A Guide to Understanding Certified Payroll Reports

Author
by Alex Gray
May 29, 2023
Read Time: Less than 6 Mins
Last Modified: January 31, 2024

In 1931, the US Congress passed the Davis-Bacon Act in an attempt to protect workers. Back then, contractors bidding on government jobs would try to win the job by offering low bids. These bids were made possible because the contractor planned on paying their employees minimum hourly wages. 

The act established the prevailing wage, which is the average wage paid to a type of worker in a particular area, and mandated that contractors working government jobs had to pay their workers at least the prevailing wage. 

The Davis-Bacon Act also created certified payroll reports. Contractors need to submit these reports as evidence that they’re paying their workers the prevailing wage rate while they work federal jobs. 

To understand the intricacies surrounding certified payroll reports, we will examine the essential components, requirements, and significance associated with these reports.

(Take a look at a Sample Certified Payroll Report: An Example of a WH-347 Form)

What Is The Davis-Bacon Act?

The Davis-Bacon Act is a United States federal law that requires contractors and subcontractors to pay prevailing wages and, potentially, benefits to workers employed on federally funded projects. The U.S. Department of Labor (DOL) determines the prevailing wage based on the wages and benefits paid to workers in similar trades and occupations in the same geographic area.

The Davis-Bacon Act also requires that contractors and subcontractors keep accurate records of the hours worked and wages paid to their employees and submit weekly certified payroll reports to the contracting agency. The purpose of the law is to prevent contractors from undercutting local wages.

Only construction companies working on federal government contracts valued at $2,000 or more must complete this certified payroll. The requirement applies whether the federal government partially or fully funds the project.

What Are Certified Payroll Reports?

A certified payroll report is a document that contractors and subcontractors must submit to the contracting agency weekly when working on federally funded projects. The report proves that the contractor is paying their employees the area’s prevailing wage.

Certified payroll reports contain detailed information about the hours worked, wages paid, and benefits provided to each employee who worked on the project during the reporting period.

Here are some fields typically included:

  • Job information: Includes details about the specific construction project, such as the project name, location, and funding agency.
  • Employee information: Includes the names of every employee working on the project, their job classification(s), and the number of hours they worked during the pay period.
  • Wage and benefit information: Includes information about the wages and benefits paid to each employee, including hourly rates, overtime rates, fringe benefits, and any deductions made.
  • Compliance information: Documentation that proves the contractor or subcontractor complies with federal and state prevailing wage laws.
  • Certification: All reports must be signed and certified by the contractor or subcontractor, attesting that the information provided is accurate and complete.

When you sign and authorize the Statement of Compliance on the WH-347 form, you confirm to the DOL and the rest of the federal government that you paid all manual/physical laborers the local prevailing wages and fringe benefits for their specific job. You confirm that your company complies with the Davis-Bacon Act (DBA).

WH-347 Form Requirements

Issued by the United States Department of Labor’s Wage and Hour Division, the WH-347 documents the number of hours worked by each employee, their job classification, and the wages and benefits they received. The form must be submitted weekly and includes the contractor’s employees and any subcontractors working on the project.

If your company is working on multiple government projects, a WH-347 is required for every job, and you’ll need to provide the following information:

  • Name and last four digits of each employee
  • Their wage
  • Number of exemptions
  • Work classification
  • Day and date of work
  • Hours worked each day
  • Total hours
  • Rate of pay
  • Gross amount earned
  • FICA
  • Withholding tax
  • Total deductions
  • Net wages paid for the week
  • Employees performing more than one craft
  • The reason for the wage exception.

Use the Wage Determinations Online Search (WDOS) to find each prevailing wage by the Davis-Bacon Act wage determination number (WD). If you don’t have the WD number, search the WDOS by state or type of construction work.

Davis-Bacon Act Violation Penalties

The DOL enforces harsh penalties if your company neglects to submit the forms or provides incorrect information. These include:

  • Barring your company from federal contracts for up to three years.
  • Withholding contract payments to compensate employees for unpaid wages due to them for overtime violations.
  • Termination of your federal contract.
  • Civil or criminal prosecution for falsifying records. If found guilty, you could face fines and imprisonment.

You can challenge the verdict before an administrative law judge and appeal that decision to the Administrative Review Board (ARB) and the federal courts.

Exceptions to Prevailing Wage Requirements: Understanding Variations and Exemptions

Exceptions to prevailing wages in commercial construction can vary depending on each jurisdiction’s specific prevailing wage laws and regulations. However, some common exceptions include:

  • Small projects threshold: Prevailing wage laws may not apply to commercial construction projects below a certain cost or size threshold. The governing jurisdiction typically defines this threshold.
  • Public works exemptions: Some types of commercial construction projects, such as privately funded projects or certain types of improvements or renovations, may be exempt from prevailing wage requirements if they do not meet the criteria for public works projects.
  • Owner-occupied projects: If a commercial property owner intends to occupy or currently occupies the building being constructed or renovated, prevailing wage laws may not apply.
  • Designated enterprise zones: Certain jurisdictions may have designated enterprise zones where prevailing wage requirements do not apply to incentivize economic development or investment in specific areas.
  • Public emergency projects: Prevailing wage requirements may be waived for commercial construction projects that are considered emergency projects necessary to protect public health, safety, or welfare.

Contractors and employers should consult the prevailing wage laws and regulations in their specific location to determine the prevailing wage requirements and any applicable exceptions for their government construction projects.

Streamline Certified Payroll and Davis-Bacon Act Compliance with Payroll4Construction

Managing the complexities of certified payroll and complying with the Davis-Bacon Act can be challenging. However, convenient solutions, such as Payroll4Construction, a software-as-a-service (SaaS) product, are available. 

With Payroll4Construction, you can streamline your certified payroll reports by entering information once and generating automated reports that include accurate data for each employee’s time. Additionally, the product offers an electronic WH-347 form, simplifying compliance with just a few clicks. Save valuable time and effort by exploring the benefits of Payroll4Construction today.

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