Slippery When Wet… Complications of the Prevailing Wage Calculations
Before you can drive off with the checkered flag, we need to review the prevailing wage.
If you’re a contractor who performs government jobs, your payroll has to be certified. Workers must receive a minimum level of pay as required by state or federal law. These prevailing wage calculations should be conducted as part of an automated process for accurate and timely processing to be sure to keep you in compliance.
The calculation can become complicated when companies have the option of paying the wage difference between the minimum required wage and the hourly wage paid to the worker with cash or with benefits.
For example, if a carpenter’s prevailing wage is $30/hour and he/she is making $45/hour, they can be paid the remaining $15/hour wage in cash or with benefits (union or HR).
Some additional decisions must be made with prevailing wages when it comes to taxation, as some earnings can be treated as taxable or non-taxable. Companies can save on FICA or Medicare by making these wages non-taxable and providing non-taxable benefits in the prevailing wage calculations.
To keep you on the straight and narrow path, your payroll app should be able to track and manage these different crafts/classifications as well as their associated prevailing wages, and be able to tie base rates and fringe benefits to these crafts/classifications.
In addition, the software should be able to calculate the fringe benefits as part of employer paid medical benefits in order to track the credit received for this process.
To remain in line with government compliance, certified payroll reports must be created and submitted in a timely manner. Effective payroll software should be able to meet these regulatory requirements with ease including the ability to upload those files into designated portals or allow for seamless integration with certified payroll reporting tools such as eMars and LCPTracker.
Contact us for more information on how to win your race with the prevailing wage, and check out our next edition of the Payroll and HR Blog Post Series.
Get the Green Light on Garnishments from Your Payroll App
The pit stop is over! Let’s get back behind the wheel to discuss the most common payroll and human resources administration road blocks – garnishment calculations and reporting – and how we can speed through them with software.
Today’s advanced payroll applications can set up, calculate and report on all garnishment and child support scenarios while complying with state and federal laws regarding involuntary deductions. Even the most complex scenarios, including the need to calculate and prioritize multiple garnishments simultaneously, as well as abide by net pay laws, can be addressed by payroll software.
For example, in many states, employees with multiple child support payments must have their garnishments prioritized by court or case date and processed on a first-come-first-serve basis. However, some of these states require that the individual will be left with a minimum amount of net pay. Traditional payroll applications would blow a gasket just thinking about these requirements, but industry-leading software provides options for pro-rated, order-received and even-split calculations, and these amounts can be automatically updated as invoices in Accounts Payable with case numbers and other identifying data. Then, separate checks for garnishments can be issued and even grouped by vendor.
With child support in the rear view mirror, we can drive on toward tax levies. To address these garnishments, payroll systems need to identify the basis for percentage of wage calculations which might exclude certain benefits or deductions such as medical insurance, union dues, uniform expenses, etc., while ensuring the required minimum of net pay remains available to comply with state and federal laws. No one should have to manually track employees’ federal and state tax levies – especially outside of an accounting package – and then have to schedule additional payroll cycles until all deductions have run their course.
Further roadblocks can be the lack of tracking and historical reporting if no electronic archival features are in place. Some of today’s inferior payroll systems force this practice and/or don’t have the ability to scan and attach garnishment orders electronically. Record-keeping for such payroll calculations are critical for audits, so be sure your payroll app has the bells and whistles of a luxury sedan, not an old tractor.
Get the green light on garnishments, don’t let your business roll into a pot hole. Contact us for more information and be sure to rev up for another Payroll and HR Blog Post Series… coming up next.
- Eliminating paper forms that your mobile workforce use to capture structured information which is then re-keyed, scanned, posted, or filed where access by the rest of your organization is difficult.
- Decreasing the time and effort to process and transmit service, billing, collection and job-related communication by getting rid of paper documents and manual processes.
- Improve productivity around your deliverables (i.e. blueprints, design drawings, procurement and supply chain orders, equipment logs, daily process reports and punch lists) by digitizing all data and processes.
- Save time, eliminate rework, and increase accountability by removing paper-based documents / processes and introducing content management and email integration to all correspondence / communication.
Caution! Dangerous Roads Ahead for Construction Payroll and HR Administration!
