Processing certified payroll is a task every federal contractor knows well. But if your accounting system doesn’t have the right tools in place, it can not only take longer than it should but could leave you open to errors. Understanding certified payroll and simplifying the process is critical for construction and field services companies looking to win jobs tied to the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Bill. To date, nearly $454 billion in Bipartisan Infrastructure Law funding, including over 56,000 specific projects and awards across more than 4,500 communities in all 50 states, according to WhiteHouse.gov. These projects are tied to developing or improving roads, bridges, mass transit, water infrastructure, resilience and broadband.
What is Certified Payroll?
Certified payroll is a special payroll report that contractors working on federally funded projects of more than $2,000 must submit to the federal government under the Davis Bacon Act (DBA). The DBA was created in 1931 to protect workers from receiving low pay while competing for federally funded construction projects during the Great Depression. The act, as currently amended, requires that any federal contractor who takes on a job over $2,000 on public buildings or public works, must pay their workers no less than the prevailing wage and fringe benefits as on similar projects. Submitting certified payroll reports is proof that you’re paying workers a prevailing wage. Prevailing wages are based on what the Secretary of Labor determines to be prevailing for employees doing similar work in the state where the work is being performed.
Certified Payroll Requirements
Complying with weekly certified payroll reporting under the Davis-Bacon Act involves submitting Federal Form WH-347 detailing wages and hours for each worker to demonstrate prevailing wage payment. Each report must contain a signed statement of compliance from the employer or an authorized representative. This attests that the included payroll data is accurate and that prevailing wage requirements were met for all covered workers.
Beyond verifying prevailing wage payment, maintaining organized records is key for contractors. Companies must keep completed certified payroll forms, timesheets, registers, and supporting documentation for at least 3 years after project completion. These archived files need to remain well-organized and accessible for both internal and external auditing purposes.
Meeting certified payroll requirements takes diligent tracking of employee hours and wages. However, non-compliance penalties like payment withholding, contract termination, fines and prosecution demonstrate why precision is imperative. Utilizing standardized processes and integrated technology can help contractors maintain accuracy. Automating data collection, calculations, reporting and compliance verification reduces human error risk and provides audit traceability.
Submitting Certified Payroll Reports
Certified payroll reporting requires accurately tracking the time the employee worked, paying the employee a prevailing wage weekly and submitting weekly reports.
Federal contractors must submit Federal Form WH-347 for certified weekly payrolls on contracts subject to the DBA and make sure each of the form’s fields are filled out correctly, including: Name of Contractor, Name and ID Number of Worker, Work Classification, Total Hours, Rate of Pay and Deductions. Current Davis Bacon wage rates for each state can be found online by filling in a few fields or providing the wage determination (WD) number.
The certified payroll reports also require that federal contractors clearly document employee names, addresses, correct job classification, rate of pay, daily and weekly hours worked and amount actually paid in payroll. Once the WH-347 form is completely filled out, submission is certified by signing the statement of compliance included in the form.
With so much riding on filling out and submitting certified payroll reports correctly, it’s essential to start with accurate data, especially hours worked.
How ExakTime Helps Ensure Certified Payroll Accuracy
ExakTime’s solutions help construction companies gather accurate data about their employees the first time, so employees are classified correctly from day one and certified payroll information is lined up and ready for Form WH-347.
ExakTime’s mobile time clock app records every hour your employees work, including lunches and overtime, all in real-time. This eliminates inaccurate time sheets, which can slow down payroll. ExakTime’s mobile time tracking app lets workers clock in and out using an app that’s easily downloaded to any mobile device. Workers simply enter their unique, 4-digit PIN number and tap the green ‘Go’ button to clock in or the red ‘Stop’ button to clock out. Clock-in and out data, including where your workers are located, is synced so team management can occur from anywhere.
The ExakTime solution supports certified payroll compliance with:
- A drop-down menu so you can simply choose “certified payroll” for a job site, automatically classifying all hours worked at the site
- A certified payroll report that lets you review the hours worked at those sites by employee
- The option to create customized “certified payroll” cost codes for every certified payroll site, so employees can clock in under the correct code for their “contract action”, or job
ExakTime also automatically saves records of all your employee timesheets. That means no matter if you need to check on payment from two weeks ago or two years, it can be securely accessed with just a couple of clicks.
Make compliance automatic by scheduling a demo to see how ExakTime’s solutions can work for you.
Frequently Asked Questions
Which law requires a company to use certified payroll?
The Davis-Bacon Act requires companies working on federal government construction projects to pay their laborers and mechanics at least the prevailing wages and benefits as determined by the Department of Labor. Compliance with this law mandates the use of certified payroll, a system for contractors to submit weekly wage reports to demonstrate they are fulfilling the wage requirements set forth for each project. This act applies to all contractors and subcontractors working on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works.
What is the difference between prevailing wage and certified payroll?
The prevailing wage is the standard wage determined by regulatory agencies for specific job titles within a geographical area, typically applied to public works projects to ensure workers receive fair pay. Certified payroll, on the other hand, is the documentation process required by the government that contractors must follow to prove they are paying these prevailing wage rates on public works projects. While prevailing wage laws set the standard pay rate, certified payroll is the verification method to ensure compliance with those rates.
