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Certified Payroll Reporting Requirements and the Davis-Bacon Act

Certified Payroll training webinarA U. S. federal law, the Davis-Bacon Act of 1931, set wage rate requirements on government funded construction projects (public works projects).  All contractors and subcontractors who perform work on government construction contracts and federally-assisted construction projects over $2,000.00 are required to submit weekly-certified payroll reports to ensure government contract compliance.


Many government contractors are currently subject to the Davis-Bacon Act, including more and more construction-industry firms and subcontractors, as a result of the American Recovery and Reinvestment Act of 2009. 

Construction, in this case, is a broad term; but, includes the alteration and/or repair of public buildings (including: painting, decorating, plumbing, electrical, HVAC, drywall, etc.), it also includes Public Works Projects (the building or repair of roads and bridges), and under the American Recovery and Reinvestment Act (ARRA), weatherization is included.

A certified payroll report is a specially formatted payroll report, consisting of two pages:

  • Certified Payroll Report - this contains information aabout who worked on the job, how much you paid them, etc.
  • Statement of Compliance -this contains certain legal language and requires the original signature of a company official who is signing this document under penalty of perjury.

Learn how to complete a certified payroll reportSince 1931, many states have enacted their own prevailing wage laws (commonly called Little Davis-Bacon) with their own certified payroll reporting requirements to ensure that contractors are in compliance:

  • 18 states follow the reporting requirements of the U.S. Department of Labor - Wage & Hour Division and require the filing of the Federal (USDOL) Form WH-347.13 states have their own State Prevailing Wage laws and forms for construction projects funded solely with state dollars.  The WH-347 will still be required on federally funded projects.
  • 32 states have developed their own "state specific" requirements that have been derived from the Federal format.
  • To further complicate matters, several states have multiple reporting requirements, each administered by a different agency or organization; or have implemented electronic filing requirements with on-line compliance programs.

To find out the requirements of your state, visit Certified Payroll Requirements by State or the Demonstrations pages.

Most anyone will tell you that completing a certified payroll on a weekly basis is a time-consuming, error-prone, and frustrating task!  The U.S. Department of Labor's form WH-347 and WH-348 are one of the simplest forms to complete, however, they estimate that it will take 1 hour to complete a form containing information about eight employees for a single job.

You need to realize that a weekly certified payroll report is only one of the many possible reports that, you as a contractor, working on these types of porjects, will have to submit -- other required forms, such as; Fringe Benefit Report, EEOC/Work Utilization Reports, and ARRA Reports; are an important piece of your overall cash flow management.  When you screw up your certified payroll reports, bad things happen; none of which put you in good standing with the Project Owner, General Contractor, Project Manager, or Department of Labor, and can damage the overall cash position of your company.  Below are some examples:

  • Your reports are rejected due to inadequate information - perhaps you didn't submit the correct form OR you didn't totally complete the forms - you are told that you need to correct the forms and resubmit them by the "deadline" or you'll have to wait another 30 (60, 90, 120) days for payment.  You may not receive a payment at all, especially if you have waited until the last day before the deadline (usually 30 days from the date that the initial notification was made to the General Contractor), to submit your reports in the first place.  Not only can your payment be delayed, but also payment to the General Contractor.
  • You did not pay your employees the wage rates listed on the Wage Decision - you will need to make "wage restitution" to the employees (the difference between what you should have paid them vs. what you did pay them), provide proof of wage restitution, AND submit revised or correct payroll reports before you are paid.  Usually, you will have 30 days from the date of the initial notification of the General Contractor, not only can your payment be delayed, but also the payment to the General Contractor.
  • You paid your employees their norman "non-prevailing wage rate" and you didn't submit certified payroll reports.  You need to make wage restitution AND issue certified payroll reports within 30 days from the date that the General Contractor was notified.  Both your payment and the General Contractors payment can be delayed.
  • Continued violation of these requirements can lead to disbarment - meaning, that you cannot bid on or perform work on prevailing wage projects for up to 3 years.

