Certified Payroll and Prevailing Wage Requirements

As a contractor or subcontractor, you must have heard of the terms Certified Payroll and Prevailing Wage . Before explaining these terms fully and their requirements, let us first discuss the Davis-Bacon Act, which is the basis of these two terms. 

During the Great Depression, the Davis-Bacon Act was passed to ensure that all local workers were paid a fair wage, and contractors for federal government contracts were given equal opportunity. This law, which continues to endure today, is applicable to all contractors and subcontractors who are involved in federally funded contracts of at least $2,000 for any type of public construction. This 'fair' wage is known as the Prevailing Wage, which is not the same as a minimum wage. The prevailing wage varies based on what location you are working in and what type of labor is employed in the construction of the work. 

An In-Depth Look at Prevailing Wage and Certified Payroll

To better understand the prevailing wage, let us consider that you are a contractor based in one county, however, you are asked to work on a federal project in another county. In this case, you will pay the on-site workers the current prevailing wage of the county where the job site is located.

Certified Payroll, on the other hand, is a form where information has to be provided about the prevailing wage and fringe benefits being paid to the workers. This form is provided to governmental entities and is a reporting tool to ensure compliance

A certified payroll has to be submitted weekly to the respective agencies that manage a government contract. The form is supposed to provide information on all employees involved in the project, their wages, benefits, hours of service, and the type of work being done by them. The form is also supposed to include withholdings, gross wages, and a statement of compliance. 

The aim of including a statement of compliance is to indicate that all information provided is correct and factual. It is also a declaration that the wages being paid to the workers are equivalent or above the prevailing wage of the county they are working in. 

The Labor Commissioner has exempted a number of projects in California from following the prevailing wage standard and reporting. This includes the work being managed by the California Department of Transportation, City of Los Angeles, Los Angeles Unified School District and County of Sacramento. Projects that are covered by a qualifying project labor agreement and those that don’t exceed $25,000 for new constructions and $15,000 in maintenance are also exempted. 

Meet Your Prevailing Wage Reporting Requirements

Contractors often think that to be able to file the forms, they must be certified payroll professionals (CPP), but that is not true. As long as you are able to meet the prevailing wage reporting requirements of the governmental entity of your state, you’re good to go. 

Payroll Systems are instrumental in helping you compile necessary information in one place. From noting the correct tracking job codes to the start and end date of a job, the data payroll systems process the data so that a certified payroll report can be generated. If you’re using a third-party platform , the payroll system can interface with it and eliminate any unnecessary and duplicate information entered. 

Thousands of contractors throughout the country rely on Certified Payroll Reporting to simplify their prevailing wage reporting, join them today by contacting us

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