What is a "Certified Payroll" Report and How Do I Complete One?

Certified Payroll Reporting Requirements and the Davis-Bacon Act

A 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, plumbings, 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 about who worked on the job, how much you paid them. etc.
• Statement of Compliance - this contains legal language and requires the original signature of a company official who is signing this document under penalty of perjury.

Since 1931, many states have enacted their own prevailing wage laws with their own certified payroll reporting requirements to ensure that contractors are in compliance:

• 24 states follow the reporting requirements of the U.S. Department of Labor - Wage & Hour Division and require the filing of the Federal (USDOL) Forms WH-347 and WH-348.
• 13 states have their own State Prevailing Wage Laws and forms for construction projects funded soley with state dollars.  The WH-347 and WH-348 will still be required on federally-funded projects.
• 13 states have multiple State Agencies overseeing prevailing wage laws and reporting form requirements.  These states can also have numerous independent compliance companies imposing additional requirements, such as the electronic filing of certified payroll reports, in addition to paper forms.  The WH-347 and WH-348 will still be required on federally-funded construction projects.

To find out the requirements of your state, please check either the Status-by-State or the Demonstration pages.

Most anyone will tell you that completing a certified payroll report 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 is 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 projects, will have to submit -- other required forms, such as Fringe Benefit Reports, 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, Department of Labor, etc. 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 in the Wage Decision - you will need to make "wage restitution" to the employees (the difference between what you should have paid them and what you did pay them), provide proof of wage restitution, AND submit revised or corrected 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 normal "non-prevailing wage rate" and you didn't submit certified payroll reports - you need to make wage restitution and issue certifeid 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 him/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.
• ARRA 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 not less than quarterly.

How to Complete a Certified Payroll Report & Statement of Compliance

The following information focuses soley 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 12/31/2011.  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 Checkboxes - 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 project's contract package.
6.   Project 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. - this is an identifying project/contract number which is found in the project's 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 the worker's social security number) of each employee who worked on the job for the week being reported.

(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.

(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.

(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 totally different 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 hour, as stated in the Wage Decision or Wage Determination associated with the contract that are paid directly to the employee.  

• 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 less 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).

(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 as to what type of deduction they are (child support, union dues, employee paid local taxes, etc.). All deductions must be in accordance with the provisions of the Copeland Act Regulations: 29 CFR, Part 3. 

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.

  (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 - means that you pay all the fringe benefit 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 exception.

1. 16.  Your Name - your printed name.

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, 2 hour training class ($69.00).  

OR 

Request our Free Certified Payroll Training Guide, 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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