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Payroll management for union contract workers is often complicated and unnecessarily stressful. If you aren’t prepared to face the overwhelming guidelines and rules accompanying each contract, you risk a lot more than just company dollars. 

Each union payroll processing presents specific challenges to setting up streamlined systems. However, with the right information and tools on your side, avoiding time-consuming (and potentially expensive) errors is possible.

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What Makes Union Contracts More Complicated?

Union contracts have an enormous influence on the rules and regulations of your business operations, employee onboarding, detailed time and schedule tracking, and how payroll is calculated can all be impacted. 

As union contracts are collectively bargained and closely monitored, payroll departments face intense pressure to monitor records, eliminate errors, and ensure consistency as well. Details for union payroll processing include:

  • Differing pay rates for various classifications
  • Changing pay rates for overtime, time differentials, and employee deductions
  • Calculating benefits (vacations and healthcare)
  • Managing pensions and 401(k)
  • Workers’ compensation audits and premium rates
  • End-of-year audits

Given so many details, it can be easy to let seemingly insignificant data and errors slide. However, incomplete reporting, late or incorrect payments to workers, and other mistakes can lead to fines, lost contracts, loss of future union contracts, and/or legal actions filed against your company. Every inconsistency adds up. 

Best Practices for Managing Union Payroll

When setting up your union payroll, there are several things you can do to ensure your processing and reporting systems are as accurate as possible. 

The most important factors to consider include:

  • Knowing your specific union requirements
  • Understanding pay scale differences
  • Differentiating between deductions and fringe benefits
  • Setting up accurate time tracking reports
  • Customizing pay rules with automated time and labor software

With so much involved in accurately setting up union worker payroll, understanding these needs from the get-go will save you time and energy. Maintain absolute confidence that all your bases are covered, and you’ll be well on your way to success. 

Union Payroll Requirements

Perhaps the most important step in navigating union payroll is triple-checking the union’s requirements. This can easily be done by going online or contacting the union’s business manager. Basic requirements for any union include:

  • Dates for payment and dues
  • How and when to pay dues
  • Consistent tracking of changes within the union
  • Changes to a union’s rules and regulations if a worker is working outside the local jurisdiction

Because unions protect workers and workers wages, understanding payment to the union itself is extremely important.

Some unions prefer online payments, while others ask for check deposits. It’s vital to stay informed on payment dates to the union as well as your union employees; otherwise, you run the risk of being charged a fee (sometimes for every hour payment is late).

Pay Scale Differences

It is invaluable to understand the regulations and rules specific to each union, as no two unions are exactly the same. This is especially important when you are researching pay scale differences for your union contract employees.

While each union has its own fine print, most pay scales for union contracts factor in:

  • Seniority
  • Department
  • Job performance

Understanding the different pay scales and requirements related to each of these factors will help you to set up an accurate and consistent payroll processing system that will meet the need of each individual union contract worker on your team.

Deductions vs Fringe Benefits

Distinguishing between specific payments and fees is another asset in managing union payroll.

Deductions, for instance, are taken out of a union worker’s paycheck. Fringes are additional payments that you make as an employer, either through cash or benefits.

When setting up union payroll processing, it is your job to understand which fringes you are responsible for, as well as the specific deductions each union requires you pay. Here are a few tips to keep in mind:

  • It is possible to overpay union employee contracts if you do not carefully read the fine print and understand if you are paying a fringe benefit or a deduction.
  • If you overpay, you may or may not face an issue from the union, but you also will not be refunded.
  • If you underpay, you will be charged penalties and/or fees.
  • Fringe benefits can change depending on the union; e.g. some fringe benefits are subject to overtime, and some are not.

Always factor in the additional costs of the deductions and fringe benefits expected of your union contract employees in order to correctly set up your payroll processing systems, and to understand the true cost of labor. 

Managing Time Tracking Reports for Union Employees

Tracking hours worked in order to calculate payment and time off is necessary for a smooth payroll process, but it is especially important to invest in accurate tracking for your union contract employees. Labor contracts include specific requirements that affect that affect payroll for union employees, including:

  • Cost of each hour of work
  • Amount of deductions or benefits accruing per day
  • Length of workday
  • Length of work week

All of this information can and must be tracked in order to quickly and easily process worker data in your payroll system. 

With accurate reports, you can ensure that your workers are receiving timely and accurate payments and that your business maintains constant access to important documentation for union leaders whenever necessary. 

Why Outsource Payroll Processing?

Most unions prefer that companies use automated payroll processing software, as having a system makes it easier to implement specific pay rules. Indeed, with the complexity of the information you have to track, the easiest way to manage your payroll is to invest in intelligent software, which will:

  • Help you track union worker hours
  • Set up electronic timecards
  • Automatically calculate overtime rates
  • Effortlessly calculate deductions and fringe benefits
  • Make information sharing easier
  • Act as a safeguard for compliance management

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How Software Can Help

Instead of hoping that timesheets are filled out correctly, software can automate the process and set up each individual union employee’s payment schedule without human error.

This not only ensures that your workforce is working the appropriate hours but also helps maintain the payroll process set up by the local union your workers represent.

While each payroll processing system differs, depending on the job and the contractor, investing in software will help you:

  • Streamline the payroll process
  • Limit the stress of reporting
  • Accurately track worker time, benefits and pay
  • Maximize investments and avoid compliance costs

Learn what VensureHR’s payroll solution can do for your business. Contact us today!.


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