Construction companies usually focus on calculating the correct hourly pay and fringe rates to ensure their non-exempt (hourly) employees get the right paycheck each payday. But many construction companies also have salaried personnel that work on projects, which adds a complication. These companies have to be vigilant about determining how an exempt employee's salary should be allocated to the right projects. A miscalculation or ignoring the impact of the exempt employee's cost to a job can impact the health of the contractor's business.
For example, let’s say a salaried employee gets paid $2000 every biweekly pay period and works 60 hours at one site and 30 hours at another one. Even though they worked 90 hours in a two-week pay period, they don’t get overtime since they’re salaried. So you would need to allocate the earnings proportionately across the two projects so that 66.7% of the salary would go to Project A and 33.3% to Project B. On top of that, any non-project time and PTO needs to be factored in correctly, as well.
Salary allocation is a critical part of accurate job costing. Contractors need to see how each salaried employee impacts the overall cost of each job, because it helps them stay within budget on current projects. It also provides important information for bidding future work.
The Pitfalls of Traditional Salary Allocation
Many construction companies calculate salary allocations in spreadsheet macros. But spreadsheets are notoriously difficult to manage accurately—you can often get rounding errors, or a cell could be using an incorrect formula and you ’d never know it. If you allocate by hand, you have the potential for human error with every tap on the calculator, and it’s even more time-consuming than using spreadsheets.
After all that work, there’s no guarantee you’ve correctly calculated the salary costs per project. Your numbers could be far off the mark and you would never know it. That has tremendous implications for bidding future projects.
But what if salary allocation could be managed for you with just the click of a button?
Find out how Time Bank makes it easy for construction companies to stay on top of payroll regulations.
Automated Salary Allocation Boosts Your Business
Clients are sometimes skeptical that automated salary allocation can really be done—they’ve been burned by other payroll vendors who said they could do it, and they’re not interested in going through that mess again. Usually, the problem is that those payroll systems can’t allocate to the penny or handle complications like paid time off. Or, they can provide “fixed” or permanent allocation functionality, but your employees work different projects and amounts of time each pay period.
For automated salary allocation to work, you need a system that addresses every aspect that spreadsheet calculations are supposed to cover. IDI’s Time Bank application can easily manage these kinds of requirements.
Time Bank can free up 8 to 12 hours of your week by ditching salary allocation spreadsheets and providing accurate salary information in just seconds. With Time Bank, you can spend your time working on your core business instead of onerous busy work.
With Time Bank, you’ll get back to your core business fast.
Reduce payroll costs, errors, and frustrations with IDI’s Time Bank payroll software. Check out this overview video!
Leave manual salary allocations behind for good! Contact IDI or your payroll representative to get more details.