What Is Certified Payroll Reporting?

Certified payroll reporting is a compliance process for contractors and subcontractors on public works projects. It ensures workers receive fair wages and benefits, aligning with labor laws. This reporting promotes transparency and accountability within federally and state-funded construction contracts.

Understanding Certified Payroll Reporting

Certified payroll reporting is a mandatory submission for businesses working on public works projects. This requirement applies to federally funded or assisted construction contracts exceeding $2,000, as stipulated by the Davis-Bacon Act. Its purpose is to verify that all laborers and mechanics are compensated according to prevailing wage laws and receive appropriate fringe benefits.

Certified payroll reporting prevents wage exploitation and fosters fair competition. By requiring detailed wage and hour information, government agencies monitor compliance, ensuring businesses do not undercut labor costs. This process promotes a level playing field where contractors compete on efficiency and quality.

The obligation to file certified payroll reports stems from public works contract terms. Prime contractors and all subcontractors involved in physical construction, alteration, or repair of public buildings or works must adhere to these requirements.

Federal requirements are governed by the Davis-Bacon and Related Acts. Many states have their own prevailing wage laws, often called “Little Davis-Bacon Acts.” These state laws mandate prevailing wages and certified payroll reporting for state-funded projects, creating a comprehensive framework for labor protection.

Data Elements for Reporting

A certified payroll report requires specific information for every employee on a covered project. This includes the employee’s full name and an identifying number (e.g., last four digits of Social Security Number). Each employee’s work classification (e.g., carpenter, electrician) must be listed according to the prevailing wage determination.

The report must detail daily and weekly hours worked, distinguishing straight time and overtime. Hours exceeding 40 in a week must be recorded as overtime. The hourly cash wage rate paid to each employee must be stated.

Fringe benefit information is required, including contributions to approved plans (e.g., health insurance, retirement, vacation). If fringe benefits are paid in cash instead of to approved plans, this must be indicated.

Gross wages earned before deductions must be reported. All deductions (e.g., taxes, insurance, union dues) must be itemized. Net wages paid to the employee for the week are included.

The certified payroll report also requires project-specific details: project name, location, and contract or project number. The applicable wage determination number(s) must also be provided.

Preparing and Submitting Reports

Once necessary data is compiled, information is transferred onto an official certified payroll form. The U.S. Department of Labor (DOL) provides Form WH-347, widely used for federal or federally assisted construction contracts. While use of Form WH-347 is optional, weekly payroll submission is mandatory, and the form serves as a convenient template that meets regulatory requirements.

Filling out Form WH-347 involves populating fields with gathered data. Company information, including business name and address, is entered at the top, along with whether the entity is a prime contractor or subcontractor. A sequential payroll number is assigned to each weekly submission, and the week ending date for the reported pay period is indicated.

The form requires entries for each worker, including name, identifying number, and work classification. Daily and total weekly hours worked, distinguishing straight time and overtime, are entered. The hourly rate of pay, gross wages, itemized deductions, and net wages paid for the week are recorded.

The “Statement of Compliance,” found on Form WH-347, must be signed by an authorized company official. The signature certifies the accuracy and completeness of the payroll information and affirms that workers have been paid not less than the required prevailing wage rates and fringe benefits.

Certified payroll reports are generally submitted weekly to the contracting agency or the prime contractor, who then transmits them to the relevant federal agency. Submission methods can vary, and prevailing wage schedules must accompany the report.

Record Keeping and Oversight

Contractors and subcontractors are legally obligated to maintain complete and accurate payroll records for a specified period after project completion. For federal contracts, these records must generally be retained for at least three years. This retention period ensures that documentation is available for potential compliance verification and audits.

The types of records that must be kept include original payrolls, timecards, wage rate schedules, and evidence of fringe benefit payments. These documents serve as foundational proof of adherence to prevailing wage laws and other labor standards. Maintaining meticulous records is essential for demonstrating compliance and can be crucial in the event of an audit or investigation.

Government agencies, such as the Department of Labor, utilize certified payroll reports to verify compliance with prevailing wage laws. Audits may be conducted randomly, or in response to a complaint, to ensure that workers have received the legally required wages and benefits. Accurate record-keeping significantly facilitates this process, allowing for a smoother review of payment and hour data.

Should any errors or omissions be discovered in submitted reports, contractors must promptly correct them. While the process for correction varies, it generally involves amending the original report and resubmitting it with the accurate information. Proactive internal audits and careful review before submission can help prevent such discrepancies.