It’s always a good time to examine your certified payroll processes, especially at the start of a new year. It doesn’t matter if you’re looking to reduce errors or streamline your processes so you can take on more government work, now is the time to set yourself up for success.
Here are a few certified payroll tips to help you save lots of time, stress and even money in the upcoming year.
Rethink manual tasks
Are you still keeping hours on timecards? Or logging time into spreadsheets by hand and rekeying that same information for your certified payroll reports? Manual tasks not only take up too much time, but they are also prone to errors. When you reduce the manual tasks needed to run payroll and complete reporting, you reduce the time and risk involved as well. Using a digital time and attendance system is one easy way to reduce manual work. A better way would be to use a system that understands the unique needs of prevailing wage work, like the need to track hours for multiple work classifications.
Need help evaluating your options? Read this article for tips on selecting time and attendance software.
Verify wage and fringe rates for each project
Wage determinations are often provided in the bid packet for projects, but that doesn’t mean you should not verify them. Paying the wrong prevailing hourly wage and fringe rate can lead to serious trouble, including being fined, owing large sums in back pay and even legal action. For example, a Baltimore based federal contractor had to pay $293K in back wages and fringe because they paid the wrong rates and didn’t pay overtime correctly. So when you start a new project, take the time to verify all wage determinations so that payrolls and certified payroll reports are correct from day one.
If you happen to need a wage and fringe rates for a project that is not already covered by a published wage determination, you can request it by submitting a DBRA Standard Form 308.
Verify work classifications & spot check payroll
Work classifications connect your workers to wage determinations for that role, so if one is incorrect the other will be too. To make things more complicated, workers can also perform tasks under multiple classifications each day. These changes must be tracked, which is problematic as it relies on workers to do from the field. This can be especially hard to do if you log time by hand, but is important because mistakes can really cost you. For instance, an electrical subcontractor had to pay $94K in back wages because they paid workers for low-voltage work when they their work was not restricted to that role.
Spot check your time data every week to make sure that the work classifications logged by workers are correct. This gives you a chance to verify and correct problems before finalizing payroll. It won’t hurt to periodically remind workers about the importance of logging their time and work roles accurately.
Make and follow a certified payroll checklist
Having an official certified payroll checklist that moves the process from stage to stage can help keep things running smoothly. It can also reduce errors, allow you to fix mistakes before pay is issued and eliminate the need for wage restitution and amending reports. To work well, you’ll want to include every step from collecting and verifying hours through submitting your final certified payroll report. Every step needs to be checked before moving forward to ensure that nothing is forgotten.
As with all processes, you should regularly look at how you handle payroll and reporting. This lets you incorporate feedback and continually improve. This article has tips on creating a checklist and additional certified payroll resources.
Focus on preventing common mistakes
While mistakes can happen at any point in the payroll process, it is a good idea to focus in on eliminating common mistakes first. This is especially helpful for smaller teams and those that handle both regular and certified payroll. You can start by making a list of the top mistakes you see within your organization. Next, add the mistakes identified by the Department of Labor as the most common errors they see from companies trying to comply with Davis Bacon regulations.
Their list includes misclassification of laborers, failing to pay the full prevailing wage and fringe benefits, and inadequate record keeping. Read the complete list of top mistakes identified by the DOL and tips for preventing them in this article.
Stay up to date on reporting
Like anything else in life, it is easier to do things right if you get caught up and stay that way. When it comes to certified payroll, this is especially true due to the many data points that need to be collected, verified and reported on. For federal contracts, payroll and reports are due weekly. State-funded projects in prevailing wage areas may be weekly or monthly. Either way, make it a point to stay caught up with all required reporting. This includes not only payroll and submitting your WH-347, but handling any wage restitution, apprentice, union, fringe and training fund reports.
It can be tempting to put things on hold if you’re working on state jobs that require monthly reporting. Don’t fall into that habit, do reporting weekly to avoid the stress and inevitable errors that come from rushing.
These tips can help you reduce payroll and reporting mistakes no matter what system you currently use, but at some point, you may want to consider using construction-specific software. The right certified payroll software can dramatically increase your efficiency, reduce errors and allow you to take on more government work without worrying about the admin burden that comes with it.
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.