⚙️ End-to-End Payroll Setup
Setting up construction payroll for the first time — or migrating to a new system — requires getting the configuration right before a single paycheck is cut. The steps have a strict dependency order: you can't assign a worker to a classification that doesn't exist yet, and you can't set up a classification without knowing the time calculation mode.
This page walks through the full setup sequence, the decision points at each step, and finishes with the payroll run lifecycle and a verification checklist.
The dependency chain
Each step depends on the one before it. Skip a step and the downstream configuration breaks.
Step 1: Choose the time calculation mode
The time calculation mode determines how raw hours are split into straight time, overtime, and double time. This is the most consequential setting in the system because everything downstream — OT thresholds, rate application, paycheck math — depends on it.
Decision tree
Is the project in California?
- Yes → Use ST/OT/DT Active (daily overtime with double time after 12 hours)
- No → Continue below
Does the union CBA require daily overtime?
- Yes → Use ST/OT/DT Active or ST/OT (depending on whether the CBA includes double time)
- No → Continue below
Is this a federal prevailing wage project in a daily-OT state (Nevada, Alaska, Colorado)?
- Yes → Use ST/OT Active (daily OT without DT, unless state law adds DT)
- No → Use Weekly Only (FLSA standard — OT after 40 hours/week)
| Mode | When to use | Daily OT | Weekly OT | DT |
|---|---|---|---|---|
| ST/OT/DT Active | California, or CBA with DT | ✅ after 8 hrs | ✅ after 40 hrs | ✅ after 12 hrs daily, 7th day 8+ |
| ST/OT | Daily OT states without DT, or CBA with daily OT only | ✅ after threshold | ✅ after 40 hrs | ❌ |
| Weekly Only | FLSA-only states (most of the country) | ❌ | ✅ after 40 hrs | ❌ |
If you operate in multiple states, you'll likely need different time calculation modes for different projects. Set the mode at the project level, not company-wide.
Step 2: Configure OT thresholds
Once the mode is chosen, set the specific hour thresholds that trigger each premium.
Standard thresholds (California)
| Threshold | Value | Notes |
|---|---|---|
| Daily ST max | 8 hours | Hours 1–8 at 1.0× |
| Daily OT start | 8 hours | Hours 9–12 at 1.5× |
| Daily DT start | 12 hours | Hours 13+ at 2.0× |
| Weekly OT start | 40 hours | After 40 ST in the workweek |
| 7th consecutive day | Enabled | First 8 hrs at 1.5×, 8+ at 2.0× |
Alternative workweek (AWS) thresholds
If the work group has an approved AWS under California Labor Code §511:
| AWS type | Daily ST max | Daily OT start | Daily DT start |
|---|---|---|---|
| 4×10 | 10 hours | 10 hours | 12 hours |
| 3×12 (rare) | 12 hours | 12 hours | — |
| 9/80 | 9 hours (8 on short day) | 9 hours | 12 hours |
Remember: the AWS exemption only applies to scheduled days. Hours on unscheduled days revert to standard thresholds.
FLSA-only thresholds
| Threshold | Value |
|---|---|
| Weekly OT start | 40 hours |
| Daily thresholds | None (no daily OT under FLSA) |
| 7th day | Not applicable |
Step 3: Set up union locals
A union local is identified by its trade, local number, and geographic jurisdiction. Each local has its own CBA with its own rates, effective dates, and trust fund accounts.
What you need for each local
| Field | Example | Why it matters |
|---|---|---|
| Union name | IBEW | Identifies the international union |
| Local number | 11 | Specific chapter |
| Trade | Inside Wireman (Electrical) | Maps to craft classifications |
| Jurisdiction | Los Angeles County | Geographic scope for rate applicability |
| CBA effective date | 06/01/2025 | Rates change when a new CBA takes effect |
| CBA expiration date | 05/31/2028 | Alerts you to upcoming rate changes |
| Trust fund name | IBEW Local 11 Trust | Where fringe remittances are sent |
| Trust fund EIN | XX-XXXXXXX | Required for ERISA reporting |
| Remittance address | Trust admin mailing address | Monthly fringe payments |
Common pitfalls
- Overlapping jurisdictions: Some locals cover overlapping counties. Verify which local has jurisdiction for your specific project location.
