What Is Certified Payroll & Which Companies Must Use It?
Understand the essential requirements for certified payroll and which companies must comply with prevailing wage regulations on public projects.
Certified payroll is a weekly wage report required for contractors and subcontractors engaged in public works projects. Its purpose is to ensure workers are compensated fairly according to predetermined wage rates for their area and job classification.
What Certified Payroll Is
Certified payroll is a detailed weekly report submitted by contractors and subcontractors working on public construction projects. This report serves to verify that all employees receive prevailing wages and fringe benefits as mandated by law. It documents the hours worked, rates of pay, and benefits provided to each worker.
The primary federal legislation driving this requirement is the Davis-Bacon and Related Acts (DBRA). This act generally applies to contractors and subcontractors performing work on federally funded or federally assisted construction contracts exceeding $2,000. It mandates that laborers and mechanics on these projects are paid no less than the local prevailing wages, including fringe benefits, for the type of work performed. The U.S. Department of Labor determines these prevailing wage rates for various geographic regions and job classifications.
Contractors must meticulously track each employee’s work classification, hours worked daily and weekly, hourly rates of pay, gross wages earned, and all deductions and net wages paid. This detailed information allows for verification against the established prevailing wage rates, including any required fringe benefits. Compliance with these requirements protects workers and helps maintain fair competition among contractors.
Who Must Use Certified Payroll
Certified payroll applies to contractors and subcontractors undertaking federally funded or federally assisted construction projects. These projects include the construction, alteration, or repair of public buildings, roads, bridges, and other infrastructure. The Davis-Bacon Act specifically applies to contracts over $2,000 for such work. It covers all laborers and mechanics involved, regardless of whether they are direct employees of the prime contractor or a subcontractor.
Beyond federal mandates, many states and some local municipalities have enacted their own prevailing wage laws. These state and local regulations extend certified payroll requirements to public works projects funded at their respective levels. Monetary thresholds for these projects vary.
These state and local laws ensure that workers on publicly funded projects receive wages comparable to those paid for similar work in the community. Contractors must be aware of both federal and any applicable state or local prevailing wage laws, adhering to the higher of the two rates if there is a difference. Compliance helps prevent underpayment of workers and promotes equitable labor practices across all public construction. Examples of projects typically covered include renovations of public schools, construction of municipal facilities, or state highway improvements.
Information Required for Certified Payroll
A certified payroll report requires specific, comprehensive data to ensure compliance with prevailing wage laws. Each employee listed must have their full name, address, and Social Security number provided for identification.
The report must detail each employee’s work classification, which is the specific job title or role performed on the project. This ensures the correct wage rate is applied. Employers must also record the daily and weekly hours worked by each employee, distinguishing between straight time and any overtime hours.
Financial details include the hourly rate of pay, gross wages earned, and an itemized list of all deductions taken from wages. Net wages paid to the employee for the week must also be clearly stated. Information regarding fringe benefits must also be documented. Finally, the report includes general project details, such as the project name, location, and the contractor or subcontractor’s identifying information.
Submitting Certified Payroll Reports
Certified payroll reports are typically required to be submitted weekly. This regular submission ensures ongoing compliance with prevailing wage and labor standards throughout the project’s duration. This weekly requirement applies even if no work was performed during a particular week, though in such cases, a report indicating no work may still be necessary or the payroll number is simply advanced.
The standard form used for federal projects is the WH-347, provided by the U.S. Department of Labor. While use of the WH-347 form itself is technically optional, covered contractors and subcontractors must still submit the required payroll information weekly. This form details the project and company information, along with the specific payroll data for each employee during the reported week.
Each certified payroll submission must be accompanied by a signed “Statement of Compliance.” This statement, often found on the second page of the WH-347 form, is a certification that the payroll information is accurate and complete, and that each laborer or mechanic has been paid no less than the required prevailing wage rate, including fringe benefits. Reports can be submitted through various methods, including mailing, online portals, or direct delivery to the contracting agency. Contractors are generally required to retain copies of these submitted forms and supporting documentation for a period of at least three years after project completion.