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Contractor Payroll - Why is it Unique?

Running payroll for contractors and construction companies comes with unique challenges not found in other industries. Compliance with complex prevailing wage laws, managing transient workforces, and producing specialized payroll reports put added demands on payroll teams.

Understanding what makes construction payroll unique is the first step to improving processes.

Construction companies rely heavily on contracted workers to execute projects. Tracking the pay rates and benefits for these workers is more complicated than for W-2 employees. Contractors may work on multiple jobs for multiple companies at once. Their pay can vary based on the nature and location of each project. Some projects require contractors to be paid state or federally mandated prevailing wages.

Prevailing Wages and Davis Bacon

On public works projects, contractors must pay workers prevailing wages as determined by the Department of Labor. Prevailing wage laws like the Davis Bacon Act exist at federal and state levels. Rates are set based on local standards for similar work in the private sector. Compliance involves tracking hours worked across multiple wage categories. Payroll teams must also submit certified payroll reports to show prevailing wages were paid.

Staying current with changing wage determinations is another challenge. Rates are updated frequently and can vary from one county to the next. For multi-state contractors, keeping track of varying rules and rates is extremely difficult without automation. Non-compliance can result in fines or project delays.

Complex Payroll Reporting

Beyond prevailing wage reporting, construction payrolls require specialized reporting to meet compliance demands. For federally funded projects, Affirmative Action reports must show workforce diversity statistics. Payroll teams need to compile data on all contractors regardless of where paychecks are issued.

At the state level, contractors must comply with unemployment insurance and workers compensation reporting for each jurisdiction. For transient workforces, tracking hours across states adds complexity. Staying on top of each state's filing requirements is critical.

Within the company, detailed cost tracking by project and work activity is vital. Payroll should integrate with job costing and project management systems. Accurate cost codes on timecards enable better insights into profitability.

Supporting a Transient Workforce

Construction contractors may work for a company one week and move to another site the next. Some workers may even split time between multiple companies. This transient workforce makes payroll administration challenging.

Processing payroll accurately requires keeping track of employees as they move. Details like pay rates, benefit enrollments, tax jurisdictions, and cost codes must carry over as workers change projects and companies. Doing this manually opens the door to non-compliance and adds administrative burdens.

Automating the flow of payroll data helps minimize errors as employees transition on and off job sites. Features like self-service portals give workers visibility and control over their information. Integrations with project management and human capital management systems also improve compliance.

a certified payroll jobsite

Benefits of Certified Payroll Reporting Software

Construction companies using manual processes or basic payroll software struggle to stay on top of industry-specific reporting demands. Investing in technology built for construction payroll brings major benefits:

1. Automated Prevailing Wage Compliance

Software with prevailing wage capabilities automates certified payroll reporting. Rates can be configured based on project location and work classifications. Hours from time cards automatically populate forms like WH-347 required for Davis Bacon compliance. Built-in rate databases reduce the need for manual wage lookups.

2. Simplified Reporting Across States

Multi-state contractors face a maze of reporting rules and forms. The right software centralizes tracking for unemployment insurance, workers compensation, and state taxes. Changes to rates and regulations are automatically applied across the system. Reporting dashboards make it easy to monitor compliance deadlines in each jurisdiction.

3. Connected Data and Processes

There are many moving parts in construction payroll from employees, projects, and compliance demands. Disjointed systems make it difficult to connect information across workflows. Unified platforms bring everything together for better reporting and more streamlined processes.

4. Real-Time Project Cost Tracking

Payroll integration with project management and job costing enables granular cost tracking. Hours and pay can automatically map to projects based on employee time cards. This gives project managers instant visibility into labor costs as work progresses.

5. Less Administrative Burden

Automating certified payroll, multi-state reporting, and project cost allocations saves significant time for payroll teams. There is less need for duplicate data entry and manual form filing. Employees also benefit from self-service access to pay statements and tax forms.

How eMars Supports Construction and Contractor Payroll

eMars is purpose-built payroll software for the construction industry. Its unified platform automates certified payroll, multi-state reporting, and job costing:

  • Automatically tracks and applies prevailing wage rates based on project locations and work classifications. Compliant certified payrolls can be generated with one click.

  • Streamlines reporting across multiple states and jurisdictions. Built-in dashboards simplify managing deadlines and forms for taxes, workers comp, and unemployment insurance.

  • Ties employee time data directly to projects for real-time cost tracking and reporting. Payroll integrates with eMars project management and human capital management.

  • Employee portal allows workers to view pay statements, manage direct deposits, update contact information, and more.

  • Flexible platform works for all contracting needs from small subcontractors to national construction firms. Custom rules and reports can be configured.

With eMars-certified payroll software, contractor payroll teams can significantly reduce reporting risks and administrative burdens. To learn more about eMars and get a custom demo, reach out today.

Take Control of Your Construction Payroll

Managing payroll for contractors and construction firms is filled with complexity. Unique compliance demands, transient workers, and cross-system reporting create challenges not seen in other industries. Automating processes with purpose-built payroll software is critical for reducing risk and administrative costs.

To see how eMars construction payroll software can benefit your company, schedule a custom demo today. Our team is ready to give you a personalized look at how eMars brings together certified payroll, multi-state reporting, and real-time project cost tracking.

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