Contractors and subcontractors who are working federally-funded construction projects have an added requirement known as certified payroll reporting. Failure to submit reports on time can result in contract funds being withheld and ineligibility for future projects funded by the federal government.
What is certified payroll reporting?
Certified payroll reports confirm that contractors and subcontractors working on federally-funded projects are paying their employees prevailing wages in accordance with the Davis-Bacon and Related Acts. These records must be filed with the U. S. Department of Labor (DOL) on a weekly basis, even if work is temporarily halted, using Form WH-347 for all contracts subject to Davis-Bacon labor standard provisions. Employers have seven calendar days from the date of payment to comply.
What is the Davis-Bacon and Related Acts?
Davis Bacon and Related Acts apply to contractors and subcontractors working on federal-funded and federally-assisted contracts in excess of $2,000 for construction, alteration or repair, including painting and decorating. These employers must pay the workers employed under the contract no less than the local prevailing wages, including fringe benefits, for the type of work performed.
The DOL, under the direction of the Davis-Bacon Act, determines the prevailing wage rates for each geographic region of the country. Overtime payment at one and one-half times the employee’s basic rate of pay for all hours worked over 40 in a workweek may be required for certain covered contracts.
What is included on certified payroll reports?
Certified payroll reports require the following information for employees working on covered federal projects:
- Full name and identifying number of the worker
- Work classification
- Hours worked daily, including the day, date and straight time and overtime hours
- Total hours
- Rate of pay
- Gross amount earned
- All payroll deductions and total of the deductions
- Net wages paid for the week
Each payroll report must also contain a statement of compliance signed by the contractor, subcontractor, or authorized agent who pays or supervises the payment of covered workers. The prime contractor is responsible for submission of payrolls by all subcontractors.
Why are certified payroll reports required?
By verifying that contractors are paying the required prevailing wages and fringe benefits, certified payroll reports help protect the livelihood of workers on certain federally funded contracts. Failure to meet this requirement or submitting certified payroll reports that are incorrect or late may put employers at risk for penalties.
How to fill out a certified payroll report
- Company information
Enter the construction company’s name and address and check the box for either “contractor” or “subcontractor.”
- Project information
The project name should match the one listed on the contract and must include the project number assigned by the government.
- Payroll number and date
List the first week of the contract as payroll number one. Each following week, increase the number, even when no work is performed, and note the date the workweek ends.
- Weekly calendar
In section four of the form, create a calendar for the week with days on the top row and dates on the bottom.
- Payroll information
Starting from the left side of the form, enter the required details for each employee – name, work classification, rate of pay, total hours worked, etc.
- Statement of compliance
After Form WH-347 is filled out for the week, complete the statement of compliance. It should include the date, employer’s name and title, the name of the project, explanations for deductions and exemptions, and the employer’s signature.
See additional instructions for completing Form WH-347
State and local prevailing wage laws
Contractors subject to the Davis-Bacon labor standards may also have to abide by state and local laws governing prevailing wages and overtime payments. For instance, they might be required to file state or local certified payroll reports in addition to Form WH-347 for the federal government. Employers on state-funded projects should contact the applicable state department of labor if their reporting responsibilities are not thoroughly explained when they receive their contract.
This guide is intended to be used as a starting point in analyzing an employer’s payroll obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.