What You Need to Know About Certified Payroll in Construction

Accuracy will be impossible to guarantee, resulting in incorrect payroll calculations. This can lead to under or overpaying your employees with no real way of understanding where things went wrong. So as you can see, determining gross wage is only the beginning, but it’s a crucial step as it serves as the foundation for all other payroll calculations to follow. Only after including things like overtime and benefits and deductions like taxes and pension contributions can you arrive at net wages (which is what you’re really after). Payroll is a vital business process for managing employee benefits, calculating taxes, and ensuring compliance with government regulations. Not to mention the role it plays in improving efficiency and employee retention.

State prevailing wage laws are also common and effect government contractors working on state-funded or assisted contracts. There are conditions under each which determine if a project is eligible and what type of work is covered. Certified payroll is similar to standard payroll but includes some unique terms that revolve around what is certified payroll in construction the regulations that govern prevailing wage work. Even if you work in payroll or already process certified payroll reports, there may be some things you don’t know about industry jargon. If you’re a contractor for public works projects, complying with the requirements of the Davis Bacon Act is critical to your company’s future.

Time tracking from the field

We put together this list of common certified payroll FAQ to help answer some of the top questions people have about certified payroll, construction reporting and compliance. In addition to payroll details, you have to include your company’s name, address, project name and location, and the project or contract number the work is being performed under. Certified payrolls are also numbered, and this must be included in the report. Once you start, you must submit a report for every week through the end of the project. If work is paused, you still have to submit a non-performance report so that at the end of the project, there is a continuous record of every week’s pay or non-work.

State prevailing wages are set through state agencies, such as the California Department of Industrial Relations. The original goal of these types of laws, often called prevailing wage laws, was to prevent cheap labor from outside markets from undercutting local wages. Prevailing wage laws are said to even the playing field, stabilize local wages, and level out competition by preventing outside companies from sweeping up local businesses with sub-market wages. An experienced payroll professional or construction accountant can review your records prior to submission to help you avoid errors. On top of that, keeping all your time tracking records organized will help make meeting the requirements of certified payroll much easier.

How long should you keep certified payroll records?

It involves submitting detailed payroll records to ensure compliance with prevailing wage laws. This process is critical for verifying that contractors and subcontractors are paying their employees the legally mandated wages and benefits. Form WH-347 is a federal form for submitting your certified payroll reports on federal projects.

• After reading this, you’ll know the steps to take to make sure you maintain compliance.
• A well-written manual can mean the difference between processing your payroll efficiently without errors and facing penalties for noncompliance.
• This report demonstrates that your business is compliant with these requirements.
• You will need details from your payroll in order to complete the form, like the names, Social Security number and tax withholding information for each worker.
• A construction payroll is a list of all employees used to calculate total earnings for time worked.
• Follow the instructions to create a certified payroll report in QuickBooks.
• The laws that create the regulations for prevailing wage work include penalties for violations.

The duration for which you should retain certified payroll records can vary based on federal and state regulations. However, as a general guideline, it’s advisable to keep certified payroll records for a minimum of three to four years. This duration allows for compliance with various statutes of limitations and auditing requirements. It’s crucial to check specific regulations in your jurisdiction, as they may dictate different retention periods. Additionally, some projects or contracts may have unique record-keeping requirements, so it’s essential to be aware of any specific guidelines outlined in the contract documents or by relevant authorities. Most government contracts require certified payrolls to be submitted on a weekly basis and are typically due within 7 days of the end of the payroll period.

Certified payroll terms every contractor should know

There is also a statement of compliance that states your attached payroll report is accurate and complete. The goal of WH-347 is to ensure you’re paying your employees the prevailing wage or the average wage for employees in a specific occupation. It shows that your business is complying with all prevailing wage requirements. Certified payroll is the blanket term used to describe payroll and the reporting that is required under prevailing wage law. Government contractors working on covered contracts must follow these laws or face investigation and penalties. Part of the process is to submit reports with specific information and to “certify” that their report is accurate and follows all applicable regulations.

• This means that the workers should receive the standard wage and benefits for their work and industry.
• In past roles, he worked for residential developers in Virginia and a commercial general contractor in Bar Harbor, Maine.
• The prevailing wage rates vary by the location of where the work is performed and the job title of your employees.
• To meet your certified payroll requirements, you’ll need to submit Form WH-347 to the Department of Labor every week.
• This includes checking to see if the correct wage determinations and work classifications were used and if the reported hours are accurate.
• There are a few places you should bookmark as sources of information on certified payroll and prevailing wage laws, starting with your state’s labor offices.
• However, this does not include any federal, state, or local law benefits – they are, by definition, mandated and are not treated as fringe benefits.