No matter your industry, payroll administration is never a straight and simple path. Yet few businesses face as many curves in the road – or as much red tape – as construction and manufacturing. Stringent Union rules regarding pay rates and fringes, irregular work hours, federal and state laws, as well as immigration issues all conspire to make payroll complicated, challenging and a potential liability.
Fortunately, and perhaps unfortunately, there are as many payroll applications as there are twists and turns in the business process itself. But beware of those curves…because not all apps address the critical requirements of commercial contractors for payroll and human resources administration.
This blog focuses on key features and functionalities that contractors need to succeed.
We’ll kick things off with a review of the fundamentals: Payroll Entry, Data Collection, Processing and Distribution.
Duplicate and inaccurate data are the most common roadblocks of payroll processing. That’s because so many contractors are still stuck in the potholes of paper-based time-sheets and manual processes. These outdated methods to input labor information into payroll systems should be replaced with mobile field time entry collection software, digital forms, digital upload templates and self-service applications…the superhighway system of business processing.
Today’s apps streamline the collection of critical payroll and HR data, and then make accurate and timely information readily available in your payroll system. If your payroll software has any of these capabilities already embedded, congratulations, you’re getting better mileage than most. But even simple apps or digital forms can replace paper documents, and manual data entry and transfer.
To be efficient, effective and profitable, you must get rid of paper and manual processes, but your digital payroll workflow also needs to be able to show you what’s in the rear-view mirror as well as what’s around the corner.
To validate the accuracy of payroll information, your software should have a Payroll Edit Register feature that alerts you to exceptions… if, for example, the hours worked by an individual or crew exceed the allowed amount of hours per pay period. In addition, the software should warn you if the pay rates deviate from minimum or maximum thresholds.
Exceptions, warnings and alerts – and, in some cases, flaming red road flares – should be established as standards and adjusted as necessary. Easy-to-use reporting and data view tools should provide quick insights into possible variations. Without taking your eyes off the road or your critical business operations, your payroll software should prompt you:
- to verify I9 documentation and employee status before processing payroll
- to review invalid pay rates (minimums/maximums)
- if an employee type has been manually overwritten
- if excessive hours have been worked per day or week
- if vacation and/or sick time is greater than accrued
- to verify involuntary deductions such as garnishments, tax levies, union dues, and child support
- to confirm union fringes and employer benefits
- to approve 401K, GTL group-term limit, medical insurance, etc.
To ensure payroll security, different access levels can be granted to enter payroll data for field, salaried and hourly employees. Salaried and fixed hourly employees can be automatically selected for entry into the payroll processing system, driving added productivity for your organization. In most software applications, multiple labor distributions can be entered on a single screen, and the hours worked each day of the week can be entered on the same line or made available with an automated data input process.
Your users will be on cruise control when your software eliminates their entry of overtime hours and automatically calculates the appropriate hours and pay rates based on your company’s or customers’ business rules. The app should also automatically prompt for certain payroll calculations, such as simultaneous transactions for charging equipment time to job cost and general ledger. Labor costs can be distributed directly to a job, a department, equipment repair hours, or can include transactions in the time and material billing process. Direct labor burden can also be calculated and distributed to job cost and general ledger, and optionally, time and material billing.
To blaze the optimal trail, your payroll application must be flexible enough to allow for automation but still be configured to your unique business requirements.
When the data is in, it’s time to write checks, and the distribution should be as smooth a road as the collection process. Your payroll app should provide a simple and seamless process for manual payoff checks, vacation checks, and special (bonus) checks. Payroll taxes and disability insurance deductions should be produced automatically for all state and local taxing authorities. Multiple state and local taxes must easily be deducted on the same payroll check.
Calculations for worker’s compensation and state unemployment insurance premiums need to be in compliance with state regulations, and Federal Unemployment Insurance (FUTA) must also be simultaneously accrued. Retroactive pay calculation for union and special pay requirements must accommodate and calculate gross-to-net pay and deductions.
With data collected and checks cut, the last stop on this road trip is reporting. Your payroll system should provide custom reports that compare, analyze and communicate your labor expenses. Because labor costs are one of the largest expenses in your construction business, you don’t want to get stuck in a traffic jam – you want dynamic reports and easy-to-read dashboards to proactively manage and improve your bottom line.
For more information on to successfully navigate the dangerous roads of construction payroll and HR administration, please contact us.