What is a Construction Payroll Service and Why You Need One

Anyone who has worked in construction or tried to wrangle payroll knows the many complexities of construction payroll. Calculating wages and benefits and staying on top of documentation and compliance can be a full-time job, on top of the many other responsibilities of running a construction business.

The solution? A payroll construction service to streamline payroll processing and improve compliance and accuracy. In this article, we’ll dive into construction payroll services, including why contractors need one and the benefits they provide.

Understanding Construction Payroll Services

A construction payroll service is a third-party provider or software that simplifies certified payroll software compliance, automates union payroll processing, and integrates construction time tracking and payroll automation for seamless job-costed payroll management. Compared to generic payroll providers that process payroll for companies in all industries, a construction payroll service is specifically designed for the complexities of the construction industry. It understands calculating and processing various types of wages for union and non-union employees. 

While a generic payroll service can likely process construction payroll, it likely won’t understand or automate the many unique payroll challenges for construction companies and general contractors, prevailing wage and union payroll processing and calculations, job coding, and manual time tracking. Payroll automation for construction can integrate with a contractor’s existing software, including project management and accounting systems, for fast and accurate payroll processing. 

Construction Payroll is More Complex than Other Industries

Construction companies may be tempted to use a general payroll service that doesn’t understand the complexities of the construction industry. Although every industry has its payroll and compliance quirks, construction is notoriously one of the most complex. Why is construction payroll challenging? Companies and payroll services have to understand and handle numerous reporting, compliance, and logistical challenges, including:

Certified payroll and prevailing wage calculations

A construction payroll service understands the complexities of prevailing wage calculations, which apply to all government-funded projects. According to the Davis-Bacon Act, contractors have to pay workers according to the prevailing wage and fringe benefits for their area. Prevailing wage varies by location and type of work and often requires more documentation to stay compliant.

Union wages and multi-tiered pay scales

Union employees covered by a collective bargaining agreement have pay and benefits different from non-union employees. Union contracts also often include tiered wage structures depending on the experience level of each worker, meaning a newer worker will have a different union pay rate than a more experienced worker but can move up over time. A construction payroll service can work through these complexities and stay current on union requirements and reporting.

Manual and remote time tracking

Construction projects often happen at multiple job sites, and companies need a way to ensure accurate construction time tracking and payroll, no matter where their employees are working. Unfortunately, for many general contractors, that means inefficient manual time tracking. A construction payroll service understands the need for reliable and efficient time tracking, no matter the location.

Job coding and costing

Construction payroll impacts current and future job costing. It’s not just about the total cost of a project but the cost of various types of work, overtime, and team size. Each project and type of work has a unique code so contractors and supervisors can understand the exact cost of a project. The amounts and codes must be accurate to provide a correct cost breakdown by project and type of work, which helps construction companies budget for future projects.

Multi-state and local tax compliance

Some construction companies have projects in multiple states or crews that travel to various job sites, which adds another layer of complexity to payroll. The state and local income tax may vary per project, which means the payroll team or service needs to calculate individual tax rates for each project. Wages can also differ for traveling crews, meaning they receive different pay for different travel assignments.

Labor law compliance 

On top of prevailing wage, union rates, and tiered wages, construction companies are also subject to various other labor laws around wage deductions, benefits, and garnishments. Each labor law requires an understanding of current regulations, calculating wages and benefits correctly, and submitting and retaining the correct paperwork. 

A Payroll Service Designed for Construction

Even just thinking through all the logistics and complexities of construction payroll can be overwhelming. With its industry-specific knowledge, a construction payroll service can overcome these complexities and create a streamlined and accurate payroll process — leaving contractors and other teams free to work on other projects. 

A construction payroll service automates certified payroll reporting to meet government and union requirements and manages job-costed payroll for accurate tracking. It also integrates with enterprise resource planning (ERP) and accounting platforms and allows for mobile time tracking to reduce payroll errors. 

When considering a construction payroll service, here are five key features to look for:

• Cloud-based payroll processing. Cloud-based reporting and processing allow for remote time tracking and easier access to payroll data, which improves accuracy and reduces roadblocks.
  
  
• Integrations. A robust construction payroll service integrates into existing ERP and accounting software (such as Sage 300, Trimble, or Foundation) for seamless data connection.
  
  
• Automated compliance reporting. Certified payroll requires documentation to stay compliant with government and union requirements. Look for construction-certified payroll software that automates the process for faster and more accurate recordkeeping. A prevailing wage payroll service makes it easy to follow regulations. 
  
  
• Mobile accessibility. Construction teams need to have reliable access to time tracking and payroll services, no matter where they’re working. Mobile time tracking for field workers reduces payroll errors and creates a smoother approval process. 
  
  
• Security and accuracy. One of the most important elements of a construction payroll service is that it protects employee and company information and provides accurate results. Look for a service that protects data and has a proven track record of accurate and trustworthy results. 

hh2 Remote Payroll: A Leading Payroll Service

When considering construction payroll software, hh2 Remote Payroll checks all the boxes and more. Our leading service combines leading cloud-based technology and integrations with automated reporting and real-time payroll data entry to create a secure and accurate payroll process. No more manual time card entry or moving data to Sage or Trimble by hand–Remote Payroll automates the process for seamless results. 

As technology becomes more prevalent on construction sites and offices, manual payroll processing is outdated. Companies and contractors don’t need to calculate data by hand or manually enter payroll information. Automated and integrated systems like hh2 Remote Payroll transform payroll management and make it easy to get fast, accurate results and stay in compliance. That means employees get paid faster, teams can focus on other tasks, and contractors can better track the many types of construction wages. 

Ready to transform your payroll management? Check out hh2 Remote Payroll.