Certified Payroll Reporting: What It Is & Why It Matters

While the term “construction” is broad, it can apply to a variety of activities such as painting, decorating, cleaning, plumbing, drywall and electrical. Prevailing wage laws were created to ensure fair pay to hourly workers. To meet these laws, your employees’ gross wages must adhere to the prevailing wage requirements for work on related projects in surrounding areas.

QuickBooks

It’s an accountability https://www.bookstime.com/management-accounting measure designed to protect the taxpayers and maintain faith that private contractors are working with everyone’s best interest in mind. A key similarity between federal and state Davis-Bacon projects is the paperwork requirements. A certified payroll specialist (CPS) must pass the Certified Payroll Professional (CPP) exam and be accredited by the American Payroll Association (APA).

• Our software is specifically designed to make prevailing wage payroll and certified payroll reporting easier for contractors and subcontractors in the construction industry, regardless of employee status.
• These bids were made possible because the contractor planned to pay their employees minimum wages.
• This is the letter where you certify that you and your business are in compliance with the terms of your federal contract.
• The form allows you to provide certain information if you intend to use your certified payroll record as your only payroll record.
• The form lists every employee, their wages, their benefits, the type of work they did, and the hours worked.

What information is required in a certified payroll report?

With Certified Payroll, you can meet the Davis-Bacon wage requirements, generate WH-347 reports, access different payroll earnings by a project in one timesheet, create reports, and much more. Essentially, certified payroll is proof that an employer pays their workers the predetermined prevailing wage under law. These wages represent set average payments to the workers who are employed in construction, alteration, or repair.

How Can Employers Determine a Prevailing Wage?

Read everything you need to know about payroll compliance in 2025, from legislation to how the right HR tech helps you comply. The WH-347 Form instructions have detailed information regarding what type of work corresponds to each code. For example, it explains the difference between a Clerk and a Secretary, how to report salaried employees on certified payroll plus the nuances between different levels within the same job function (e.g., Clerk I, II, and III).

Step-by-Step Guide to Completing a Certified Payroll Form

• If a worker meets the criteria of an employee—such as being under direct supervision, working set hours, or using the employer’s tools—they may need to be reported as an employee, regardless of their 1099 status.
• In construction projects, managing finances can be a challenging task — but understanding committed costs can simplify the process.
• While the core intent aligns with the federal Davis-Bacon Act, each state sets its own thresholds, wage determinations, and reporting procedures.
• So, you’ve earned a coveted government contract and now you find out that you have to file something called certified payroll.
• Certified payroll is required as a means of providing government entities with a detailed breakdown of the work completed and pay provided to employees.
• Certified payroll reporting ensures that workers on government-funded projects receive fair wages and benefits according to prevailing wage laws, specifically under the Davis-Bacon Act.

Using payroll software or compliance tracking tools can help streamline the process and reduce errors. If your business receives a government-funded job, you’ll be normal balance required to submit certified payroll records. Certified payroll reports come with strict requirements, and there are hefty penalties for non-compliance.

• 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.
• A certified payroll is a federal reporting form, also known as WH-347.
• Once an audit is underway, any labor law violation that is found can be acted upon, not just violations of prevailing wage laws.
• Using such workers can open your reporting up to extra scrutiny by job site investigators or payroll auditors who verify that everyone onsite is following DBA laws.

Paying workers incorrectly

Also, Quickbooks allows you to keep all the payroll records in one place. It’s especially crucial as The Fair Labor Standards Act (FLSA) requires that all the payroll data should be saved for at least 3 years. If you get confused with Quickbooks, the app provides handy manuals that explain how to work with the app simpler.

For a payroll report to be certified, it must include particular information — which we’ll look at below — as well as a Statement of Compliance. The goal is to keep track of everything affecting payment on the job site. The certified payroll report is submitted weekly to whatever government agency is tracking the public project. Certified payroll was established by the Davis-Bacon Act, a federal law that ensures private companies pay the correct compensation to employees who contribute to public works projects. Most employers covered by this law will need to submit a Form WH-347 each week to prove their payroll activity is in compliance. In order to calculate fringe benefits, you need to first determine the prevailing wage for the project.

Construction Newsletter

A certified payroll report is a company’s accounting of everything that is paid out under a contract for a government client. Yes, employers can use a combination of cash and non-cash fringe benefits to meet their prevailing wage obligations. For example, they might provide health insurance and pay the remaining fringe amount in cash.

• For federal projects, a construction company will submit paperwork to the Department of Labor (DOL).
• The Department of Labor conducts studies and reviews data to determine a fair wage for a specific job in each region of the country.
• An IT entrepreneur, executive, and former engineer with a passion for innovation and leadership.
• Typically anything over 8 hours in a day; HOWEVER, this can be different per classification.
• This typically applies to construction projects over $2,000 that are federally funded.

These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought. Construction is a broad term and can mean anything from building a school to repairing a highway. It includes a wide variety of tasks such as painting, decorating, plumbing, or electrical. Everything included in our “Plus” package and automated time-tracking with Time and Attendance. Offers a comprehensive suite of HR tools such as a proactive HR support team, employer/employee training, business advice, and legal assistance from Upnetic Legal Services®2.