget and ensure that extra labor costs, including OT, are fully accounted for during the job costing process. This step is key for managing current projects while also improving estimated costs for future projects. 

Being aware of OT as it accumulates allows your company to monitor any additional costs and make adjustments to keep your projects within budget. An accurate record of OT is also essential for avoiding overpayment and underpayment issues, allowing your payroll staff to quickly confirm the accuracy of crewmembers’ hours. 

Compliance and Legal Requirements 

Construction companies with two or more employees and an annual gross sales equal to $500,000 or more are required by federal law to pay overtime to qualifying employees on federally funded projects per the Fair Labor Standards Act (FLSA). Additionally, your state may have separate labor laws or overtime exemptions your company must follow. Failing to comply with federal or state regulations can result in legal action against your construction company, resulting in large fines or other penalties, like becoming ineligible for future government contracts.  

Your company may also need to adhere to union contracts, which can have different overtime rules than federal or state regulations. For example, a union contract may stipulate that OT pay is 2.0x the worker’s typical rate or that OT pay starts at 35 instead of 40 hours. In these cases, the union contract supersedes the state or federal regulations.  

Employee Morale and Satisfaction 

No worker wants to receive less pay than what they’re owed. Accurately recording and approving OT hours increases transparency in the process, so employees know they’re receiving fair compensation for their time and efforts. 

Follow Industry Best Practices for Managing OT 

Following industry best practices can help your crew and back office employees record and manage time accurately. Here are a few strategies to consider. 

Implement Digital Solutions 

Upgrading from paper timesheets to cloud-based time-tracking software helps ensure time is recorded and coded correctly. Crew members can easily log their time and select the right job code over their mobile devices with just a few clicks. Plus, data from the construction site is synced and shared with your back office in real-time, so you can stay on top of additional costs and ensure you’re in compliance with all regulations.  

Automate Time Collection and Approval 

With digital timesheets, you can automate many steps of the collection and approval process. This software can automatically import and export timesheet data, eliminating manual data entry errors. Automation increases your data’s accuracy while reducing the time it takes to collect, enter, route, and approve time sheets.  

Additionally, many digital time entry solutions offer multi-level approval processes you can customize to fit your needs. For instance, you can set up an approval route that first sends timesheets to a construction foreman for approval and then automatically routes them to your project manager before sending them to payroll. This feature allows for a more efficient approval process. 

Customize Time Entry Methods 

Digital time-keeping solutions offer greater flexibility to match your company’s specific needs, both in terms of how you want to record time and how it integrates with your existing accounting and ERP systems. For instance, you may want to implement a digital punch clock for field workers, who need to keep close track of their hours while on-site, but also want to offer daily or weekly time entry for office employees. Selecting a time entry software that fully integrates with your existing systems is necessary to access real-time data. 

Manage Overtime Tracking with the Latest Tech 

One of the best ways to ensure accurate overtime tracking is by using the latest technology. Modern time tracking software, including Remote Payroll, offers: 

• Advanced Features: With built-in GPS tagging and geolocation, field employees can only clock in and out at a construction site’s precise location, preventing them from committing time theft and ensuring time and attendance at each site are accurately tracked. It also includes photo capture technology, which takes a picture of the crewmember each time they punch in or out, preventing buddy punching. 

• Integration with Payroll and Accounting Systems: It seamlessly syncs with popular accounting and ERP systems, like Sage, so data from construction is available to your back office for real-time visibility into labor costs (including overtime hours) and project budgets.  

• User Experience and Accessibility: The cloud-based tool offers employees a consistent, user-friendly experience, whether they’re tracking time through a web browser in an office or through an app on a mobile device out in the field. 

Tracking overtime in construction doesn’t have to be challenging.  Book your demo of hh2 Remote Payroll to simplify the process and ensure compliance and accuracy.