If you hire contractors for federally-funded projects, you’ll want to become very familiar with Certified Payroll.
Per the 1931 legislation, the Davis Bacon and Related Acts, require the local prevailing wage rates for laborers and mechanics employed under the contract. To monitor compliance, specific reporting requirements like “certified payroll” reports are requested every week and penalties for not submitting these reports can be hefty.
We’ve put together some details that you need to know if you are working on federally-funded projects or considering that kind of work.
The Davis Bacon Act
Specifically, the Act covers federal and federally-assisted contracts with projects exceeding $2,000. This includes projects completed under federal grants or loans. However, you should make sure to check with your local state and county laws for local-specific thresholds which may be lower or higher.
California, for example, has a $1,000 minimum general threshold but higher limits for alterations and construction. Other states like New Jersey have a $15,000 threshold for municipal projects and $2,000 for other public works. Some states such as New York, Illinois, Kentucky, and Missouri don’t have minimum thresholds at all. Nine states fall into this category.
Projects and contractors included in these thresholds must be paid the prevailing wage rate.
Certified Payroll Requirements
Certified payroll are reports that are “certified” or signed statements of compliance that the Davis-Bacon prevailing wage has been provided for completed work. The forms must include accurate project, pay, and employee information. Penalties for incomplete or poor record-keeping can result in back wages and even contract termination.
In general:
- Qualifying employees must be paid weekly.
- Form WH-347 (or similar) should reflect the employee’s name, address, job classification, hours worked, and amount paid.
- Review county-specific wage rates.
- Record-keeping, including tracking contractors who may fall into different classifications.
- In addition to wages, make sure to track fringe benefits.
Certified Payroll Report or Form WH-347
To stay in compliance WH-347 form is available to serve as your Certified Payroll Report. It is not required that you use that particular form but the information requested should still be present in your company’s payroll report and It must be filled out weekly.
Before you start filling out the WH-347 form (or similar), make sure you have the following information:
- Company information
- Job or project being completed
- The total length of the project
- Employee identifying information
- Hours and pay rate for the employee for the week
- Gross and net earnings for the employee
- Tax withholdings and deductions
- Any fringe benefits provided
The hardest part about Certified Payroll is gathering all of the information you’ll need every week. It is estimated that it takes about 55 minutes to complete the collection of information necessary to gather, review, and certify the information and form.
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