Certified payroll comes with more obstacles than regular payroll, and more oversight as well. Making a small mistake can lead to a large problem, including compliance actions that come with financial penalties. That makes getting everything right critical, but it’s not always easy. Keeping up with the moving parts of any payroll process is challenging but there are some things you can do to make certified payroll less painful.
The following are best practices for certified payroll workflows that can help your payroll team keep things moving smoothly.
Switch to digital time and attendance: Tracking hours on timecards and spreadsheets is time consuming, requires you to transfer the data into multiple formats and is error prone. If something is wrong, you could end up owing wage restitution, which is harder to track down and fix on timecards. Using a digital system solves all of these problems and can save you hours a week on admin tasks related to payroll.
Create a payroll and reporting checklist: Things work better if they are official, which is why you’ll want to create an official payroll and reporting checklist. This is a complete list of steps that have to be followed from start to finish of the process. This makes sure that everyone does the same things, in the same order, each time. Not only will this reduce errors, it will save you time and make training new team members a lot easier. And if something does go wrong, you can more readily discover what happened and make sure it doesn’t happen again.
Verify workers hours mid-week: This can be just a spot check to make sure things look as expected. For example, you would expect your full-time workers to log 24 or 30 hours by the end of Wednesday, depending on how long your average day runs. By spot checking hours mid-week you can find mistakes and make corrections
Double check work classifications: These might not change for most workers, but if someone does tasks that related to different official work roles, you’ll need to track and pay for that accordingly. Depending on the size of your workforce, you may know which workers are most likely to change roles through the day. If so, check their time entries to make sure things look correct.
Check your prevailing wages: Are you paying everyone the correct prevailing wage? Usually the awarding agency provides wage determinations for the roles needed for the job, but that doesn’t mean you don’t need to check them! It’s your responsibility to check and keep up with wage determinations, so make sure you have double checked the prevailing wage rates for your job and do a periodic spot-check to make sure nothing has changed.
Be consistent: Don’t fall behind on your certified payroll reporting! Federal prevailing wage jobs require weekly certified payroll reporting. But some states have different standards for state-funded prevailing wage work. For instance, in California certified payroll records must be submitted monthly or more frequently if required by the awarding body. (Source) Either way, doing your reporting weekly will prevent you from getting behind which can be a difficult position to recover from.
Follow a pre-reporting checklist: Before you finalize everything, make sure you check some of the most common areas for errors. This is any part of the process where manual entry is required, taking a close look at the following areas:
- Verifying the number of hours worked
- Double check your work determination information
- Double check prevailing wage rates
Prepare example reports: What does a properly filled out WH-347 look like? If your working on state prevailing wage jobs, what does that process look like? Having samples for people to compare against can help eliminate simple errors and speed up the process. It is also a valuable training tool for new team members.
Revaluate processes regularly: You should aim to review your payroll and reporting processes regularly. Depending on how busy your team is, this could be quarterly or less frequently, but don’t ignore it all together. By evaluating how you handle each step of payroll and reporting, you’ll be able to find and react to problems quicker. Ask everyone to bring their ideas and to have a few examples of problems that happened and how they were solved.
And no matter how much prevailing wage work you do, you’ll want to prioritize staying up with legislation. Labor laws change and every year different types of legislation goes into effect that impacts how you do business. The only way to stay compliant and out of trouble is to understand the law and how it applies to your projects.
Learn more about prevailing wage law here.
Learn all about the top certified payroll mistakes that lead to violations here.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.