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Union Payroll Processing: 3 Things to Know
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HR + Payroll Software

Union Payroll Processing: 3 Things to Know

One-Minute Takeaway

  • Payroll processing for union members can be incredibly complex.
  • It requires understanding unique union deductions, pay scale differences, and ensuring accurate time tracking.
  • Using payroll and time & labor management software can simplify the intricacies of union payroll.

From the Writers’ Guild of America and SAG-AFTRA to healthcare workers at Kaiser Permanente to the United Auto Workers, labor unions have been in the news a lot lately. In fact, the number of strikes with 100 or more members that lasted more than a week is up 65% over the same time in 2022—56 strikes to be exact—in the first nine months of this year (Cornell University School of Industrial and Labor Relations). Rulings on collective bargaining and union regulations not only have an enormous effect on the day-to-day running of businesses across the U.S. but also on the day-to-day of citizens in general.

And unions are becoming more popular, with Americans indicating in an August 2023 poll that they sympathize more with the television and film writers (72% supporting the writers and 67% supporting the actors) versus the production studios (Gallup). The public also sees unions as having more power than in years past with a record high 61% saying unions help the U.S. economy rather than harm it (Gallup).

With this rise in popularity and predominance, it’s important for employers to keep a close eye on laws that pertain to unions, as the inclusion of union members in their payrolls can require substantial changes to onboarding, training, and paying these employees.

Navigating the complexities of union payroll can be a daunting task for businesses. With their specific regulations, unique deductions, and intricate documentation requirements, it’s crucial for employers to stay informed and ensure compliance when paying union employees.

While unions require heavy time tracking to ensure employees are not working more hours than permitted or working hours that don’t align with their schedules, payroll processing for union employees doesn’t have to be a major burden: having the right tools in place—such as time and attendance tracking or mobile punching functionality to help ensure that employees don’t clock in from outside of the building or geographic area designated by the employer—can make the process relatively simple.

Here are three important things to keep in mind when thinking about payroll processing for union workers:

1.   Union Deductions: Understanding the Differences

One of the key distinctions between payroll processing for union and non-union employees is the union deduction. A predetermined portion of each paycheck is to be set aside for union dues. Union dues are fees paid by union members to support the activities and initiatives of the labor union. These dues are typically a percentage of the employee’s wages and are deducted from their paycheck. It’s important for employers to accurately calculate and withhold these dues to ensure compliance with union requirements.

If your company employs both union and non-union workers, keeping track of deductions can be tricky. Further complicating matters, there are four types of union “shops” that can be found in a workplace:

  • Employees are required to join the union as a condition of being hired, and companies cannot hire a candidate not willing to join the union.
  • Union shop Employees are not required to join a union as a condition of being hired, but they have to join within a certain time frame (usually 30 days).
  • Employees are required to pay union fees and dues, but they are not required to become participating union members.
  • Employees are not required to join a union or pay dues and fees. Open shops are typically found in right-to-work states.

To simplify the process, consider using payroll software to automate this process so that the proper union deductions are always taken out on time and in full. This software can automatically manage the complexities of different union shop types and ensure accurate calculations for each employee. Payroll software also provides the flexibility to handle additional deductions that may be specific to union employees. For example, some unions may require contributions to specific retirement funds or programs. With the right payroll software, you can easily set up and manage these deductions, ensuring compliance with union requirements.

2.   Pay Scale Differences: Navigating Union Requirements

A number of factors go into determining the pay rate for union employees. These factors may include seniority, department, and job performance. Most unions have specific requirements regarding pay scales and payroll processing, so it’s important to take a detailed look at all of the rules and regulations put in place by each particular union.

Wage rates and scales determine the minimum and maximum wages for different job classifications within the union. In addition to wage rates, employers must also understand and comply with regulations regarding overtime and premium pay. Union employees may also be entitled to additional compensation for working beyond regular hours or on holidays.

Additionally, union employees often receive fringe benefits as part of their compensation package. Fringe benefits are non-wage compensations provided to employees, such as health insurance, retirement plans, and paid time off. These benefits are negotiated through Collective Bargaining Agreements (CBAs) between the union and the employer. Employers must understand the specific fringe benefits outlined in the CBA and ensure they are properly administered and accounted for in the payroll process.

Possibly even more important, employers must keep detailed records and documentation related to union payroll. This includes maintaining records of employee contributions, deductions, and benefits provided. These records are essential in the event of audits, disputes, and ensuring transparency in the payroll process. It’s important to have a robust payroll system in place that can handle the specific requirements of union payroll and generate accurate reports and documentation.

Because of this complexity, most unions prefer that companies use automated payroll processing software, as having a system makes it easier to implement specific payroll requirements.

Payroll software can handle any changes or updates to pay scales that may occur over time. As unions negotiate new CBAs or make adjustments to existing agreements, the software can be easily updated to reflect these changes. This eliminates the need for manual calculations and reduces the risk of errors in payroll processing.

3.   Accurate Time Tracking Reports: Mitigating Risk

While ensuring accurate tracking of hours worked and vacation time taken are always necessary tasks for HR departments, the job is even more important for companies where union labor plays a significant role. Given the specific requirements surrounding the length of the workday and the workweek, a business that fails to accurately track hours worked could be putting itself at risk.

A time and labor management solution can track this data and use it to create quick and accurate reports. These reports provide a comprehensive overview of employee hours, including regular hours, overtime, and any premium pay that may be applicable. This makes it easy for business leaders to provide the necessary documentation during discussions with union leaders.

In addition to accurate time tracking, a time and labor solution also offers features such as geofencing and mobile punching functionality. Geofencing ensures that employees can only clock in from designated areas, preventing any potential abuse of the system. Mobile punching functionality allows employees to clock in and out using their mobile devices, providing flexibility and convenience while still maintaining accurate time tracking.

Resolving Disputes and Ensuring Fairness

Payroll disputes can arise in any organization, and it’s no different when it comes to unionized workers. Discrepancies in pay, benefits, or deductions can lead to grievances and potential legal issues so it’s crucial for employers to have clear grievance procedures in place to address and resolve these disputes promptly.

Transparency in the payroll process is also essential to maintain trust and fairness among union employees. Employers should ensure that employees have easy access to their pay stubs, which clearly outline their wages, deductions, and benefits. This transparency helps prevent misunderstandings and promotes a positive working relationship between the employer and the union.

Additionally, businesses must stay up to date with changes in minimum wage advocacy and other equality and fairness initiatives. Union payroll should reflect these changes to ensure compliance and fair treatment of employees.

How Paycor Can Help

Paycor offers the best HCM platform and the best proactive service, expertise and thought leadership for medium and small businesses. Our team of recruiting, HR, tax, payroll, and compliance experts are dedicated to customer satisfaction and success. From proactive service to industry-leading thought leadership, we provide you with the tools you need to make a difference.

Simplify compliance and accuracy for hassle-free union employee compensation. From unraveling payroll complexities to staying compliant, we’ve got you covered.