Situations such as these can be held against you when you need a favor or are looking for new/more work.  Like anyone else, a Project Owner, General Contractor, or Project Manager likes working with people who do not create headaches for himn/her.

Prevailing Wage Laws require:

  • That you should pay your employees on a weekly basis.
  • That Certified Payroll Reports should be completed and submitted on a weekly basis to the company that hired you within 7-10 business days from the date that you paid your employees.
  • No Work Payrolls are required whenever there is a temporary break in your company's work on the project.
  • Reports must be numbered consecutively, including the "No Work" payrolls.
  • Every Contractor or Subcontractor is required to keep a complete set of their own certified payroll reports and other basic records, such as, time cards for the project and payroll records, for at least 3 years AFTER the project is completed.
  • AARA Reports are required to be submitted Monthly.
  • EEOC/Work Utilization Reports can be required to be submitted Weekly, Monthly, or Annually; depending upon the state your business resides in and the Public Entity that originally put the job out to bid.
  • Fringe Benefit Reports can be required to be submitted monthly but no less than quarterly.

The point is - you need to know how to correctly fill out a certified payroll report! The point is - you have NO choice except to learn which certified payroll report form you need to submit, how much you are required to pay your employees, how to correctly fill out a certified payroll report, and any other required report - and submit them in a timely fashion...

How to Complete a Certified Payroll Report & Statement of Compliance

The following information focuses solely on completing the U. S. Department of Labor or Federal WH-347 Certified Payroll and WH-348 Statement of Compliance forms, which currently expire on 12/31/2015.  In Part 1, we will tackle the Certified Payroll Report, and in Part 2, we will tackle the Statement of Compliance.  Before we get started, be sure to grab yourself a sample copy of these forms by clicking here.  The copies contain numbers, which correspond to the numbered instructions below.

Part 1 - Completing the Certified Payroll Report?

The Certified Payroll Report contains identifying information about your company, how many weeks you have been working on the job, the current workweek ending that you are reporting, the job you are working on, who worked on the job, how many hours they worked, and what they were paid.

HEADER INFORMATION (must be included on each Certified Payroll Report that you submit)
  1. Name of Contractor or Subcontractor Check boxes - this section is provided to indicate if you are the General/Prime Contractor or a Subcontractor on this job, and includes space for your company name.
  2. Address - this is your company's business address.
  3. Payroll No. - the payroll number should coincide with how many weeks you have been performing work on the construction project and numbered sequentially; your first week on the job would equal Payroll No. 1, your second week - Payroll No. 2, etc.
  4. For Week Ending - this should be the workweek ending date for the payroll week that you are reporting.
  5. Project and Location - Project -this should be the name of the project where you are working.  You'll find this information in the projects's contract package.
  6. Prpject and Location - Location - this should be the physical location of the project where you are working.  You'll find this information in the project's contact package.
  7. Project/Contract No. - identifying project/contract numbers from the actual bid or contract package.
PAYROLL SUMMARY INFORMATION

(1) Name and Individual Identifying Number (E.G. Last four digits of Social Security number) of worker - the full name and an individual identifying number (e.g., the last four digits of worker's social security nnumber) of each employee who worked on the job for the week being reported.

WHO ARE EMPLOYEES AND WHO MUST BE INCLUDED ON THE CERTIFIED PAYROLL REPORTS?

An employee is anyone who is performing construction work on the project, including: trade journeyman (carpenters, plumbers, sheet metal workers, etc.); apprentices, trainees, watchmen, guards, and traffic control personnel.

Working foreman or supervisors that regularly spend more than 20% of their time performing actual construction work on the project are considered to be covered and, therefore, required to be reported on the certified payroll report.

Apprentices and Trainees are the only workers who can be paid less than the wage rate found in the wage decision for their work classification.  They must be registered in an approved apprenticeship or training program.  An approved program is one that is registered with the U. S. Department of Labor, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency that is recognized by the USDOL.

(2) Withholding Exemptions - the number of Federal Withholding Exemptions (Allowances) claimed by the employee.

