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New Federal Construction Projects Could Mean New Payroll Complexities

Posted by Kit Dickinson on Jul 7, 2020 10:30:00 AM
Kit Dickinson
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construction site with workers in the background | solutions for challenging construction payroll complexities

The coronavirus hit the construction industry at the worst possible time: right at the start of the busy season. Now that work is picking back up, many contractors will be making up for lost time, taking on as many projects as possible and bringing on more workers.

It could also introduce more payroll complexity than you’re used to — especially if you’re taking on new kinds of contracts. Outsourced payroll systems can take many of the burdens off your plate, but they can’t solve all of them.

In this article, we’ll take a look at the remaining payroll challenges HCM systems can’t address, and introduce you to a solution that fills the gap.

Union Pay Policies

Union rules involve complex pay policies and calculations that make timekeeping and payroll particularly challenging to manage. The manual effort involved, and the time it takes, cause many construction companies to avoid taking union jobs altogether.

Union payroll challenges include pay rates, union benefits, and union deductions. If an employee is subject to overtime pay or works under varying job roles during a pay period, your union calculations can be incredibly complicated. 

You’ll need to be well equipped to handle payroll accurately and reliably. Most time-and-attendance systems aren't designed for such complexities, leaving payroll personnel to develop their own manual workarounds.

Job Costing

Job costing is critical to ensuring that your construction business stays profitable, but job costing isn’t a cut-and-dried scenario for outsourced HCM solutions. While payroll systems have visibility into the labor costs and benefits that are paid through payroll, they don't have access to other employer-paid costs such as medical, dental, and 401K — which are all paid to different vendors. These non-payroll costs have a large impact on job costing. If you can’t account for them, you won’t get an accurate picture of your project's profitability. 

For many contractors, the only way to get the best of both worlds — an HCM and an ERP system — is to run payroll in both systems and deal with manually maintaining and reconciling data in each system. It's a labor-intensive and error-prone task.

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Certified Payroll

Construction companies with government-funded projects are required by law to submit certified payroll reports. Many employers manually complete the reports by hand every week. They take it on faith that the information from the job site is accurate and that all the calculations were made correctly. If they weren’t, the company could face significant fines.

Certified payroll reporting is a lengthy process, even when it’s done correctly. If an error is found, you’ll need to recreate and resubmit the reports all over again. This manually-intensive process takes time away from more valuable work and increases your chances of facing an audit.

Contractor Central Takes Away Your Payroll Frustrations

Challenges like these have vexed construction companies for decades, and many employers have given up hope of a better solution. But as technologies have advanced, it has become possible to automate the complexities of construction payroll. 

IDI can robustly automate your most complex calculations and payroll policies! Our Contractor Central™ application is designed for construction companies that want to outsource payroll while keeping their best-of-breed ERP. The web-based application integrates with your current time-and-attendance system to complement timekeeping and payroll calculations, and automate your most complex policies.

Contractor Central handles all of your union payroll policies, automates certified payroll and other reports, and exchanges job cost data with leading ERP systems. The solution is automated and customized to your company's unique needs.

With IDI's Contractor Central suite of solutions, you can:

  • Save time by automating certified payroll reports and other unique payroll processes.
  • Prevent errors involved in complex union and other calculations. 
  • Simplify your payroll system by integrating your HRP and ERP solutions.
  • Offload payroll compliance (taxes, withholding, etc.) by outsourcing payroll.

Here’s How It Works

When Contractor Central is run at the end of the pay period, it retrieves the time and labor information from your time system. The system then associates the specific rates of pay with the union, job, and worker classification. After determining rates, Contractor Central calculates the weekly average rate of pay for all overtime hours, in accordance with FLSA guidelines.

Run the automated solution at the end of each pay cycle. It takes just minutes to do and it's easy to use. With the click of a button, the calculations are made and the results are passed to payroll.

Companies that use Contractor Central find their time savings increase and their calculation errors dramatically decrease. The software also helps reduce labor disputes, government fines, and lawsuits. All of this means greater peace of mind for you each payday.

IDI Knows the Construction Industry

IDI has deep roots in the construction industry, with more than three decades of knowledge and experience backing our software. We understand the frustrations that construction companies face every time they take a government contract. Contractor Central was engineered out of that expertise, to help construction companies where they need it most.

Learn more abour how IDI helps construction companies

Topics: Construction Industry Solutions