If you’re considering whether to bid on any government funded project, you know that you’ll have to stay compliant with certified payroll requirements. But what are the requirements and how can you make sure your company meets these obligations?
Our blog outlines in simple terms what payroll stipulations you can expect when you work on a government funded project.
What Is Certified Payroll?
Certified payroll is a special type of payroll reporting required for contractors working on federally funded or federally assisted construction projects. It’s different from your regular payroll run. It’s a weekly report that shows you paid your workers the correct wages in line with federal law.
The foundation of certified payroll is the Davis-Bacon Act from 1931. This law requires contractors who work on Federal projects to pay their workers no less than the prevailing wage, which is the standard pay rate for each type of job in a specific geographic area. The law helps protect workers from being undercut by any contractors who try to lower their bids by paying their workers lower wages.
Davis-Bacon payroll applies to most federal and federally assisted construction contracts over $2,000. That includes projects funded through federal programs in transportation, housing, education, and more.
The WH-347 Form: Your Weekly Compliance Report
The main tool for certified payroll reporting is the WH-347 form, which is published by the U.S. Department of Labor. Contractors must submit this form every week for any pay period in which work was performed on a covered project.
Here’s what the WH-347 form asks you to report:
- Employee name, address, and ID number to identify who worked
- Work classification to show the type of work each employee performed (e.g., carpenter, laborer, electrician)
- Hours worked each day, including any overtime
- Total hours and gross wages
- Rate of pay including both the base hourly wage and any fringe benefits
- Deductions including taxes and other withholdings
- Net wages paid
For each WH-347 form submitted, an authorized company representative must sign a Statement of Compliance. This is your legal declaration that the information is accurate and that workers received the required prevailing wages and fringe benefits. Signing a false statement can result in serious penalties, including debarment from future government contracts.
While the WH-347 is the federal standard form, there are some states that have their own prevailing wage laws and these states may require a different or additional form. It’s important to always check with the contracting agency before you assume the federal form is all you need.
What is Prevailing Wage Payroll?
Prevailing wage payroll means paying workers the going rate for their trade in a specific geographic area. The Department of Labor sets these rates through what are called wage determinations. Each determination lists the required hourly wage and fringe benefit rate for every applicable job classification in a specific county or region.
Prevailing wages are not one-size-fits-all. A carpenter in rural Alabama may have a different required wage than a carpenter doing the same work in downtown Chicago. Rates are updated regularly, so it’s important to check the wage determination tied to your specific contract and to make sure your payroll reflects any updates.
Fringe benefits like health insurance, retirement contributions, or paid vacation can be counted toward the prevailing wage. If your benefit package doesn’t meet the required fringe amount, you must pay the difference in cash to the employee.
Common Certified Payroll Requirements to Know
Here’s a quick overview of what certified payroll requirements typically involve:
- Weekly submission.Reports must besubmitted no later than seven days after the end of the payroll period. If no work was performed in a particular week, some agencies require a “no work” statement.
- Correct worker classification.Every employee must be listed under the right job classification. Misclassifying a worker, even by accident,can trigger back pay obligations and penalties.
- Accurate fringe benefit reporting.You must show that workers received the full prevailing wage, including fringe benefits. If you provide benefits through a bona fide plan,you’ll need to document it.
- Record retention.Federal law requires you to keep payroll records for at least three years after the project is complete. State requirements may be even longer.
- Compliance with overtime rules.The Davis-Bacon Act works alongside the Contract Work Hours and Safety Standards Act, which requires overtime pay (1.5x the basic rate) for hours over 40 hours worked in a week on covered projects.
Why Government Contract Payroll is Hard to Manage Manually
Tracking all of this detail by hand could be a recipe for mistakes. Certified payroll reporting includes many moving parts: multiple employees, multiple trade classifications, varying wage rates by location, benefit calculations, as well as tight weekly deadlines.
Many small and mid-sized contractors try to manage government contract payroll in spreadsheets or with basic accounting tools. The problem is that general-purpose software wasn’t built for construction. It doesn’t know what a wage determination is. It can’t automatically generate a WH-347. And it won’t alert you when rates change or when you’ve misclassified a worker.
That’s where construction accounting software makes a real difference. A good construction payroll solution will handle prevailing wage calculations, generate certified payroll reports automatically, and keep your records organized for audits. Dedicated construction software that handles these functions can save hours every week and reduce your risk of costly errors.
If your business works on projects across state lines, the complexity multiplies. Different states have different prevailing wage laws, different reporting forms, and different submission requirements. Managing multi-state payroll compliance is a challenge that grows fast as your business grows and it’s another area where the right software pays for itself quickly.
How JOBPOWER Helps with Certified Payroll
JOBPOWER is construction accounting software built specifically for small and mid-sized contractors. It’s designed to handle the kind of complex payroll situations that come with government contracts including certified payroll reporting, prevailing wage tracking, and union payroll compliance.
With JOBPOWER, you can:
- Automatically generate WH-347 reports for federal projects
- Track prevailing wage rates by project and job classification
- Manage fringe benefit allocations accurately
- Store payroll records in one place for easy audit access
- Integrate payroll with job costing so you always know your true labor costs
If you’re spending too much time on certified payroll or if you’re concerned about staying compliant, it may be time to take a closer look at the ways construction-specific software can help your business. Request a free demo and see how JOBPOWER can simplify your payroll process from the first week.