How to Report Salaried Employees on Certified Payroll

Certified payroll reports are a requirement for contractors and subcontractors working on federally funded or federally assisted construction projects, as mandated by statutes like the Davis-Bacon and Related Acts. These reports ensure that all laborers and mechanics employed on such projects receive prevailing wages and fringe benefits as determined by the U.S. Department of Labor. While reporting hourly employees is straightforward, the process for salaried employees introduces specific considerations to ensure compliance with these wage requirements.

Understanding Salaried Employees on Certified Payroll

Reporting salaried employees on certified payroll presents a challenge because prevailing wage requirements are expressed as hourly rates. To reconcile this, a contractor must calculate an “effective hourly rate” for each salaried employee. This calculation involves dividing the employee’s total weekly salary by the actual number of hours worked in that week on the certified project. For instance, if an employee earns a $1,000 weekly salary and works 40 hours, their effective hourly rate would be $25.00 per hour.

The Fair Labor Standards Act (FLSA) distinguishes between exempt and non-exempt salaried employees, which impacts certified payroll reporting. Exempt salaried employees, such as executive, administrative, or professional employees, are not subject to minimum wage and overtime provisions. However, for certified payroll, their effective hourly rate must meet or exceed the prevailing wage rate for their classification.

Non-exempt salaried employees are covered by FLSA minimum wage and overtime requirements, even if they receive a fixed salary. For certified payroll, if a non-exempt salaried employee works more than 40 hours in a workweek, their overtime hours must be compensated at one and one-half times their regular effective hourly rate. This ensures adherence to both FLSA overtime rules and prevailing wage stipulations.

Fringe benefits provided to salaried employees, such as health insurance, retirement contributions, or paid leave, can be credited towards satisfying prevailing wage requirements. These benefits are converted into a cash equivalent or an hourly rate equivalent. This allows employers to offset a portion of the required prevailing wage rate with the value of fringe benefits, provided they are documented and verifiable.

Gathering Required Information for Certified Payroll

Before completing a certified payroll report for salaried employees, collecting specific and accurate information for each individual is necessary. This includes employee identification details such as the full legal name and Social Security Number. Accurately identify the employee’s specific work classification or craft, as defined by the applicable prevailing wage determination for the project.

Gather the calculated effective hourly rate for the salaried employee. This rate is important for demonstrating compliance with prevailing wage requirements. Additionally, detailed wage and hour data must be tracked, including the total regular hours worked, any overtime hours worked, the gross wages earned, and itemized deductions such as taxes or other authorized withholdings.

Documentation for fringe benefits is also important. For each benefit provided, such as health and welfare contributions or pension plans, specific details regarding the type of benefit and its verifiable cash equivalent must be available. This documentation supports any credits claimed against the prevailing wage rate for benefits paid. The official certified payroll form, U.S. Department of Labor (DOL) Form WH-347, is the standard document used for these reports.

Completing the Certified Payroll Form for Salaried Employees

Populating the certified payroll form, such as DOL Form WH-347, for salaried employees requires careful attention. In the employee identification section, the employee’s full name and Social Security Number are entered. Their specific work classification, aligning with the prevailing wage determination for the project, is noted.

The total hours worked by the salaried employee during the pay period are recorded in the designated column, including regular and overtime hours. For the “Rate of Pay” field, the calculated effective hourly rate for the salaried employee is entered. This ensures that the compensation is presented in an hourly format consistent with prevailing wage mandates.

When a non-exempt salaried employee works overtime, those hours are reported separately in the overtime column. The corresponding overtime pay, calculated at one and one-half times their effective hourly rate, is included in the gross amount earned. This separation ensures transparency and compliance with both FLSA and prevailing wage overtime provisions.

Fringe benefits provided to the salaried employee are documented in the designated section of the form or on an accompanying statement. This includes detailing the type of benefit and its hourly cash equivalent, which can be credited against the prevailing wage rate. The “Gross Amount Earned” field reflects the total remuneration before deductions.

Itemized deductions, such as federal, state, and local taxes, or other authorized withholdings, are listed. The “Net Wages Paid” represents the actual take-home pay for the employee after all deductions. Finally, the “Statement of Compliance” on Form WH-347 must be completed and signed, certifying that all wages paid and fringe benefits provided adhere to the applicable prevailing wage determination and related laws.

Submitting Certified Payroll Reports

Once the certified payroll form is completed, the next step involves submitting the report to the appropriate governmental authority. Common submission methods include mailing the physical forms, uploading them through secure online portals managed by specific government agencies, or direct submission to the contracting officer overseeing the project. The exact method depends on the requirements outlined in the contract or awarding agency.

Along with the completed certified payroll form, include any required supporting documentation. This includes detailed statements for fringe benefits claimed, documentation for authorized deductions, or other records that substantiate the information provided on the main form. Ensuring all necessary attachments are included helps prevent delays or requests for additional information.

Maintaining records is important for certified payroll compliance. Contractors are required to retain copies of all submitted certified payroll reports, along with supporting documentation such as timecards, payroll records, and fringe benefit statements, for a specified period, three years from the completion of the contract. This record-keeping facilitates any potential audits or reviews by regulatory bodies.

After submission, contractors should be prepared for follow-up inquiries or audits from the contracting agency or the Department of Labor. These processes verify the accuracy and compliance of the submitted reports. Promptly responding to any requests for clarification or additional documentation helps maintain good standing.