Certified payroll is a report you submit to a government agency certifying that you have paid your employees for the previous week according to prevailing wage laws. Certified payroll reports need to show information on each worker’s classification as well as their prevailing and fringe rate. Contractors that work on qualifying government contracts are required to do certified payroll for construction. The Davis-Bacon Act applies to federally funded contracts over $2,000 for the construction, alteration, or repair of public buildings or public works. There are also federally assisted contracts, where federal and local dollars are combined, which are governed by these laws. The U.S. Department of Labor (DOL) requires that weekly Certified Payroll Reports are submitted for all prevailing wage projects.

• You will need to submit certified payroll reports to the Labor Commissioner using the DIR’s (Department of Industrial Relations) online system.
• Understanding the process of completing the certified payroll report is crucial to helping you avoid compliance issues.
• Prior to joining the team at Forbes Advisor, Cassie was a content operations manager and copywriting manager.
• Here, you’ll include the name of the contractor or subcontractor awarded the contract and filing the paperwork.
• The Davis-Bacon Act was passed by Congress in 1931 to ensure that contractors and subcontractors hired for federally funded projects pay workers the prevailing wage.

What Is Certified Payroll? Here’s What You Need to Know

The prevailing wage pay rates differ depending on the location of the work and the job description of your employees. During the Great Depression, Congress approved them to ensure that workers on public works projects were appropriately compensated. Certified payrolls are frequently a subset of a construction company’s regular payroll. In actuality, it generally refers to a single task, such as a government contract or a public works project. Certified payroll is only required when a company does construction for what is certified payroll the federal government and the project’s contract is worth more than $2,000. These reports also look into fringe benefits, like health insurance or retirement plans.

Federal Laws vs State Laws on Prevailing Wage

The contractor — or subcontractor — is responsible for paying all on-site hours, including said fringe benefits. Managing multiple subcontractors on a public works project can complicate certified payroll compliance. Each subcontractor must submit their certified payroll reports accurately and on time. Coordinating this process requires careful oversight and communication. Handling certified payroll for public works manually can be time-consuming and error-prone. Using specialized payroll software can simplify the process and reduce the risk of mistakes.

Form WH-347: Your Guide to Federal Certified Payroll Reporting

• For federal compliance, payroll form WH-347 can be used as it meets all the requirements.
• In this article, we will go over what certified payroll is, the various types of businesses that need to know about it, and what employers should know about the process to stay compliant.
• Or, worse yet, they may be wondering if you were deliberately trying to hide something.
• If you’re overwhelmed by running payroll yourself and are considering options to lessen your burden, you may be thinking about using a payroll outsourcing company.
• But egregious mistakes can result in being barred from bidding on future government construction projects, having payments withheld, or paying interest penalties for wage restitution payments.
• The bottom two rows are for entering the straight time (S) and overtime (O) hours for each of those days.
• For federal projects, a construction company will submit paperwork to the Department of Labor (DOL).

You can either upload the completed WH-347 form or you can fill it out digitally and submit it through their system. Fill out Form WH-347 and deliver it to the representative in charge of your worksite or mail it to the agency. You can use payroll software to help you run payroll and keep organized records for certified payroll Retail Accounting reporting. You may receive penalties for failing to submit certified payroll reports, submitting the report without signing it, or falsifying certified payrolls.

Importance of Compliance for Contractors Working on Government Projects

In past roles, he worked for residential developers in Virginia and a commercial general contractor in Bar Harbor, Maine. Jonny holds a BBA in Financial Economics from James Madison University. After college, he spent two and a half years as a Peace Corps Volunteer in Kenya.

This information must be reported every week to the Department of Labor for federal contracts. Remember, successful navigation of compliance regulations requires ongoing vigilance and a proactive approach. Consider establishing a Accounting Periods and Methods dedicated team or partnering with a qualified compliance professional to stay up to date on evolving regulations and best practices.