Managing payroll for a construction company can be challenging with multiple job sites, tasks, and schedules. Another common factor that adds a layer of complexity is unionized payroll.
Many construction workers (including more than 10% of U.S. workers) belong to labor unions to protect their rights and working conditions. Employees who are part of a union have their pay governed by a collective bargaining agreement (CBA), which is negotiated between the union and the construction company. A CBA is a written document that sets the terms of wages, benefits, and working conditions employers must follow. If companies don’t follow the rules in the CBA, they risk penalties and potential legal action.
Payroll for non-unionized employees isn’t bound to a CBA, meaning construction companies can adjust and balance payments as needed. Non-union payroll tends to be simpler because it is consistent across employees and determined by the company.
Unionized payroll is usually much more complex because it has to adhere to the rules in the CBA, meaning that the details of the paycheck and benefits are out of the construction company’s hands. Payroll teams need to be aware of the CBA requirements so they can follow the intricate rules. On top of that, a construction company may have employees belonging to different unions (such as electricians, plumbers, engineers, and others), meaning payroll teams have to balance and understand the unique needs of each CBA and labor group.
Unionized payroll is unlike non-union payroll and can present a number of challenges for construction company accounting teams.
Union workers have different pay scales with set minimum and maximum wages for different job classifications. Pay scales are based on things like department, job performance, location, and seniority and are determined by the CBA, not by the construction company. That means that within a construction team, union workers can have a variety of pay grades that are often different and more varied than their non-union colleagues.
Varied pay scales and certified payroll are challenging for construction companies because they aren’t in control of the wages and have to stay current on the CBA to ensure they are paying workers the correct wages. On average, a CBA is re-negotiated every two to five years, with most contracts lasting three years. That means the accounting system has to adjust to new CBA rules every few years for each unique union. Pay scales can also vary for each person and even from project to project, so staying current and paying attention to the details of each union worker's paycheck is essential—and time-consuming.
Perhaps even more complex than unionized pay scales is the benefits tracking process. As defined in the CBA, union workers are likely to receive overtime pay and benefits like health insurance and contributions to pensions and apprenticeship programs. Each of these benefits has unique contribution rates and reporting requirements, which can change when the CBA is updated. For those reasons, strong time tracking is essential.
That means construction company payroll teams need to be aware of the current CBA benefits requirements and calculate the rate correctly based on each union employee’s job classification and hours worked. Non-union employees, on the other hand, may not receive benefits. Companies that offer benefits to non-union employees typically set the benefit options, making for fewer options and a simpler process.
Calculating benefits can be incredibly nuanced, depending on the complexity of the CBA. Benefits tracking often requires payroll teams to manually track if employees qualify for certain benefits, determine their contribution rate, and deduct their contributions from their base pay. Unionized employees also often have their union dues taken from their paychecks, which adds another calculation to the process.
With all of the complexities of unionized payroll, it helps companies to turn to payroll automation for construction. Instead of processing payroll by hand and having to manually calculate each unique pay scale and set of benefits, tools like hh2 Remote Payroll can easily handle unionized payroll.
hh2 Remote Payroll can cut payroll processing time by 70% — learn more about hh2 Payroll Automation. Designed specifically for construction teams, hh2 Remote Payroll makes it easy to automatically code hours to the right cost codes or pay scales and customize approval processes for smooth, accurate union payroll management.
Automation streamlines the complex calculations of union payroll, which creates a faster and more efficient process and reduces the chance of errors. By leaning into automation through hh2 Remote Payroll, construction companies can trust that their payroll processes will stay in line with CBAs without having to manually check each piece of data.
Here are three automation features that make a difference:
Automated payroll systems automatically adjust for complex pay scales and different rates. The systems know the job levels, union classifications, and pay scales of each employee to automatically calculate their rate correctly.
Each CBA likely has different benefits requirements. Knowing which benefits apply to which employee and manually making calculations can be challenging and time-consuming. Automated payroll systems can easily handle detailed union rules to deduct the correct benefits.
Part of the reason unionized payroll is complex is that a high level of compliance is required. If construction companies don’t follow union payroll rules, such as the details of each union’s unique CBA, they could face potential penalties and legal action. They will also likely be required to pay back any missed wages. Companies can avoid harsh consequences by using automated payroll systems to assist with prevailing wage compliance reporting and ensure all rules are followed. Companies can customize the payroll software with the union requirements and ensure the correct pay and benefits are applied. Automated systems also keep detailed payroll records, which can be helpful if a union wants reports from the employer.
Unionized workforce payroll is a complex but necessary part of construction company accounting—but it doesn’t have to be stressful or time-consuming. Leaning into automated construction payroll solutions like hh2 Remote Payroll makes it easy for companies to simplify payroll and feel confident in compliance and accuracy for all employees.
hh2 Remote Payroll can streamline workflows, allow for real-time updates and adjustments, and keep your company’s payroll processes on track.
Schedule a free hh2 Remote Payroll demo today and simplify your payroll process instantly!