When working on government projects where the contracted work is more than $2,000, you’ll need to submit certified payroll. This is because the government requires that employees be paid a fair hourly rate for their jobs. Since this can get complicated, our team at ASAP Payroll has created this handy guide to help you understand what certified payroll is, what it involves and when you need to use it.
What is certified payroll?
Contractors who work on construction projects funded by the US Department of Labor must submit certified payroll weekly. This special payroll report is used for WH-347 from the US Department of Labor. Certified payroll came about as the result of the Davis-Bacon Act of 1931. Projects were further expanded by the Federal-Aid Highway Act of 1956, the 1974 Housing Community Development Act, and the Federal Water Pollution Control Act.
It’s important to note that the Davis-Bacon Act and the subsequent related acts mean that any contractor or subcontractor working on the construction of a bridge, building, house or other federally subsidized or funded construction project would need to submit a weekly certified payroll report.
How to Ensure Certified Payroll Compliance
Two primary components are involved in remaining compliant, including prevailing wage and record keeping.
Understanding Federal Prevailing Wage Compliance
Accurate recording of employee hours worked, rate of pay, benefits, and jobs performed is the lengthiest part of the process regarding maintaining compliance with the prevailing wage clause. To maintain accuracy, the report must list:
- Each employee’s legal name
- Each employee’s social security number
- Both the gross and net wages for each employee
- The benefits that you provide each employee or the cost equivalent paid to each employee in place of benefits
- The hours worked by each employee
- The job classification for each employee for the hours they worked.
- The federal and state withholdings for each employee
It’s important to note that the prevailing wage clause means that each employee needs to be paid the prevailing wages for all the jobs they perform on the project.
This means that if you have an employee proficient in drywall and flooring, that employee will need to be paid for the hours worked on flooring and the hours worked on drywall, and it may not be the same wage. Therefore, due diligence is required when reporting jobs performed, hours worked on those jobs, and the wage rates associated with those jobs.
Once the report is complete, the contractor must sign a statement of compliance. This is usually located on the back of the WH-347 form. The contractor must submit the form no later than seven days after the payroll week.
Understanding State-Prevailing Wage Compliance
If your construction company is working on a construction project for a specific state, you may need to file additional forms with the state in order to remain compliant with your contract.
All records for the work performed must be kept for at least three years after the completion of the Federal construction project. If you are performing work for a state government, you’ll need to look up the requirements for record keeping. In general, you’ll want to keep those records for a minimum of 2 to 4 years.
Certified Payroll Services with ASAP Payroll
If you need certified payroll services for your construction company, we can provide them at ASAP Payroll. Our certified payroll services can help you accurately track employee hours worked, their jobs, their hourly rate of pay, and the benefits you provide so that you can remain compliant with your government contract.
To learn more about our certified payroll services, call us at 317-887-2727 or request a quote.