How Does Certified Payroll Work? A Step-by-Step Guide for Government Contractors

This report proves that workers are being paid the prevailing wage in compliance with federal standards. Embracing certified payroll is vital for construction companies to remain in legal compliance and uphold worker rights. Certified payroll stands as a vital compliance framework within the construction industry, aimed at adhering to both federal and state labor regulations. This elaborate system mandates businesses engaged in federally funded construction projects to meticulously document their employees’ pay, working hours, and accrued benefits. For any construction entity venturing into projects financed by federal resources, maintaining an up-to-date certified payroll record is non-negotiable. Managing certified payroll reporting manually can be time-consuming and prone to error, especially for contractors working on multiple projects across different states.

How Do I Fill Out A Certified Payroll Report?

• Check out the following screenshots of Form WH-347 to see what the certified payroll report looks like.
• For instance, does your state require additional documentation or forms beyond federal guidelines?
• The good news is there are several ways you can simplify the process and ensure compliance.
• Everything included in our «Plus» package and automated time-tracking with Time and Attendance.
• Filling out certified payroll forms accurately is essential for meeting compliance standards on government-funded projects.
• Information on prevailing wage rates can be accessed through local government databases or the Department of Labor’s website.

Certified payroll reporting is mandatory for contractors and subcontractors working on federally funded or assisted construction projects where the contract value exceeds $2,000. These requirements are primarily enforced under the Davis-Bacon Act, which applies to any construction, alteration, or repair of public buildings or public works projects funded by federal money. This means that if a contractor or subcontractor is part of a project funded by a federal agency or receiving federal support, they are responsible for filing certified payroll reports. Contractors subject to the Davis-Bacon labor standards may also have to abide by state and local laws governing prevailing wages and overtime payments.

Calculate Accurate Payroll Data

• You’ll need to provide, at minimum, each worker’s last name and the last four digits of their Social Security number.
• This can be done through time cards, digital tracking systems, or even simple logbooks.
• Consult a licensed legal professional to confirm the state-specific nuances of certified payroll in the place(s) where you operate.
• The purpose of the law is to prevent contractors from undercutting local wages.
• Certified payroll is a detailed report used by contractors working on government-funded projects.
• Column 7 requires a detailed breakdown of all deductions made from the gross pay, such as federal and state withholding taxes and garnishments.
• We’ll answer your questions, walk you through how our platform works, and help you start employing talent compliantly anywhere.

DBA requires contractors and subcontractors with a construction-related federal contract of over $2,000 to pay employees the prevailing wage. Contractors may use their own format if it contains all the required data elements. Accurate preparation begins with obtaining the correct wage determination number from the contracting agency. This determination specifies the required basic hourly rate and fringe benefit amount for every applicable job classification. The DBA protects local wage standards and prevents outside contractors from gaining an unfair competitive advantage. This protection includes the basic hourly rate and required fringe benefits, such as contributions to health insurance or retirement plans.

Tools and software that simplify certified payroll reporting

As mentioned, certified payroll reports serve as a safeguard against worker exploitation, and act as proof that your business is adhering to the DBRA. The payroll officially becomes certified when the signed Statement of Compliance is attached. This document is exactly as it sounds – it’s simply a statement that the person submitting this certified payroll has complied with all necessary rules.

• Supporting documentation, such as time cards, time sheets, canceled checks, and fringe benefit payment records, must also be retained for the same period.
• Accurate preparation begins with obtaining the correct wage determination number from the contracting agency.
• Contractors and subcontractors working on federally funded construction projects have an additional payroll responsibility known as certified payroll.
• By handling the submission and maintenance process carefully, you reinforce your adherence to labor compliance standards and demonstrate operational integrity.
• According to the Fair Labor Standards Act (FLSA), you must keep payroll records for at least three years.

The government uses these special certified payroll reports to verify that contractors and subcontractors pay employees fairly. Learn more about our guide on deferred compensation and how it benefits employees. There is also a statement of compliance that states your attached payroll report is accurate and complete. The goal of WH-347 is to ensure you’re paying your employees the prevailing wage or the average wage for employees in a specific occupation. It shows that your business is complying with all prevailing wage requirements.

Vantage Data Centers

Most normal balance employers covered by this law will need to submit a Form WH-347 each week to prove their payroll activity is in compliance. Contractors and subcontractors must maintain all underlying records that support the data reported on the WH-347 form. The minimum retention period for these records is generally three years from the date of contract completion. These records include original time cards, payroll ledgers, cancelled checks, and documentation detailing the cost and distribution of fringe benefits. Proper documentation of fringe benefits is a common area for compliance errors.

How do I run a certified payroll report?

ADP’s tailored approach helps you control costs and stay compliant, wherever the job takes you. This weekly submission ensures that all laborers and mechanics receive a rate of pay, including fringe benefits, that matches or Accounting Errors exceeds the predetermined local standard. The procedure is governed by federal statute and is a non-negotiable part of working on covered public works contracts. If your business works on a federal contract of over $2,000, the Davis-Bacon Act requires that you complete certified payroll reports. But wait – some states also have certified payroll reporting requirements.

Contractors must retain all certified payroll documents and supporting records. On federal projects, reports must be retained for a minimum of three years following the completion of the contract. Some state prevailing wage laws may require a longer retention period, sometimes up to four years. The most important component is the Statement of Compliance, typically found on the second page of the WH-347.

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Only construction companies working on federal government contracts valued at $2,000 or more must complete this certified payroll documentation. The requirement applies whether the federal government partially or fully funds the project. Yes, many agencies allow for the electronic submission of certified payroll reports.