For employers in the manufacturing industry, even the smallest payroll problems can become union nightmares. Unions keep a sharp eye out for payroll violations, and simple miscalculations can mean costly disputes and heavy fines. You've got to scrutinize your payroll outputs to eliminate errors before they get passed on to employees' paychecks.
When setting up your union worker payroll, it's important to ensure that your processing and reporting systems will help protect your business—and not be a liability to it. The most important factors to consider include:
- Knowing your union's requirements
- Calculating pay scale differences
- Complying with FLSA
- Tracking time accurately
- Working with the union and employees
Let's unpack each of these factors.
1) Know Your Union's Requirements
Every manufacturing union has specific pay requirements. These requirements are spelled out in the union contract, and your payroll system should be set up to accommodate each requirement. For example:
- Pay periods and pay dates
- How paychecks can be issued
- Rate changes within the union
- PTO, sick leave and vacation pay rules
- Union deductions
- Union reporting requirements
If your payroll processes haven't incorporated all of your union requirements, you could be unknowingly violating union contracts. In this case, ignorance isn't bliss—while you may be unaware, it's only a matter of time before the union discovers the error. And the longer the error has gone unaddressed, the more painful your dispute resolution will be.
2) Calculate Pay Scale Differences
If you're like most manufacturing employers, you pay multiple rates based on factors like job, production, seniority, shift, and union, to name a few. That means payroll has to stay on top of several pay rates for each employee. It's a lot of variables to manage, and if you don't handle them accurately, you'll issue inaccurate paychecks.
This is where many employers run into trouble. Because you have so many moving pieces to account for, and because every employee is different, it's incredibly easy to fat-finger a calculation or make a copy/paste error. Complex spreadsheets use unwieldy (and fragile) macros, and it's easy for the eyes to skip a row when you're entering calculations.
Wherever you have manual effort, you have room for human error. The more you can automate your calculations, the more robust your payroll process will be.
3) Comply with FLSA
The Fair Labor Standards Act (FLSA) is a minefield for manufacturing companies. Determining a production employee’s overtime rate isn’t the clean “time-and-a-half” calculation that it is for most industries. To get the correct FLSA overtime rate, you need to factor in all of those different pay rates and incentive earnings. If a union employee's pay rate changes during the pay period, your overtime calculations need to change with it. If you don't get it right, not only will you need to deal with union disputes, you'll have the Department of Labor on your doorstep as well.
The DOL estimates that at least 70% of employers aren't FLSA compliant. Noncompliance can mean heavy fines, lawsuits and even criminal charges. In fact, FLSA lawsuits have increased more than 500 percent since 1991. Manufacturers that think they’re safe from litigation should think again.
Often, companies become noncompliant because confusing laws have changed. Other times, they’re relying on complex manual calculations to determine pay. In either case, noncompliance can be costly.
4) Track Time Accurately
Union disputes over employee wages can often come down to time tracking issues:
- Did the employee work more than 40 hours?
- What jobs were they on?
- What shifts did they work?
- What facilities did they work in?
- Were they compensated for all of their job responsibilities?
Not only does accurate time tracking ensure your employees are paid fairly, it protects you in case of a union dispute. Full and accurate time data lets you confidently show that your employees were paid appropriately.
Unfortunately, many manufacturers have an outdated timekeeping system that's either inconvenient to use or unable to provide all the data you need if a dispute arises. Other employers have inadequate processes in place, or a lack of accountability. When push comes to shove, they can't be sure that their payroll data reflects actual time on the job.
5) Be Easy to Work With
A positive workplace isn’t just a great way to retain your top employees, it can keep you out of union trouble, too. If your unionized employees trust you and feel respected, they’ll be more likely to give you the benefit of the doubt when there’s an error on their paycheck.
Making payroll easy to understand can help, too. If your workers’ paychecks are affected by pay scale variables, it can be hard to tell if they’ve been paid correctly. Confusion leads to suspicion, and a simple misunderstanding or calculation error can lead to tense union disputes and fines.
Make it easy for your employees to interpret their paychecks. Here are a few ideas:
- Provide a printed pay stub legend with each paycheck.
- Host quarterly Q&A sessions for employees.
- Incorporate a face-to-face explanation as part of new hire on-boarding processes.
- Link to an online calculator from your company wiki.
When your unionized workers see that you're making every effort to pay them fairly, you'll have a better chance of working with the union instead of against it.
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No More Union Violations
When unions are scrutinizing manufacturing employers for union wage violations, the heat is always on. But if you're protecting your business in these five key payroll areas, you'll mitigate the risk of union action and heavy fines.
Take some time this week to review how your business is handling each of these five areas. Evaluate your weak points and talk with your executives about improving your processes and tools.
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