The ongoing labor crunch that has been in full swing since at least the summer of 2020 has led many companies to examine the way that they pay and take care of their workers. Indeed, many are having to consider measures such as pay raises and increased frequency of pay as benefits that they can offer to those who want to work for them. With inflation soaring to approximately 7.5%, its highest rate in four decades, companies everywhere must consider how they will respond to more demands from their employees for higher pay. While pay raises get all of the headlines, it is important to also keep in mind the process of managing payroll itself. Today we will look at what a certified payroll is and why it matters so greatly to companies that use it to get federal government contracts.
What Is A Certified Payroll?
The federal government has specific policies regarding how much workers ought to be paid and under what working conditions they should be put through. For a company to win federal contracts they must at least meet the minimum conditions that the government sets out for them. Thus, a certified payroll system is a bare minimum starting point from which all employers must operate.
Naturally, the federal government does not merely accept a company’s word that they are paying their workers a fair wage for the work they are doing. The government requires proof of this reality. The US Chamber of Commerce provides this helpful definition of what one must do to submit a certified payroll to the government for approval:
To complete your certified payroll requirements, you’ll submit Form WH-347 to the Department of Labor. This form includes information about your employees, their wages and the total number of hours worked.
Form WH-347 ensures you’re paying your employees the prevailing wage, which is the average wage for employees in a certain occupation. This report demonstrates that your business is compliant with these requirements.
Government employees will review those records to ensure that the employer is truly paying their workers fairly, and then they will move on from there. As long as the employer is holding up its end of the bargain, the business should be in good shape to move forward with its project. It is only when they are not doing what they are supposed to be doing from a moral and ethical standpoint that things can get a little trickier. However, most employers want to ensure that they have long-term cooperation with the government for contracts, so they will do what they need to in order to pay the wages that the government deems appropriate.
What Conditions Must Be Shown On The Report?
The report primarily focuses on the wages that are paid to employees, but there are a few other factors that the government needs to see as well. They will want a breakdown of:
- Wages
- Hours
- Social Security numbers
- Benefits
- Job classification
- Withholdings
The government needs all of this data so it can be sure that the contractor is pays its employees properly and correctly withholding taxes. Then, and only then, can the government be sure that it is working with people who are honest and above-board about what they are doing. Thus, the creation of a certified payroll system that truly works every time is precisely what one needs if one is to submit requests for government contracts.
Government contracts can be both highly lucrative and highly competitive these days, so any contractor that wants to win business with the government should get to work creating the payroll system that the government insists upon to get contracts from them.
For more information on how this all works and what you need to make it happen, please contact us.
