Payroll Mistakes That Cost Construction Companies Thousands

Construction is a tight-margin business. A single payroll mistake can cost thousands and derail profitability. Here are the most common expensive mistakes we see.

#1: Certified Payroll Errors

If you bid on public projects, you likely need to file certified payroll reports. Errors here can result in:

• Project suspension
• Fines and penalties
• Lost future opportunities
• Legal action from labor agencies

Common certified payroll mistakes:

• Misclassifying workers by skill level
• Incorrect wage rates
• Missing fringe benefits in calculations

#2: Misclassifying Field Workers

Classifying hourly workers as exempt salaried employees to save overtime:

• Violates FLSA (Fair Labor Standards Act)
• Results in back pay lawsuits
• Triggers massive penalties

Construction workers must be classified by their actual duties, not their job title.

#3: Workers' Comp Premium Audits

Your payroll data drives your workers' comp premium. Errors mean:

• Overcharging or undercharging
• Surprise premium adjustments
• Potential audit liability

Accurate payroll = accurate workers' comp costs.

#4: Missing Prevailing Wage Compliance

Public and some private projects require prevailing wage payments. Not tracking this separately can lead to:

• Department of Labor investigations
• Contractor blacklisting
• Project penalties

How to Avoid These Mistakes

1. Use construction-specific payroll software that handles certified payroll requirements
2. Audit classifications quarterly with your HR team
3. Track prevailing wage separately for public projects
4. Partner with a payroll specialist familiar with construction rules

The cost of fixing mistakes is always higher than preventing them.