Ever do a job for Uncle Sam? Then you know that certified payroll is a special payroll report contractors and subcontractors have to submit when working on a government-funded project.
In fact, any construction company that wins a bid to build, renovate or repair public property better study up on certified payroll reporting and the Davis Bacon Act, as failure to comply could trigger penalties.
The Davis Bacon Act (Davis Bacon, or DBA) was passed by Congress during the Great Depression to protect workers from low pay due to intense competition for public works projects.
Davis Bacon requires contractors who have a federally-funded construction contract over $2,000 to pay their laborers the local prevailing wage and fringe benefits for their work.
Three things to remember
Using Federal Form WH-347, certified payroll reports must contain accurate information regarding your company, employees, contracts and projects.
Every state has current county-based Davis Bacon wage rates listed online that can be found by filling in a few fields or providing the wage determination (WD) number. (The WD number is the reference number used to find a prevailing wage by location and contract action, i.e. job type.)
Certified payroll reporting requirements can still get complicated, so companies with federal jobs should beware, as there are stringent penalties for violations.
Certified Payroll Requirements
As we mentioned, employees on Davis Bacon jobs must receive the same prevailing wage and fringe benefits being paid to similarly employed laborers in the region.
The following rules must also be adhered to for DBA compliance:
- Certified payroll employees must be paid weekly
- Employee name and address, correct job classification, rate of pay, daily and weekly hours worked, and amount actually paid must be clearly documented in payroll
A payroll submission becomes “certified” when the contractor or business owner signs the statement of compliance, which is included in the WH-347 form.
The Department of Labor also offers instructions for completing the certified payroll form.
For contractors, selecting the correct job classification and making the right Wage Determination for each employee is critical to complying with DBA. Some categories are easy (plumber, painter, bricklayer) but others are more general (laborer), which can create confusion.
Have a federal contract for over $2,000? Beware—Davis Bacon applies, and not complying will get you in trouble.
Penalties for Violating Davis Bacon
The DOL has beefed up its compliance scrutiny in recent years. The Wage & Hours Division collected more than $1.2 billion in back wages between 2009 and 2016, and hired 350 new investigators, according to the American Bar Association.
Penalties for violating DBA can go beyond enforced payment of back wages and fringe benefits all the way to withholding funds on federal contracts, contract termination, and even debarment from all government contracts for three years.
And be careful: DBA applies in more situations than you might realize. Over 60 other federal statutes actually invoke Davis Bacon provisions.
Workers on Certified Payroll jobs must be paid the prevailing wage for their job in the region on a weekly basis.
ExakTime’s Certified Payroll Software
A system like ExakTime can help you stay compliant by recording 100% accurate hours, lunches and overtime for all employees in real time.
These are a few key features we offer to make certified payroll compliance easy:
- A drop-down menu so you can simply choose “certified payroll” for a job site, automatically classifying all hours worked at the site
- A certified payroll report that lets you review the hours worked at those sites by employee
- The option to create customized “certified payroll” cost codes for every certified payroll site, so employees can clock in under the correct code for their “contract action”, or job
Finally, ExakTime automatically saves records of all employee timesheets securely—which means reviewing when they worked and what you paid two months or two years ago is always just a few clicks away.