Every construction company that does prevailing wage work knows how time-consuming certified payroll can be. Not only does certified payroll require a lot of time, but it is also easy to make simple mistakes during any part of the process. These mistakes can lead to compliance issues including official investigations and financial penalties.
The regulatory agencies that watch for certified payroll issues don’t care about why a mistake happened, the results are the same. For this reason, construction companies that doe prevailing wage work need to be extra diligent in understanding the laws and following all requirements.
Why is certified payroll so complicated?
Prevailing wage laws require certified payroll, which includes strict adherence to tracking hours, using the correct wage determinations, tracking work classifications, handling fringe and reporting. Most payroll systems are set up for basic payroll requirements, which fall short when it comes to things like assigning prevailing wage rates, allocating fringe and tracking various work classifications. This leaves many construction companies to manually track these items, copying the data over from timecards to spread sheets to payroll systems and federal or state reporting portals.
These steps take time, but also leave companies open to error at any point of the process. Often, a mistake at any point gets compounded throughout the process. For instance, if a worker fails to track that they worked as both a laborer and drywall hanger during their shift, their prevailing wage and fringe rates would be incorrect. This might happen for multiple days, which would lead to a significant pay difference. Every record that reported this information would be incorrect and would need editing and wage restitution would have to be made.
In this situation, the company at fault could be investigated, which might even lead to additional errors being uncovered. Back wages, fringe, and financial penalties could be ruled on, and sometimes companies are debarred from future government contracts. For construction companies that rely on government contracts as an important revenue stream, this can be devastating.
Selecting certified payroll software
You can see how a simple error can lead to large problems, which is why it’s vital to understand the law and have strong processes in place. Additionally, using software that is made to handle construction payroll can take away a lot of the stress and risk involved in certified payroll.
Look for something that has the ability to:
-Auto-assign prevailing wage rates
– Simplify wage determinations
– Flag errors before payroll runs
– Simplify wage restitution
– Easy report generation (business insights and compliance reports)
-Includes advanced time and attendance features
Additionally, you’ll want access to advanced fringe benefits management. This will not only help you stay compliant, but can help you limit fringe overpayment, maximize the credit you take for fringe payments, and even offer traditional benefits to your workforce. Many construction companies find that switching from paying fringe in cash to leveraging advanced fringe management frees quickly puts their business in a stronger position.
Certified Payroll Resources for Construction Companies
It doesn’t matter if you’re considering switching to certified payroll software or plan on continuing to do things manually, you and your team need to keep up with the law. You’ll also want to build solid payroll and reporting processes.
The following list is full of helpful certified payroll and prevailing wage resources, including federal and state links.
Federal construction Compliance Resources
California Department of Industrial Relations Links
Certified Payroll Articles
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.