Certified payroll is a type of weekly payroll used by contractors working on federally funded projects. If your business has a contract for over $2,000, you have to submit a weekly certified payroll report.
Here is what certified payroll is and how to comply.
How to complete certified payroll requirements
The certified payroll reports confirm that contractors and subcontractors working on federally funded projects are paying their employees prevailing wages in accordance with the Davis-Bacon and Related Acts. The Davis Bacon Act protects workers from low hourly pay.
To complete certified payroll requirements, employers will need to first submit Form WH-347 to the Department of Labor. Form WH-347 requires information about employees and their wages and number of hours worked.
The certified payroll reports will require the following information:
- Full name and identification number of worker
- Work classification
- Daily hours worked, including the day, date, straight time, and overtime hours
- Total hours
- Rate of pay
- Gross amount earned
- All payroll deductions and total of the deductions
- Net wages paid for the week
Form WH-347 ensures that employers are paying their employees the prevailing wage. It is important to note that prevailing wages do not apply to salaried employees in executive and administrative positions.
The Form WH-347 report will show whether a business is compliant with these requirements.
What is the prevailing wage?
The prevailing wage ensures that hourly workers are paid fairly for work on government projects. The prevailing wage rate is the average wage paid to similarly employed workers in a specific occupation in the area of intended employment.
States determine the prevailing wage rates, so even if your state exceeds the federal prevailing wage, employers are required to pay the state’s rate.
To find out your wage, contact the Department of Labor.
Penalties for non-compliance
The Department of Labor will review certified payroll reports to ensure that wages are paid fairly. If a company violates the Davis-Bacon Act, they may be fined or terminated as a government contractor. If payroll information is knowingly false, this could lead to criminal or civil prosecution.
Certified payroll can be difficult to manage, especially when there are costly penalties for not filling out information correctly. Working with a local PEO may be beneficial for your company to ensure information is correct in the reports. This will help your business avoid unnecessary fines and penalties. If you have any questions regarding certified payroll, reach out to us at service@helpside.com.