(3) Employee Work Classification - each employee must be classified in accordance with the type of work they perform on the jobsite.

Work Classifications, specific to this project, will be defined in the Prevailing Wage Determination, which is included in the contract specifications package.  The Wage Determination will also indicate the minimum wage requirements - or the hourly amount plus fringe benefit rate that you must pay employees. Employees performing work under more than one type of classification must be reported in separate entries on the report.

(4) Hours Worked:  Day and Date - first, you'll need to fill in the day and date, creating a weekly calendar; then, you'll need to indicate the number of hours worked each day for each employee, designating the number of straight/regular time hours, as well as, the number of overtime or double-time hours.

Overtime "usually" occurs when an employee works more than 40 hours in a week - although, some states require overtime after 8 hours worked in a single day.  Overtime is to be paid at 1.5 times the base hourly rate of pay, as required by the Contract Work Hours Standards Act.  Contact your local Department of Labors Prevailing Wage Division for requirement in your state, and be aware that you "might" be required to pay overtime based on "weighted-average", under the Fair Labor Standards Act.

(5) Total Hours - report the total straight/regular hours, overtime hours, and double-time hours worked by the employee on this specific job. 

(6) Rate of Pay/Cash Fringes - this has two separate requirements as follows:  

Contractors paying Fringe Benefits in Cash to the employee - for each type of wage:  Straight Time (ST) or Overtime (OT), you must show the actual base rate of pay, PLUS the Fringe Benefit rate per hours, as stated in the Wage Decision or Wage Determination associated with the contract that are paid directly to the employee.

For example, per the wage decision, an employee might have a work classification that has a base rate of pay of $10.00 per hour with a fringe benefit rate of $5.00 per hour.  It is required that you report Straight Time (ST) earnings as $10.00/$5.00 and Overtime (OT) earnings as $15.00/$5.00 (base rate plus half time premium plus hourly fringe benefit rate).  You would then, also, check Box 4 (b) on the Statement of Compliance.  See item number 13 in Part 2 - Completing the Statement of Compliance.

Contractors pay all required fringe benefits to a Union or bona-fide Fringe Benefit Plan - if you pay all required fringe benefits to approved plans, funds, or programs; in amounts not lesss than, stated in the wage decision associated with the contract, you are required to only show the base rate of pay for Straight Time (ST) and Overtime (OT).

For example, per the wage decision, an employee might have a work classification that has a base rate of pay of $10.00 per hour with a finge rate of $5.00 per hour.  It is required that you report Straight Time (ST) earnings as $10.00 and Overtime (OT) earnings as $15.00 (base rate PLUS half time premium).  You would then, also, check Box 4(a) on the Statement of Compliance.  See item number 13 in Part 2- Completing the Statement of Compliance.

(7) Gross Amount Earned This Job/All Jobs - enter the gross amount earned for this specific job or the total ST hours times the ST rate PLUS the total OT hours times the OT rate.  If part of the employees TOTAL weekly gross wage was earned on projects other than the project described on this payroll, you are required to report gross wages on this project, and then gross wages on all projects.

For example, let's say that an employee's gross wages for this specific project was $60.00; but his entirely weekly gross (for all work performed on all projects) was $120.00 - you would be required to report his wages as $60.00/$120.00.

(8) Deductions; Based on Gross Wages ALL Projects - there are a total of 5 columns for reporting deductions.  Deductions are split into specific payroll tax deductions and "Other Withholding".  Any deductions that are not payroll taxes fall into the "Other Withholding" category and require an explanation to what type of deduction they are (child support, union dues, employee paid medical insurance, employee paid local taxes, etc.). All deductions must be in accordance with the provisions of the Copeland Act Regulations: 29 CFR, Part 3.

If an employee worked on other jobs in addition to this project, you must reports deductions as the total decution from the full weekly gross pay, and indicate that deductions are based on gross payroll.  The total of these deduction must be reported in the total deductions column of the final report.

(9) Net Wages Paid for the Week - the employees net wages for the week must agree with what the employee actually takes home in his/her paycheck.  This is the TOTAL of Gross Wages All Projects, minus Total deductions.

