Pick the Right Prevailing Wage Software
Prevailing wage reporting is complicated and can lead to costly mistakes. Unfortunately, most contractors are using software that only manages 5% to 10% of their needs. This results in a mix of unconnected systems, manual processes and wage overpayments.
As an example, an average 12-man company working 25% on public jobs will spend 20 hours a week on compliance and waste $67,000 per year on overpaid wages and taxes. To avoid this, look for the following features when evaluating a new system.
Misreporting from paper timesheets causes overpayments of 4% to 7% each payroll. Prevailing wage jobs further increase costs since employees tend to over-report the higher-rate tasks. Look for a system that can track jobs and compare them to the actual GPS punch location. Also, make sure the system can compare tasks to a predetermined budget or schedule.
Overtime rules get very complicated when mixing prevailing and non-prevailing wage jobs/tasks. Look for a system that can handle the overtime and prevailing wage laws in every state worked.
Determination and Rate Management
If working multiple jobs and award dates, get a system that assigns the proper rates and fringes based on the job, task and shift. If performing a lot of federal jobs, the system should also manage conformity rate requests.
Given the higher wage rates, a contractor needs to set up budgets by job/task and get notifications when approaching overtime and budget limits.
Fringe credits must be tracked on each employee and are subject to different annualization requirements. A good system will calculate the maximum allowable credit for each employee and recalculate the hourly credits as employer health contributions or PTO levels change. Look for a system that generates updated fringe benefit reports when employees become eligible for benefits.
Every deduction must be signed off by an employee. A prevailing wage system should automatically generate authorizations for employees to sign when a deduction is added or changed.
Missed hours and reclassifications can become large restitution projects. A good payroll system will automate the restitution calculation and generate amended reports when historic punches are corrected.
Certified Payroll Reporting
Some systems generate a federal WH347, but each agency, contractor and state will have additional requirements. Look for a system that creates all the reports and exports them as needed.
Penalties for violating minimum and maximum ratios can be large. Look for a system that tracks apprenticeship hours in real time and generates all reporting.
A good system will also generate reporting for training contributions, EEO, workforce, fringe statements, apprenticeships (e.g. DAS140/142 in California) and more. Most systems should also provide integration to a general ledger or ERP system.
Paying fringe requirements as cash will cost an average employer 20% in extra taxes and insurance. A “bona fide trust” provider can save tens of thousands of dollars. The right trust company may even offer options to allow employees to access their fringe cash without triggering employer tax or insurance costs.
Some systems automate those features into one system, while others focus on one particular solution.
One Automated System
eBacon is an option that automates features including payroll, time tracking, restitution calculations and more into one system.
Payroll and Time and Attendance
Most payroll companies such as ADP, Paychex or QuickBooks can handle multiple pay rates but few automate rate calculations with pre-defined determination tables. Although the employer would have to manually maintain rates on each punch, this may be a viable solution if the contractor performs only a few prevailing wage jobs or tasks.
Diversity Management Programs
Companies such as B2GNow have built software to manage diversity compliance and EEO management.
Construction ERP Systems
There are a lot of good systems on the market including Procore, Viewpoint, Spectrum, Foundation and Sage. Those that offer payroll and time and attendance tend to support multiple rates and basic fringe and reporting abilities. Those that don’t most likely integrate with a certified payroll and reporting system.
Certified Payroll Reporting Systems
LCPTracker, eMars, Elation, PRISM and eComply are the main players in the market. While they don’t offer payroll or time and attendance, they generally accept import files from payroll companies.
Trust Management Companies
These companies don’t help with the payroll calculation or certified reporting, but they can generate large fringe and tax savings. Be careful that some trust companies only focus on Supplemental Unemployment Benefits (SUB), which are in a grey legal area pending an appeal of a 2015 DOL decision on annualization. Instead of focusing on one benefit trust type, look for a company that can offer multiple options, including health, retirement, dependent care and cash withdrawal.
Since all contractors have different needs, spend time evaluating which solution provides the features to meet the company’s requirements. A little extra research will save a lot of time and money in the long run.