Processing payroll is never easy, but processing certified payroll adds a new level of complexity to the situation. There are also more opportunities to make mistakes due the many rules and regulations in place. Although it’s easy to make some common errors like failing to track all certified hours correctly, there are steps you can take to limit mistakes in general.
Why is certified payroll necessary?
Contractors and subcontractors that work on government-funded projects have to follow special rules outlined by Davis-Bacon and related acts. Additional state prevailing wage laws may also be in place, depending on the nature of the contract. These rules determine how much you pay employees in hourly wages and in fringe benefits. If you take on work subject to any of these laws, you have to submit certified payroll reports that prove that you’re following all applicable laws.
Reducing errors on certified payroll
Failing to follow the rules, or even making errors, can lead to financial penalties, legal action and even debarment from government contracts. This makes it important to know and follow all applicable laws and have a system in place for catching and correcting errors.
Although your company’s payroll process is unique, the following suggestions may help you create a check and balance system that limits mistakes.
- Create a system for double checking time card information when hours are reported, before processing payroll. If possible, move to digital time tracking to make it easier to track and correct errors when they happen.
- Make sure you are using the most recent prevailing wage determinations. The California prevailing rates can be on the Department of Industrial Relation’s website, broken down by area and city where applicable. Federal wage determinations for Davis-Bacon and Service Contract Act projects can be found here.
- Make sure everyone, from employees in the field to those in the office, understand their role in the process. For instance, a worker may not realize that they need to track their various roles throughout the day. By educating everyone on what’s required, you can limit mistakes and frustration.
- Using software designed to meet the unique needs of certified payroll can help reduce errors, while saving your company time and even money. Look for software that can help assign prevailing wage and fringe rates and also has the ability to create WH-347 and city specific reports. The right software can even help you stay compliant with laws, reducing your risk, and stress.
- The rules governing prevailing wage work are complicated and subject to change. This means it’s critical to stay educated and ahead of all requirements. To reduce errors and stay compliant, make sure you regularly check official sources for updates. There are even sometimes learning opportunities you can take advantage of.
Here are a few resources to bookmark:
U.S. Department of Labor prevailing wage seminars
Davis-Bacon and Related Acts fact sheet
Construction industry specific information on DBA and related acts
Preventing mistakes is easier than trying to correct them once they occur. This is especially important when it comes to certified payroll because mistakes early on in the process can have a domino-like effect. Since even simple errors can lead to fines and legal trouble, it’s important to be proactive.
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
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.