- Expired CBAs: When a CBA expires without a new agreement, the existing rates typically remain in effect until a new CBA is ratified. But verify — some CBAs have built-in escalators.
- Multiple crafts, same local: Some locals represent multiple crafts (e.g., laborers and cement masons). Each craft has different classifications and rates within the same local.
Step 4: Enter wage rates
Wage rates are entered per classification within each local. This is the most data-intensive step.
Three rate paths
Union rates (CBA)
- Source: the CBA itself (usually a wage schedule appendix)
- Structure: base wage + each fringe line item separately
- Example: Journeyman Electrician, IBEW Local 11 — Base $48.50, H&W $12.50, Pension $9.75, Vacation $4.25, Training $1.00
Prevailing wage rates
- Source: federal (SAM.gov wage determinations) or state (e.g., California DIR)
- Structure: base wage + total fringe (may or may not be broken out by component)
- Example: Electrician, Inside Wireman — Base $58.33, Fringe $31.75
Employee rates (non-union, non-PW)
- Source: employer's internal pay structure
- Structure: hourly rate only (benefits handled separately through HR/benefits systems)
- Example: Electrician — $42.00/hr
Rate entry checklist
For each classification, confirm:
- Base wage amount
- Each fringe line item amount (if union/PW)
- Effective date and expiration date
- Which fringe components are subject to OT premiums (check CBA language)
- Apprentice period percentages (if applicable — e.g., 1st period at 50%, 2nd at 55%, etc.)
- Foreman differential (typically 10–15% above journeyman base)
Step 5: Assign workers
Each worker needs to be linked to their classification, union local (if applicable), and any special attributes.
Worker record fields
| Field | Example | Notes |
|---|---|---|
| Name | John Smith | As it appears on payroll records |
| Classification | Journeyman Electrician | Must match a rate entry |
| Union local | IBEW Local 11 | Links to the local's rates |
| Apprentice period | — (or "3rd period") | Determines apprentice rate percentage |
| Hire date | 03/15/2024 | For seniority calculations |
| Default project | Courthouse Renovation | Can work on multiple projects |
Apprentice assignments
Apprentices require additional configuration:
| Period | Percentage of journeyman | Hours required |
|---|---|---|
| 1st period | 50% | 0–1,000 hrs |
| 2nd period | 55% | 1,001–2,000 hrs |
| 3rd period | 60% | 2,001–3,000 hrs |
| 4th period | 65% | 3,001–4,000 hrs |
| 5th period | 70% | 4,001–5,000 hrs |
| 6th period | 75% | 5,001–6,000 hrs |
| 7th period | 80% | 6,001–7,000 hrs |
| 8th period | 85% | 7,001–8,000 hrs |
Exact percentages and hour ranges vary by trade and local. On prevailing wage projects, apprentice rates are based on the PW journeyman rate, not the CBA journeyman rate (unless the CBA rate is higher).
Step 6: Configure projects
Each project has its own compliance requirements that affect how payroll is calculated and reported.
Project configuration fields
| Field | Example | Why it matters |
|---|---|---|
| Project name | Central Library Renovation | Identification |
| State | California | Determines which state OT rules apply |
| County | Los Angeles | Affects PW rate lookup (county-specific) |
| Project type | Public works — building | Determines PW rate schedule |
| Prevailing wage required | Yes | Triggers PW rate validation |
| Federal PW (Davis-Bacon) | Yes | Requires WH-347 filing |
| State PW | Yes (California DIR) | Requires eCPR/A-1-131 filing |
| Wage determination # | CA-2025-0042 | Links to the specific rate schedule |
| DIR project ID | 2025-123456 | California-specific registration |
| Time calculation mode | ST/OT/DT Active | Can override company default |
| GC or subcontractor | Subcontractor | Affects CPR submission chain |
Multi-project workers
Workers frequently move between projects within a pay period. Each project may have different:
- Time calculation modes (California project vs. Nevada project)
- Rate sources (PW vs. private)
- Reporting requirements (CPR vs. no CPR)
Track hours by project by day. A worker who spends Monday–Wednesday on a PW project and Thursday–Friday on a private project has two different rate structures and two different reporting obligations in the same week.