Part 2 - Completing the Statement of Compliance:

While the "Statement of Compliance" does not need to be notarized, the statement is subject to the penalties provided by 18 U.S.C. & 1001, which can involve a fine, possible imprisonment of not more than 5 years, or both.  When you actually sign the Statement of Compliance, you are certifying under penalty of perjury that the information being submitted is accurate and true.

1.  Date - the current date of the date on which you are submitting the report.

2.  Your Name and Title - your printed name and your position with the Company.

3.  Company - the name of your Company.

4.  Project/Job Name - the name of the project or job that the report is being submitted for, it is suggested that you also include the name of the company that you are submitting this report to, for example - Company:Job/Project name.

5.  Work Week Beginning Date - the actual day's date that your work week begins on.

6.  Month of - the name of the month.

7.  Year - the current year.

8.  Work Week Ending Date - the actual day's date that your work week ends on.
9.  Month - the name of the current month.

10.  Year - the current year.

11.  Company - the name of your Company.

12.  Deduction Statement - this is where you should explain the deductions listed in section 8 on the actual certified payroll report.

For example, a deduction explanation could contain the following information; Deductions are based on gross wages and include but are not limited to: Federal Withholding, FICA, Medicare, State Withholding, State Disability Insurance, Union Deductions, Child Support, or Other Garnishments.  Explanations for deductions listed in the "Other Withholding" Column are described on the Certified Payroll Report in the Other Deduction Key Coding Section.

13.  Fringe Benefit Check Boxes - this is where you indicate HOW the fringe benefit portion of the prevailing wage is paid.

(a) Where Fringe Benefits are paid to Approved Plans, Funds, or Programs - means that you pay all required fringe benefit rates to a Union or Bona-fide Fringe Benefit Plan.  See item number 6 in Part 1 - Completing the Certified Payroll Report.

(b) Where Fringe Benefits are Paid in Cash - meanss that you pay all the required fringe baenefit rates to the employee as part of his/her gross hourly rate of pay.  See item number 6 in Part 1 - Completing the Certified Payroll Report.

14.  Exceptions - here, you would enter any exceptions specific to a work classification along with an explanation.

For example, let's say that you employ employees who, under the Wage Classification, are classified as Unskilled Laborers; the Wage Decision further indicates that employees who fall under the Classification of Unskilled Laborers receive no fringe benefit rates.  You would use the Exceptions section to indicate this.  In the Exceptions (Craft) column, you would write Unskilled Laborers.  In the Explanation column, you would write, per Waged Decision #, employees classified as Unskilled Laborers receive no hourly fringe benefit rate.

15.  Remarks - use this section to make any special remarks that are specific to this job or are specific to your company.  For example, if your company issues payroll on a bi-weekly, instead of aa weekly, basis; you could enter the following statement:

Payroll is issued on a bi-weekly basis.  The hours reported reflect the actual hours worked in the week being reported, however, gross amount earned, deductins, and net wages reflect the actual amounts of the full bi-weekly payroll check.

16.  Your Name - your printed name.

17.  Your Title - your printed title or job title with the company.

18.  Signature - your written signature, signature stamps are usually not allowed.

According to the instruction sheet provided by the U.S. Department of Labor, it is estimated that it will take approximately 56 minutes to complete a single certified payroll report listing 8 employees.  Certified Payroll Solution will shorten that time to less than 10 minutes.

Certified Payroll Reporting requirements seem very complex, how do I obtain training?

Check with your local Department of Labor, Prevailing Wage Division, to see if they offer classes or instructions.

OR

Sign up for our live, monthly Certified Payroll Reporting Training Webinar {$89.00 AND} includes the Certified Payroll Training Guide described below.

OR

Purchase our 72+ page Certified Payroll Training Guide - $35.00, which will teach you reporting requirements at the Federal level.  If you understand the reporting requirements at the Federal level, you can easily transfer this knowledge to the State level, if necessary.  

 

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