Contractors and subcontractors that work on construction projects funded by the federal government deal with the added requirement of certified payroll. Companies must submit certified payroll reports to confirm that they are following prevailing wage laws. While there are many states that require certified payroll reporting for state-funded construction projects, we are going to focus federal prevailing wage requirements under Davis Bacon and Related Acts.
Exactly what is certified payroll reporting for federal projects, why is it required and what is included on certified payroll reports? We’ll answer these questions and more in this guide on certified payroll reporting.
What is certified payroll?
Certified payroll and certified payroll reporting are often used interchangeably. For payroll to be certified, you must confirm or “certify” that you’re paying workers prevailing wages as required under Davis Bacon and Related Acts (DBRA). This includes not only following the correct wage and fringe benefit requirements, but also submitting a detailed report with the U.S. Department of Labor (DOL) weekly, even if work stops temporarily. The government provides form WH-347 to help companies make sure they are reporting all of the required information. Using the form is not mandatory but providing the information it helps you collect is required by law.
DBRA applies to contractors and subcontractors performing work on federal-funded and federally assisted contracts in excess of $2,000 for construction, alteration or repair, including painting and decorating. So at the federal level, projects that fall under this rule must abide by certified payroll reporting requirements. It’s important to note that DBRA is a federal law but your state may have prevailing wage laws for state-funded projects as well. It’s your responsibility to understand and follow all laws governing your project.
What’s in a certified payroll report?
Certified payroll reports tell the DOL that you’re following the law in how you handle payroll for your prevailing wage projects. They must include a great number of details on each worker’s pay, role and time worked.
Your certified payroll report will include the following information:
- Complete legal name and an identifying number of each worker. This can be the last four of their SSN.
- Work classification they worked under, which may be more than one.
- All hours worked, including the day, date and straight time and overtime hours.
- Total hours worked for the week being reported on.
- Rate of hourly pay. If more than one work classification is worked, this must be shown per each one
- Gross amount earned
- Payroll deductions and total of the deductions
- Net wages paid for the week
Additional information a certified payroll report
In addition to payroll details, you have to include your company’s name, address, project name and location, and the project or contract number the work is being performed under. Certified payrolls are also numbered, and this must be included in the report. The first week you do any work on a project is payroll number one. Once you start, you must submit a report for every week through the end of the project. If work is paused, you still have to submit a non-performance report so that at the end of the project, there is a continuous record of every week’s pay or non-work.
Certified payroll statement of compliance
Your certified payroll report must include a statement of compliance. This must be signed by someone in your company and serves to verify that you have paid everyone correctly, followed all laws and that the information in the report is true and accurate. This is an actionable agreement and is backed up with civil or criminal prosecution under federal law, so it’s not to be taken lightly.
How to fill out a certified payroll report
You will need the following information on your company, the project and every employee that was paid to perform work on that project during the week.
- Company details
Enter your construction company’s legal name and physical address. You must check the box for either “contractor” or “subcontractor” to identify your role on the project.
- Prevailing project information
Enter the project name and be sure it matches the name listed on the contract. It must also include the project number assigned by the government agency issuing the contract.
- Payroll number and date
The first week that work is started on a project is counted as week one. Every week following this will be numbered in sequence, including weeks where no work is performed. So if you have eight weeks of work on a project, you’ll submit one report a week for eight weeks. If no work is performed during a week you submit a non-performance report so at the end of the project every week is accounted for, work or no work.
- Day and time of work
This is where you account for the hours worked during the week. You’ll notice there is a column for each day in the week, as well as a section marked O and S. Overtime goes in the O section, and straight time goes in the S section. You have to add it all up for the week in the Total Hours section. (Column 5)
- Payroll details
You have to enter all the payroll details in columns 6 through 9. This includes the rate of pay, gross amount earned, all deductions and net wages paid for the week. This information is similar to what a pay stub might have, like FICA withholding.
- Statement of compliance
When you’re sure everything is correct, and you’re ready to submit your certified payroll report, you must fill out the statement of compliance. This verifies the accuracy of the information you’re submitting to the federal government and includes the date, company’s name, name and title of the person submitting the report. Additionally, it includes the name of the project and explanations for deductions and exemptions.
Why are certified payroll reports required?
The same laws that require you to pay prevailing wages also require the submission of weekly certified payroll reports. These reports show that you’re complying with the law and serve as a record of your compliance efforts. Failing to submit certified payroll reports, or getting behind in reporting, can lead to penalties or delay funds dispersal. Submitting certified payroll reports that are not accurate can even lead to financial and legal trouble. This illustrates how important the government considers certified payroll reports.
Certified payroll reports can be time consuming, but it’s critical to do them on time and correctly. This can be especially difficult if you’re using manual time tracking methods like timecards, or have to manually transfer data from spreadsheets or outside payroll systems into your certified report. In fact, the time it takes to deal with certified payroll can be a limiting factor for government contractors looking to grow because taking more contracts means more compliance work. This might mean you need to staff up quicker than you’re ready to just to handle the admin work.
The solution is to switch to a digital time and attendance tracking system. This can make everything involved in certified payroll easier, faster and more accurate. Your best bet is to use a single system that allows your data to flow directly into your payroll and reporting software. This eliminates many opportunities for mistakes and can save your admin team hours every week. Look for something designed specifically for certified payroll to ensure you can quickly create all required reports, including federal and even state certified reports. You’ll save time and money, reduce your risk and be able to take on more lucrative government contracts with your existing administrative team.
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.