What Is Certified Payroll and How Does It Work?
Decipher certified payroll for public works. This guide clarifies its purpose, essential reporting details, and the steps to ensure accurate submission and compliance.
Certified payroll is a specialized weekly report for contractors and subcontractors on public works projects. It details wages paid to employees, ensuring compliance with labor standards and promoting transparency in publicly funded construction. Its primary purpose is to verify that workers receive fair wages and benefits, aligning with predetermined rates for their job classifications. This process helps prevent wage fraud and maintains a level playing field among contractors.
Understanding Certified Payroll Requirements
Certified payroll reporting is required for contractors and subcontractors on federally funded or assisted construction projects, particularly those covered by the Davis-Bacon and Related Acts. This federal legislation mandates that laborers and mechanics on public works contracts exceeding $2,000 receive no less than locally prevailing wages and fringe benefits. Many states and local jurisdictions have similar prevailing wage laws, often called “little Davis-Bacon Acts,” extending these requirements to state and local public works projects.
These laws ensure workers on government-funded projects receive compensation reflecting local prevailing wage rates, including hourly wages and fringe benefits like health insurance and pension contributions. The Davis-Bacon Act and the Copeland Anti-Kickback Act establish the obligation for contractors to maintain accurate payroll records and submit them to verify compliance. These acts protect workers from exploitation and maintain fair competition by preventing wage undercutting.
Essential Information for Certified Payroll Reporting
Preparing a certified payroll report requires specific data for each employee on a public works project. For every worker, the report must include their full name, address, and Social Security number. Their work classification, such as carpenter or electrician, must also be identified, as this determines the applicable prevailing wage rate.
Detailed information on hours worked is required, specifying total hours for each day and week, distinguishing between straight time and overtime. The hourly wage rate, gross wages earned, and an itemized list of all deductions (e.g., taxes, insurance) must be reported. Finally, the net wages paid to the employee must be clearly stated.
Fringe benefits, such as health insurance premiums or pension contributions, are a component of prevailing wage requirements and must be accounted for. These benefits can be direct contributions to benefit plans or cash in lieu of benefits, and their value must be included in the total prevailing wage calculation. Record-keeping, supported by documents like timecards and pay stubs, is necessary to substantiate reported information. A “Statement of Compliance,” typically found on the certified payroll form, must be completed to certify the accuracy of the payroll data and confirm adherence to prevailing wage laws.
Preparing the Certified Payroll Report
Preparing the certified payroll report involves transferring employee and wage information onto the required form. Federal Form WH-347, “Payroll (For Contractors and Subcontractors),” is the standard document for projects subject to the Davis-Bacon and Related Acts. This form is available from the Department of Labor website, providing a structured format for reporting.
When filling out Form WH-347, contractors must enter employee details, including name, work classification, and total hours worked daily and weekly. The applicable hourly wage rate, gross wages earned, and all itemized deductions must be recorded. Fringe benefits, whether paid directly or as cash equivalents, need to be shown in compliance with the prevailing wage determination.
The form also requires indicating the prevailing wage rate for each work classification. After weekly payroll data is entered, the “Statement of Compliance” section must be completed and signed by an authorized representative. This signature certifies the accuracy of the reported payroll data and confirms compliance with federal prevailing wage requirements. Many states have their own specific certified payroll forms, which may have similar yet distinct requirements.
Submitting Certified Payroll Reports
After completing the certified payroll report, it must be submitted to the relevant authorities. For federal projects, reports are typically submitted weekly, within seven calendar days after the pay date. Submission methods vary, including mailing physical copies, uploading documents through online portals, or direct submission to the prime contractor.
Reports are generally submitted to the contracting agency or the prime contractor, who is responsible for ensuring compliance for all subcontractors. Copies may also be filed with the Department of Labor or state labor departments, depending on the project’s funding source. Maintaining copies of all submitted reports is necessary for record-keeping and potential audits.
After submission, contractors may receive confirmation of receipt, and reports may undergo review by the contracting agency or labor department. Clarifications or additional information may be requested if discrepancies are identified. Adhering to the specified submission frequency and method helps avoid penalties and ensures ongoing compliance with public works contract requirements.