If your business receives a government-funded job, you’re required to submit certified payroll records. Certified payroll reports come with strict requirements, and there are hefty penalties for noncompliance.
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What is certified payroll?
Certified payroll is a special type of weekly payroll used by contractors working on federally funded projects. It ensures you’re complying with the Davis-Bacon Act, which requires anyone working on these projects to receive prevailing wages and benefits set by the U.S. Department of Labor (DOL).
To complete your certified payroll requirements, you’ll submit Form WH-347 to the DOL. This form lists each employee’s name, job classification, hours worked, pay rate, gross wages, and deductions. It also includes a compliance statement that certifies all workers have been paid according to federal requirements.
Certified payroll helps the government verify that its contractors are meeting wage laws and labor standards. While not every business must file these reports, individuals working on public works projects or government contracts often do.
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Who needs to file certified payroll?
Certified payroll reports are required for contractors and subcontractors working on federally funded construction projects that fall under the Davis-Bacon Act. This law applies to most public works projects valued at over $2,000, like building or repairing roads, bridges, or government facilities.
Any business that has a direct contract with a federal agency, as well as subcontractors hired by a primary contractor, must submit certified payroll reports for their workers. These reports ensure that all employees are paid prevailing wages and fringe benefits as determined by the DOL.
In some cases, state or local government projects that receive federal funding may also require certified payroll. Even if you’re not the primary contractor, you’re responsible for filing accurate reports for your employees if you’re performing covered work under a qualifying contract.
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What is the prevailing wage?
Your employees’ gross wages must meet the prevailing wage requirements for work on similar projects in the surrounding areas.
Any fringe benefits received must meet these requirements as well. Some states have their own version of the prevailing wage. States determine the prevailing wage by referring to the federal prevailing wage and conducting surveys of local wages. If the prevailing wage in your state exceeds the federal prevailing wage, you’re required to pay the state’s rate.
You can contact the DOL to find your wage determination. Once you know the prevailing wage, you can complete Form WH-347.
Even if you’re not the primary contractor, you’re responsible for filing accurate reports for your employees if you’re performing covered work under a qualifying contract.
How to fill out the WH-347 certified payroll form
When you fill out Form WH-347, you'll provide detailed information about your employees and their wages for a specific project week. You’ll start by filling out some general information about your business, such as:
- Whether you’re a contractor or subcontractor.
- Your business address.
- Your payroll number.
- The last day of the work week.
- The project or contractor number.
From there, you’ll provide detailed information about each of your employees. That includes:
- The name of the employee.
- Their Social Security number.
- The number of withholding exemptions.
- The employee’s job classification.
- Their total hours worked.
- The employee’s pay rate and fringe benefits.
Finally, you'll sign a compliance statement certifying that all workers were paid the required prevailing wage and fringe benefits. You must fill out this form accurately since errors can lead to penalties or delays in payment. If you’re having trouble, the DOL provides instructions on how to complete the WH-347 correctly.
Penalties for noncompliance
The DOL will review certified payroll reports to ensure wages are paid fairly, and the government has increased its scrutiny of these reports in recent years. If you knowingly violate the Davis-Bacon Act, your business could be fined or terminated as a government contractor. Knowingly submitting false payroll information could lead to criminal or civil prosecution.
The best way to ensure your business complies with the law is to utilize technology designed to help you with payroll. A payroll software solution can efficiently process your payroll, and it can help ensure you keep accurate, organized payroll records for at least three years.
You might also consider working with a certified payroll specialist to ensure you’re meeting the government’s requirements. Doing so can improve your quality assurance and standardize your payroll process.
Tools and software that simplify certified payroll reporting
Managing certified payroll manually can be time-consuming and result in errors, especially if you’re handling multiple workers or projects. Fortunately, you can use payroll and construction management software to automate wage calculations, track hours, and generate Form WH-347.
Popular payroll software like QuickBooks, ADP, and Paychex offer certified payroll reporting features to ensure wage compliance and accurate reporting. Construction-specific platforms like LCPtracker and Payroll4Construction are also designed to handle prevailing wage requirements and produce compliant reports.
Many of these tools allow you to import time-tracking data directly, reducing the need for manual entry and minimizing mistakes. They also store previous reports, which makes audits and recordkeeping easier. Choosing the right software can save you valuable time and help ensure all certified payroll submissions meet federal and state requirements.
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