In the construction industry, managing payroll presents unique challenges, from navigating fluctuating workforce sizes to adhering to complex regulatory requirements. Construction payroll software is an important tool.

It meets the needs of project-based work. It also serves both union and non-union employees. This software helps ensure accurate, compliant, and efficient payroll processes.

This practical guide explores how smartly leveraging technology can significantly ease the administrative burden, allowing construction companies to focus on their core business operations.

What is Construction Payroll?

Construction payroll is the process through which construction companies pay employees their wages.

It’s an important job that involves tracking hours on timesheets. It also includes calculating benefits and following tax and union rules. Finally, it requires filing reports.

Businesses in every industry face payroll issues. However, the construction industry has special challenges that make it even harder. For example, consider the project-based nature of construction.

Each construction project has its own specific requirements. Timelines, budgets, and equipment needs will change. The amount of labor needed will also vary. This is important to finish the project on time and within budget.

It is hard to find skilled workers for these projects. The construction industry has a shortfall of 500,000 workers. At the same time, payroll is always changing because of this unstable workforce.

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Construction Payroll Software

Construction payroll software simplifies and automates payroll for contractors. It helps businesses manage different pay rates. It tracks work hours and updates payroll taxes. It also completes accurate timesheets with a time and attendance tracking system.

With construction payroll software, businesses can also maintain regulatory compliance.

How is Construction Payroll Unique: Payroll Types

Construction payroll is far more complex than standard payroll due to the variety of wage types and compliance requirements contractors must manage.

Adherence to federal, state, and local payroll laws, employment regulations, and deadlines is assured through software that is up to date on current laws and regulations, delivers automated calculations, and supplies reporting capabilities with the click of a button.

Here are the key payroll types that make construction payroll unique:

• Prevailing Wages
  These are wage rates set by local authorities or the U.S. Department of Labor, especially for government-funded projects. Contractors must pay the highest applicable rate—whether it’s based on the employee, union, or certified project—to comply with the Davis-Bacon Act. Not all states require prevailing wages, but federal projects do.
• Union Wages
  Employees covered by collective bargaining agreements are entitled to union benefits—even if they’re not union members. Payroll systems must account for union-specific wage rates, pensions, and benefit contributions, which vary by trade and region.
• Certified Payroll
  This is a weekly report (Form WH-347) submitted to government agencies to confirm that workers are paid correctly under prevailing wage laws. It includes details like hours worked, job classification, and deductions, and is essential for compliance on public projects.
• State and City Requirements
  Contractors often work across multiple jurisdictions, each with its own wage laws and tax rules. Payroll systems must be flexible enough to apply different rates and regulations based on project location, even within the same pay period.

Essential Software Features for Construction Payroll

Construction payroll software must address the industry’s unique challenges. Here are the essential features that make a solution truly construction-ready:

• Certified Payroll Reporting
  Automatically generate reports that meet government contract requirements.
• Union Wage Tracking
  Handle complex union rules, wage rates, and benefit calculations across different trades and regions.
• Job Costing Integration
  Allocate labor costs to specific projects or cost codes for accurate financial tracking and forecasting.
• Multi-State & Multi-Rate Support
  Manage employees working across different states or under varying pay rates within a single payroll cycle.
• Prevailing Wage Compliance
  Ensure accurate wage calculations based on local, state, or federal prevailing wage laws.
• ERP & Project Management Integration
  Sync payroll data with ERP tools to streamline operations and reporting.
• Mobile Access & Employee Portals
  Enable field workers to clock in/out, view pay stubs, and update personal info from any device.

These features help construction firms stay compliant, reduce manual errors, and improve payroll efficiency across job sites.

Benefits of Adopting Construction Payroll Software

Adopting construction payroll software delivers a number of business-enhancing benefits.

1. Operational Efficiency

Automated and streamlined payroll processes reduce the time accounting teams spend on construction payroll, increasing their efficiency. This increased efficiency allows team members to focus their energies on other, value-adding endeavors.

2. Enhanced Compliance Accuracy

Automated compliance through modern construction payroll software ensures compliance accuracy. Errors brought on by manually researching and applying compliance requirements and labor laws are eliminated—freeing construction companies from the fear of lawsuits and penalties due to inadvertently over- or under-paying their employees.

3. Improved Financial Management

Construction payroll software—when integrated with a comprehensive enterprise resource planning (ERP) solution—equips construction businesses with financial management capabilities. Better budgeting, enhanced project cost tracking, and sophisticated financial reporting provide them with a holistic understanding of their current and future projects’ profitability.

Implementing Payroll Solutions in Construction Companies

Since there are many payroll solutions, construction companies must carefully evaluate each option. They should check if it has these essential features:

• Pay Groups
• Employee Classes
• Tax Rates
• Payroll Attributes
• Overtime Rules
• Deductions and Benefits
• Reporting and Dashboards
• Mobile Support

Download Construction Payroll Brief

Conclusion

From consistent labor shortages to inflation to supply chain disruptions, construction companies are no strangers to challenges. Thankfully, construction payroll problems don’t have to be on the list.

With construction payroll software, like Acumatica Payroll, businesses get a full payroll management system. This software removes manual data entry, simplifies taxes and government reporting, and speeds up decision-making.