There’s a broad spectrum and diversity of roles within the construction industry. This can be an administrative nightmare when it comes to managing operational, staffing, and welfare initiatives. Payroll, obviously, forms a critical part of all these activities. In the context of payroll, you also need to add in the presence of unions and the subsequent wage code derivations defined by Union Payroll. All in all, we are looking at a complex and unending workflow for financial associates in the construction sector when they prepare budgets, settle payments, and tally the balance sheets.
Union payroll brings in a whole new dimension of complexity to the construction sector. Let us examine closely the unique challenges brought about by unions in the payroll process.
Unions are often recognized, and their authority upheld by legal frameworks across the country. Liaising with them seamlessly is essential to avoid major legal disputes and complications, which can put immense pressure on the daily functioning of labor-intensive businesses like construction. Union issues often make headlines as major corporations are constantly being pulled up for disputes related to pay disparity and workforce treatment.
In fact, data from the National Labor Relations Board shows that in just the first half of 2022, there was a staggering 57% growth in the number of petitions filed by union representations in the US when compared to the same time last year.
The significant difference between union payroll and non-union payroll is the contribution made towards union functioning from an employee’s wages. Different unions have different subscriptions in terms of the fee collected from employees for membership. From an employer perspective, this means individually compiling and managing wage codes for each employee based on deductions to be made to unions.
Furthermore, there is another complexity in how union memberships are accounted for. Some employees may choose to enroll in a union at a later stage, while some may have received employment via the union, making them automatic subscribers. Memberships can also be of different tiers depending on the influence that an employee gets in the union. All this adds up to the complexity.
Geographical Diversity in Union Contracts
We have seen how union payroll has internal diversity, which complicates payroll management. The next big challenge facing the construction sector with regard to union payroll is the region-based structural differences in union contracts. These changes impact the pay structure of employees belonging to that union based on location. Different states often have their own set of union policies and legal wage codes, which are further influenced by local population behavior and the socio-economic ecosystem of the area.
For construction companies that operate in multiple jurisdictions, this leads to a huge overhead while managing employee payroll. Every geographical nuance and difference in pay rates, policies, benefits, etc., must be aggregated, evaluated, and integrated into the payroll in time to ensure contractual obligations are met.
Work Estimation Guidelines
Different unions are guided by different wage formats calculated by taking work efforts in different methods. For instance, some pay by the hour, some pay for the day, some leverage actual work hours based on punch-ins, some rely on supervisor entries, and much more. For the average construction company, it is important to have streamlined timekeeping and work management solutions in place that will help follow a diligent process that is compliant with different union remarks about workdays and weekdays.
Besides, different unions have different rates for overtime or time differentials as well as deductions based on leave arrangements. Overall, estimating the exact billing hours for a union payroll construction employee can be a tedious and time-consuming task.
Construction companies often face tremendous challenges with administrative and payroll management activities due to several complexities. Union payroll is perhaps one of the most challenging among the complexities and has the potential to disrupt smooth functioning in the event of non-compliance. Hence, construction companies must ensure they adhere to nuances and valid requirements from unions and pay staff accordingly. Managing this entire initiative manually will be next to impossible owing to the complex web of processing and the high chances of errors.
This is where a powerful digital construction management system with a tightly integrated payroll solution like CEM becomes a lifesaver. This enables a smooth transition from paper and spreadsheet-based manual project management to user-friendly and intuitive dashboards for your construction business with CEM. Sign up for a free demo to know more.