The payroll run lifecycle
Once setup is complete, every pay period follows this cycle.
Rate resolution: which rate wins?
When multiple rate sources apply to the same worker on the same project, rate resolution follows this priority:
- Component-by-component: Compare each component — base wage, H&W, pension, vacation, training, etc. — across all applicable rate sources (CBA, federal PW, state PW) and use the highest value for each. The resulting total may exceed every individual source total. See the rate comparison example for a worked demonstration.
- Document which source governs each component: The "winning" source will often differ by line item (e.g., CBA base + PW health & welfare).
- Employee rate floor: If a non-union worker's regular rate exceeds the PW base, the regular rate governs for base wage
The result is a "blended" rate that meets all applicable requirements. See Scenario 6 in the worked examples for a full dollar-amount walkthrough.
The three outputs
Every locked pay period produces:
- Paychecks — issued to workers, reflecting base wage × ST/OT/DT hours, minus taxes and authorized deductions
- Fringe remittances — sent to union trust fund administrators (monthly), itemized by H&W, pension, vacation, training, per worker per hour
- Certified payroll reports — filed with the contracting agency (weekly on most public works projects), listing every worker's hours, classification, rates, and gross pay by project
On prevailing wage projects, all three outputs must reconcile. The paycheck gross plus the fringe remittance total must equal the worker's total compensation at or above the prevailing wage determination.
Verification checklist
Before running the first payroll, verify every configuration element. An error caught here costs minutes; the same error caught on a CPR audit costs thousands.
Time calculation
- Correct mode selected for each project's state (ST/OT/DT for California, Weekly Only for FLSA-only states)
- Daily OT threshold set correctly (8 hours for California standard, 10 for 4×10 AWS)
- Weekly OT threshold confirmed at 40 hours
- 7th consecutive day rule enabled for California projects
- AWS elections documented and DLSE-reported (if applicable)
Union locals
- All applicable locals created with correct jurisdiction
- CBA effective and expiration dates verified
- Trust fund names, EINs, and remittance addresses entered
- Multiple crafts within the same local set up as separate classifications
Wage rates
- Base wage matches CBA wage schedule or PW determination
- Each fringe line item entered separately (not as a lump sum)
- Fringe OT rules configured per CBA language (straight-time vs. premium)
- Apprentice period percentages match the applicable apprenticeship standards
- Foreman differential applied to correct classification
- Rate effective dates match CBA/PW determination dates
Workers
- Each worker assigned to correct classification and local
- Apprentice period verified against hours worked to date
- Default project assignment set
- Multi-project workers have hours tracked by project by day
Projects
- Prevailing wage flag set correctly (federal, state, or both)
- Wage determination number linked and rate schedule verified
- DIR project ID entered for California public works
- State and county correct (affects PW rate lookup)
- Time calculation mode overridden if different from company default
- GC vs. subcontractor role set (affects CPR submission chain)
Test payroll
- Run a test pay period with known hours for 2–3 workers
- Verify ST/OT/DT split matches manual calculation
- Verify gross pay matches expected base × hours + OT premium
- Verify fringe amounts match expected rate × total hours
- Verify CPR output shows correct hours, rates, and gross by project
- Verify fringe remittance report matches trust fund requirements
- Compare test output against the worked examples scenarios
Related pages
- Payroll Worked Examples — Seven dollar-amount scenarios showing the math
- Federal Overtime (FLSA) — Weekly OT rules
- California Overtime — Daily OT, 7th day, AWS
- State Overtime Map — All 50 states
- Union Locals & Wage Rates — Rate structure
- Prevailing Wage Rate Management — Rate lookups and priority
- Certified Payroll (Federal) — WH-347 filing
- California DIR Compliance — eCPR and registration