What Are Certified Payroll Reports & Why Do They Matter?
Unlock the importance of certified payroll reports for upholding labor standards, ensuring fair wages, and meeting regulatory obligations.
Certified payroll reports are financial documents detailing wages paid to employees on government-funded or assisted construction contracts. They demonstrate that contractors and subcontractors adhere to specific labor standards and wage requirements, ensuring fair compensation and regulatory compliance on public works projects.
Purpose and Applicability
Certified payroll reports uphold prevailing wage laws, protecting workers from unfair compensation. The federal Davis-Bacon and Related Acts require contractors on federal projects over $2,000 to pay prevailing wages and fringe benefits. Many states have similar “mini Davis-Bacon” acts for state-funded public works projects, ensuring comparable labor protections.
These reports are regularly submitted by businesses engaged in construction, alteration, or repair work on public buildings or public works. This includes activities from painting to major infrastructure projects. The requirement extends to both prime contractors and any subcontractors involved in the project.
These reports serve several regulatory purposes. They verify workers receive mandated wages and benefits, preventing wage theft. They also maintain fair competition by preventing contractors from gaining an unfair bidding advantage through underpaying workers. Additionally, they provide transparency and accountability in public fund use, allowing oversight agencies to monitor compliance and prevent fraud.
Information Required
Certified payroll reports require detailed information about each employee’s work and compensation on a covered project. Each report includes employee identification, such as full name and a unique identifier (e.g., last four digits of Social Security number or employee ID), for accurate tracking.
The work classification for each employee must be stated, indicating their specific trade (e.g., laborer, carpenter, electrician). This classification matches pay to the correct prevailing wage rate for the job type and geographic area. The report also details daily and weekly hours worked, distinguishing between straight time and any overtime.
Hourly rates, including basic wage and fringe benefits, are a key component. Fringe benefits include contributions to health insurance, pension plans, or vacation funds, or cash in lieu of benefits. The report shows gross wages earned, followed by an itemized breakdown of deductions like taxes and other withholdings.
Net wages paid for the week are also reported. Applicable prevailing wage rates for the project and worker classification are referenced for compliance verification. This information allows auditing entities to confirm workers received compensation at or above the required prevailing wage, including proper accounting for fringe benefits.
Preparation and Submission
Preparation involves transferring labor and wage information onto appropriate forms. For federal projects, the U.S. Department of Labor’s Form WH-347 is standard, though optional if another form contains all required information. This form captures company and project details, and individual employee earnings.
Contractors input company name, address, and whether they are a prime or subcontractor. Project information, including name, location, and government contract number, is also recorded. Each weekly submission receives a sequential payroll number, starting with “1” for the first week, even if no work was performed.
The Statement of Compliance, typically on Form WH-347’s second page or a separate document, is a key element. It must be signed by the contractor, subcontractor, or an authorized agent. By signing, the individual certifies the payroll information is accurate and complete, and that all workers have been paid at least the required prevailing wage rates and fringe benefits.
Reports are submitted weekly to the contracting agency or prime contractor, who ensures all subcontractor reports are also submitted. This weekly frequency ensures continuous oversight of wage compliance. While federal projects require weekly submission, some state requirements may allow monthly submissions, depending on contract terms.