How Payroll Systems Drive Growth in Skilled Trades

Skilled trades like carpentry, plumbing, electrical work, HVAC, and more face surges in demand in all sectors of the economy, making 2025 an excellent time to grow a skilled trades business. Subsequently, skilled trades businesses are finding out that one-size-fits-all payroll solutions are not meeting their needs.

Skilled trades payroll systems need features uniquely designed for the industry, such as effective time tracking, robust benefits administration, and enhanced compliance features for multiple levels of labor laws, government contract stipulations, and union mandates. In addition to ensuring workers are paid accurately and on time, these systems foster positive workforce development.

Here's how skilled trades payroll systems can effectively support growth in skilled trades.

Key Challenges in Payroll for Skilled Trades

• Wage and hour complexities and overtime calculations. Skilled trades are generally paid by the hour rather than a salary, which makes accurate timekeeping a crucial feature in payroll for skilled trades. Some projects, like public construction, are subject to state or local prevailing wages. Workers may have their pay rates dictated by trade unions, while others are set by the employer. Overtime calculations in the skilled trades may also vary by state and local regulations and union mandates, depending on the project.
  
  
• Labor law and union compliance. Skilled trades workers are protected under federal labor laws like the Fair Labor Standards Act in addition to state and local labor laws regarding working conditions, who supplies tools and equipment, and mandated benefits like workers' compensation insurance. Unions also have additional compliance measures, such as wage and hour regulations, working conditions, and benefits. Skilled trades payroll systems are designed to handle these compliance requirements across different projects for both union and non-union trades workers.
  
  
• Benefits management. The skilled trades industry is facing changes as technology evolves and the cost of higher education rises. This shift is leading more individuals to enter trades such as pipe fitting and machining straight from school or as a mid-career change. As a result, the need for effective benefits administration is becoming more critical. Modern payroll solutions for skilled trades need to accommodate a variety of benefit programs, allowing employees to select the options that best suit their individual needs, such as cafeteria plans. 

How Payroll Systems Can Support Skilled Trades Businesses

Accurate and On-Time Payments

Everyone wants to be paid on time, whether they fit pipes or oversee projects. Skilled trades businesses that have blends of salaried and hourly workers need to ensure that all of their workers are paid on time and with as few payroll processing errors as possible. This includes correctly calculating overtime and determining who is eligible for overtime rates. Payroll automation tools reduce the human errors that come with manual payroll processing, and enhanced time tracking ensures that the payments are correct.

Labor Law Compliance

While all industries must adhere to federal, state, and local labor laws, it is especially crucial in the trades where workplaces can be more dangerous. There are mandated benefits for skilled trades workers, with additional stipulations for union shops. There are also cases where workers who are not in the union must be paid at the same rates as union workers. Skilled trades payroll systems are designed to handle these challenges that are not usually present in non-unionized industries.

Employee Benefit Administration

Benefits administration for skilled trades encompasses the traditional employee benefits and mandated benefits seen in other industries, with more unique benefit programs becoming the norm as the industry grows more diverse. By simplifying benefits enrollment, a wide array of valuable benefits becomes a major attractor for top talent. With demand for trades workers outstripping the supply, benefits management is particularly crucial for employers in the skilled trades.

Time and Attendance Tracking

Skilled trades workers often divide their time between multiple job sites or work at one specific job site until the project is complete. Effective time tracking across job sites is crucial for ensuring workers are paid on time, and their overtime and taxes are correctly calculated.

Payroll for skilled trades seamlessly integrates time-tracking systems across job sites with the payroll system to streamline processes. This ensures workers' pay is correct no matter where they worked or for how long.

Reporting and Analytics

Making data-driven decisions is a challenge every owner and manager in the skilled trades faces. Fortuitous reporting and analytics tools in your skilled trades payroll system provide insights on labor costs per project, as well as other benchmarks. By determining workforce trends and which projects are the most profitable, the analytics stemming from your payroll data empower data-driven decision-making to further grow the business.

Benefits of Tailored Payroll Systems for Skilled Trades

• Increases employee satisfaction and retention. When employees are happy that they're being paid accurately and on time, it makes them more likely to stay. This is particularly important for trade positions that are difficult to fill.
  
  
• Removes administrative burdens. When owners, management, and HR are less burdened with administrative tasks related to payroll, this frees them up for more meaningful work oriented around growing the business and making it more efficient.
  
  
• Mitigates compliance risks. The skilled trades have several compliance risk factors, and tax and labor law risks are a top concern. Payroll for skilled trades is designed to mitigate these risks by accounting for compliance measures unique to the trades.

Steps to Implement a Payroll System for Skilled Trades

• Evaluate your current payroll needs and challenges. What needs are going unmet by your current payroll solution? Is your business entering a critical growth stage or an acquisition? Take note of what is and isn't working with your current solution and the overall outlook for your business.
  
  
• Choose a system tailored to skilled trades. A bespoke solution for the skilled trades with time tracking, compliance, and benefits administration tailored to trade workers is a better option than a standard payroll system. To ensure it is tailored to your needs, make a list of pain points with your current payroll system.
  
  
• Train your team to use the system effectively. Every payroll system has a learning curve. Once the team learns how to get the most value out of the system, it goes from a mere tool to a highly effective powerhouse that fuels business growth.

Payroll solutions tailored to the skill trades not only ensure accurate payments and reporting today but also fuel growth tomorrow. As the skilled trades face unique regulatory and payment challenges compared to other industries, it is crucial to use a specially designed payroll system for the trades instead of a one-size-fits-all payroll solution.

Contact Workforce PayHub today to discover how our payroll systems can drive growth for your skilled trades business.