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Construction Companies: Payroll Features Every Business Needs (2026)
Construction companies need payroll configured for prevailing wage compliance, certified payroll and union vs non-union, pay codes that general-purpose software leaves to the customer to build. BEG runs construction company payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Pay codes a construction company cannot run without
Construction companies pay laborers and carpenters on different bases, and the payroll system has to hold every one of them as its own pay code with the right tax and overtime treatment: prevailing wage compliance, certified payroll, union vs non-union and seasonal crew cycles. A generic setup collapses these into hourly and salary, and the errors show up in the regular rate, in year-end forms and in the first wage claim.
A construction business with two or more employees and $500,000 or more in annual gross sales is covered by the FLSA, and individual employees whose work involves interstate commerce are covered regardless of the employer's sales. Overtime is owed after 40 hours in each workweek; paying overtime only after 80 hours in a biweekly period is illegal because each workweek stands alone.
DOL lists these typical construction violations: not recording work before or after the shift, shorting hours as down time or rain delay, unpaid meal breaks where the employee is not fully relieved, banking overtime as comp time, failing to combine hours worked in more than one job classification in the same workweek, and not paying for travel from the shop to the work site and back.
Tax handling specific to construction companies
For per diem allowances paid for travel away from home on or after October 1, 2025, the IRS high-low substantiation rates are $319 per day for high-cost localities and $225 for all other localities in the continental United States, of which $86 and $74 are treated as paid for meals. The incidental-expenses-only rate is $5 per day.
What is configured before the first run
At implementation every pay structure above is built as a code with its own taxability, its own overtime treatment and its own W-2 mapping, and the exemption status of laborers and carpenters is documented against the rule that supports it. That is the difference between software with the features and a payroll that uses them correctly.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- A construction business with two or more employees and $500,000 or more in annual gross sales is covered by the FLSA, and individual employees whose work involves interstate commerce are covered regardless of the employer's sales. Overtime is owed after 40 hours in each workweek; paying overtime only after 80 hours in a biweekly period is illegal because each workweek stands alone. [DOL Fact Sheet #1]
- DOL lists these typical construction violations: not recording work before or after the shift, shorting hours as down time or rain delay, unpaid meal breaks where the employee is not fully relieved, banking overtime as comp time, failing to combine hours worked in more than one job classification in the same workweek, and not paying for travel from the shop to the work site and back. [DOL Fact Sheet #1]
- For per diem allowances paid for travel away from home on or after October 1, 2025, the IRS high-low substantiation rates are $319 per day for high-cost localities and $225 for all other localities in the continental United States, of which $86 and $74 are treated as paid for meals. The incidental-expenses-only rate is $5 per day. [IRS Notice 2025-54]
Read the full guide to every managed payroll feature, explained, and the rest of the construction company payroll library.
Managed Payroll, Handled.
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Frequently Asked Questions
Can you handle certified payroll for government projects?
Yes. Certified payroll reports under Davis-Bacon and state prevailing wage laws are produced for each pay period in WH-347 format or state electronic reporting systems with fringe benefit credits documented.
How do you handle union vs. non-union employees on the same job?
Union and non-union employees are set up with separate pay rate structures and fringe benefit calculations. Union payroll includes remittance to applicable union trust funds.
Can you handle seasonal crew ramp-ups?
Yes. Bulk new hire entry processes seasonal crew in time for the first pay cycle, including new hire reporting, withholding setup, and direct deposit.
What does BEG charge for construction company payroll?
Construction payroll runs at $45 per employee per month, all-inclusive. Certified payroll report production is included. For a 25-person crew, that is $1,125 per month.
What does managed payroll cost for a construction company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Prevailing wage compliance, certified payroll and union vs non-union are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Construction Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Independent Contractor or Employee
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