Certified Payroll Reports: A Guide to Payroll Reporting and Compliance

Payroll Compliance Folders Labelled Wages

President Biden's 2022 budget proposal includes over $2.3 billion in infrastructure spending. Government agencies at all levels are ready to fund infrastructure projects.

Government construction contracts can be a major benefit for your company. They come with some additional reporting requirements, though.

Having a government construction contract means complying with certified payroll reports laws. Find out more about what certified payroll reporting requires. Learn how to remain compliant and make the most of your government contracts.

What Are Certified Payroll Reports?

A certified payroll report is an accounting of everything you paid your employees while working on a contract for a government client. Contractors and subcontractors file them.

Certified payroll reports give the government oversight over contractors. The government can verify that workers are being paid fairly.

Who Needs to File Certified Payroll Reports?

Contractors or subcontractors who work on government-funded construction projects worth more than $2,000 must file certified payroll reports. Even if the government isn't funding the entire contract, certified payroll reporting can apply. If the government funds more than $2,000, companies will need to file certified payroll reports.

Certified payroll reports cover projects that build, alter, or repair public buildings. They also apply to public works. Public works include structures for public use, like schools and highways.

The Davis-Bacon Act

The Davis-Bacon and Related Acts are the laws that regulate certified payroll reports. These laws came into effect in 1931.

Congress passed them during the Great Depression. The aim was to ensure that workers on public works projects received fair pay.

The Davis-Bacon Act mandates that contractors and subcontractors must pay laborers and mechanics at least the locally prevailing wages. It applies to federal contracts and contracts in the District of Columbia.

Many states have passed legislation similar to the Davis-Bacon Act. These laws may add minimum wage requirements and other policies.

What Is the Prevailing Wage?

The prevailing wage is an hourly pay rate. You'll use it to complete your certified payroll reports. The prevailing wage is the average wage paid to workers with:

  • Similar employment
  • The same occupation
  • In the region of intended employment

Using the correct prevailing wages for each type of worker is very important.

Determining Prevailing Wages

The Davis-Bacon Act gives the US Department of Labor the authority to determine the locally prevailing wages. The prevailing wage can vary from county to county across the country. The two most important factors in determining the prevailing wage are:

  • The location where the construction project is happening
  • The type of work

TheDepartment of Labor has a wage determination website. It helps you find the right prevailing wages. You can find the rates for wages and fringe benefits for each type of worker.

Fringe benefits include things like health care and paid vacation. They can also be paid in cash. If you pay fringe benefits in cash, the extra hourly pay is a percentage of the prevailing wage.

Prevailing Wages for Large Projects

Projects worth more than $100,000 have some additional requirements. For example, you must pay workers at least 1.5 times the regular rate when they work more than 40 hours in a week. The Contract Work Hours and Safety Standards Act mandates this overtime rate.

What to Include in a Certified Payroll Report

You must include certain information in a certified payroll report to be compliant. The regulations ask for information about every employee who works on the project site. You need to report:

  • Name and ID number
  • Job classification (plumber, welder, etc.)
  • Number of hours worked, including overtime
  • Rate of pay based on the prevailing wage, including fringe benefits
  • Gross amount earned
  • Deductions and withholdings
  • Net wages

If you have subcontractors working for you, you need to include them in your certified payroll reporting. However, any subcontractors will first need to complete their own certified payroll report. They will then give the report to you to put into your certified payroll report.

If you work on the project, you need to report certified payroll for yourself. Many business owners in the construction industry don't pay themselves starting out. Government contracts require certified payroll reporting for you, however.

Some employees may be exempt from your certified payroll. Prevailing wage requirements may not apply to apprentices or trainees. They should be enrolled in an apprenticeship program registered with the Department of Labor. A state apprenticeship agency that the Department of Labor recognizes also counts.

Certified payroll doesn't apply to salaried employees in certain positions. Executive, administrative, or professional positions are usually exempt. Prevailing wage laws are intended to protect workers on the job site whose primary duties include manual, physical labor.

How to File Certified Payroll Reports

You need to file a certified payroll report weekly. You'll file the federal form, Form WH-347, during the time you're working on the government construction project along with any other state or municipal certified payroll forms that are required of your company.

You should use one form for all the workers on the project. You can complete the form and upload it or fill it out online. You'll submit it to the Labor Commissioner through the Department of Industrial Relations (DIR) website for your state.

The last step is certifying your report. You'll sign a statement confirming that the form is correct and complete. It's important to select a certified payroll reporting tool that continuously checks and updates these forms.

Why Is Compliance with Certified Payroll Important?

Paying your employees at least prevailing wages helps you attract good workers. Complying with the Davis-Bacon Act also protects you from penalties and fines.

If an audit finds violations, the government can remove you from the project. They can bar you from future government construction contracts for several years.

You could be responsible for paying back wages to your employees. The government may be able to withhold your payment for the project. This leaves you to pay your employees directly out of pocket.

You could face fines or even criminal prosecution.

Getting Help with Your Certified Payroll Reports

Compiling the data and filling out Form WH-347 is complicated. It's also time-consuming. The Department of Labor estimates it will take 55 minutes to collect and record the data for 8 employees.

Luckily, certified payroll reporting software canhelp with your reporting process.

The right software program eliminates duplicate data entry. Your reports are more accurate. You avoid errors like incorrect calculations, inaccurate employee classifications, and omitted fringe benefits.

Payroll reporting automation helps you avoid having reports rejected because of incomplete information.

Certified payroll reporting software can help you meet federal requirements. It can also help with state regulations. This is especially important for states with multiple reporting requirements.

Choosing the Right Certified Payroll Reporting Software

You have many choices for payroll reporting software. However, only a dedicated certified payroll reporting software platform has the performance you need.

Points North Certified Payroll Reporting is designed for the construction industry. You can easily generate your certified payroll reports. You'll save time and reduce stress.

You can create reports and send them to the right recipients from the reporting platform.

Contact us for more information about our government contract compliance solutions. Start simplifying your certified payroll reporting today.

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