Certified Payroll Requirements for Federal Construction Reporting

You must comply with prevailing pay and fringe rates published by the DOL to ensure compliance with payroll laws. Some states, such as California and New York, have specific laws that impact certified payroll. Make sure to always check with state laws and regulations before processing or reporting certified payroll for your employees.

There are also penalties for filling out the form wrong, so it’s important to do so carefully. There are electronic systems available that will help do the heavy lifting for you and help with monitoring and managing compliance on public projects. So, you won yourself a bid on a publicly funded project, but not just any publicly funded project… You won yourself construction work in the state of California. Accuchex is a reputable workforce management services provider and can not only assist you with the burden of your ongoing compliance demands, but can potentially prove to be a more cost-effective solution, as well.

The whole point of certified payroll is to make sure employees are paid their predetermined wage, so not complying is a huge issue. Penalties can range from withholding funds on projects to being banned from bidding on government contracts for three years. On the flip side, the contractors are the ones needing to produce CPRs, demonstrating that they are paying the proper prevailing wages. Subcontractors must submit their CPRs to their primes, who in turn need to collect and review the reports (as well as produce CPRs for any of their own employees). Ultimately, primes are responsible for monitoring the compliance of their subs.

Where do I find Form WH-347?

All contractors and subcontractors on most federal public works projects must submit certified payroll records to the federal agency that is contracting for or financing the project. Certified payroll reports ensure that your payroll records, as well as those of your subcontractors, accurately reflect the hours worked, rate of pay (both base rate and fringe benefits), and work classification. Payroll processed under a specific government contract (such as government-funded construction projects) requires special payroll reports that must be filed weekly. Certified payroll requirements can vary depending on the state where the work is performed.

The submission process is one area where the state requires an extra step. In addition to the submission requirements above, CPRs also have to be electronically submitted in XML format via the California Department of Industrial Relations’ web portal. Cost of goods sold (COGS) makes up a substantial portion of a construction company’s expenses.

Certified payroll reports ensure that wages follow regulations set in the Davis-Bacon and Related Acts. Every state and city has different codes on the wage required to legally employ construction contractors. Your certified payroll report serves as proof that you are meeting these criteria. Investigators are also hired to make sure contractor compliance is upheld.

What Does a Certified Payroll Report Look Like?

Hourly’s full-service payroll platform can automatically track, record and pay wages for you—so you don’t have to do it manually. You can contact the Department of Labor to find your wage determination. For state projects, the timeframes vary but you’ll typically need to keep the records for around 2-4 years. Moreover, Federal Form WH-347 must include all of the current information on all of the categories above.

• The weekly reports, which serve as proof that you’re paying your employees the prevailing wage, must be submitted to the funding agency for the contract.
• The average net profit margin for construction businesses ranges from just 3-7 percent, according to research from IBIS World.
• Fringe benefits include anything provided in addition to basic compensation (the prevailing wage workers are paid by the hour).
• Payroll software also helps keep you compliant with all types of legislation on payroll information.

These employers must pay the workers employed under the contract no less than the local prevailing wages, including fringe benefits, for the type of work performed. Yes, however, it works a little differently than with your direct employees. This is because each contractor and subcontractor is responsible for submitting their certified payroll records directly to the Labor Commissioner. To comply with this requirement, What is certified payroll the subcontractor will complete a certified payroll report and provide it to you. This should then be included with your company’s certified payroll reports in order to properly account for their wages related to the project. Certified payroll reporting is when contractors and subcontractors working on federal projects submit payroll reports to confirm they’re paying their workers the prevailing wage.

What you need to know about compensation in construction

Under the Davis Bacon Act passed in 1931, during the time if the Great Depression, all workers that perform labor on federally funded projects must be paid a prevailing wage. The law was passed to protect workers from low pay as a result of a company’s low bid to win public work contracts. Certified payroll is a way of tracking a company’s pay practices on Davis Bacon jobs and ensure that local, state, and federal laws and prevailing wage requirements are being met. Failure to comply with Davis Bacon and certified payroll reporting can result in hefty fines for a contractor. Certified payroll is a special weekly payroll report used by contractors who are working on federally funded projects. To meet your certified payroll requirements, you’ll need to submit Form WH-347 to the Department of Labor every week.

Since 1988, we have been giving open-shop contractors a competitive edge when bidding on Davis-Bacon, Prevailing Wage or Service Contract jobs. This guide is intended to be used as a starting point in analyzing an employer’s payroll obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services. To make your life easier, reduce the risk of mistakes and ensure you never lose important data, use an automated payroll solution. Even though you will have to invest in it, it will speed up your process and increase accuracy.

What Do I Need to Include in Our Certified Payroll Reports?

In order to calculate fringe benefits, you need to first determine the prevailing wage for the project. Once you have that, you will need to provide workers with a basic hourly wage plus fringe benefits that add up to the required prevailing wage for their position and the county the project is being completed in. Setting up payroll is a common challenge for small businesses, and this process only becomes more complex if you have to figure certified payroll on top of that.

Since the Davis-Bacon Act has been enacted, other acts have been passed to enforce prevailing wage laws. Several examples of these acts include the Housing and Community Development Act of 1974, Federal-Aid Highway Acts and the Federal Water Pollution Control Act. As mentioned above, there are penalties for not filling out the forms truthfully, and fraud is taken very seriously.

What is standard costing?

Failure to meet this requirement or submitting certified payroll reports that are incorrect or late may put employers at risk for penalties. Certified payroll reports, which need to be submitted every week to the agency that oversees a certain government contract, list every employee who performed work on a job. While processing regular payroll requires a good deal of admin work, staying ahead of certified payroll requirements can be overwhelming. This is because you must make sure that you are using the correct wage determinations, paying the correct prevailing and fringe rates, and submit weekly reports. This can quickly dominate a payroll teams’ time and even limit a company’s ability to grow.

It involves filling out information on each employee, including the dates, hours worked, job code, and labor costs for a particular activity. Despite the fact that the Fair Labour Standards Act (FLSA) provides guidelines, it’s still easy to make mistakes and breach the law. If you work with federally funded projects, then you should know how to create and submit a certified payroll report to the US Department of Labor.

Don’t fret if you feel in over your head—we’ll break down how to report certified payroll, so you can complete this essential process and make sure you’re in compliance when working on government projects. Davis-Bacon Act and Related Acts established labor fairness legislation, which included the prevailing wage system and certified payroll. Prevailing wage is the hourly pay rate that is used to complete certified payroll. Potential violations may be reported by workers that think a company is doing something wrong, like paying the wrong prevailing wage rate. At other times it could be a compliance officer or other official that visits a job site in order to check for compliance. No matter how the violation is found, however, it is followed up with an investigation.

In addition to meeting prevailing wage requirements, certified payroll employees must be paid weekly. Form WH-347 ensures you’re paying your employees the prevailing wage, which is the average wage for employees in a certain occupation. This report demonstrates that your business is compliant with these requirements. If your business lands a federal contract for over $2,000, you have to submit a weekly certified payroll report.