YOUR COMPLETE GUIDE TO CERTIFIED PAYROLL FOR CONSTRUCTION

Government contracts are a great opportunity for your construction company, providing reliable work and revenue needed to grow your business. But they also have strict payroll requirements that you must adhere to weekly or risk facing severe penalties. Learn about the certified payroll regulations you need to follow, how your company can stay in compliance, and the steps you can take to simplify your construction payroll process.     

Construction Certified Payroll: What You Need to Know 

Contractors and subcontractors must submit certified payroll, a specific type of weekly payroll, when working on federally funded projects. To comply with certified payroll requirements, you must complete and turn in Form WH-347 to the Department of Labor each week you pay hourly construction workers. 

This paperwork certifies that you’re paying laborers the local prevailing wage for their occupation and providing employee benefits like health insurance or retirement plans. You’ll also report on the type of work performed and the total hours worked for each crew member. Certifying your payroll ensures hourly construction workers receive fair compensation for their specified duties. 

Certified payroll applies to on-site workers performing physical labor only, not salaried administrators, executives, and other in-office employees. It confirms your company is compliant with wage requirements and that your payroll is complete and accurate.  

Certified Payroll Reporting Requirements 

Due to the Davis-Bacon and Related Acts (DBRA), certified payroll is mandatory for construction projects receiving over $2,000 in government funds, regardless of the industry or type of work performed. It applies to contractors who repair, alter, or complete construction in government-owned buildings and public schools. Public works construction projects, like building or repairing bridges or highways, also require compliance with certified payroll.  

The reporting requirements cover a broad range of construction work. You’ll need to submit certified payroll for construction-related tasks like: 

• Plumbing 
• Electrical  
• Drywall 
• Cleaning 
• Painting 
• Decorating 

Contractors and subcontractors are required by law to adhere to prevailing wages, or a minimum average hourly rate, for each type or classification of construction work. This means crew members completing work classified as plumbing must be paid the average hourly pay for plumbers in your area. Your prevailing wages also include fringe benefits, which must be paid directly to benefit plans or by providing workers with cash in place of their benefits.  

Prevailing wage varies by the locality of the work performed, and some states have their own prevailing wage laws you’ll need to follow. If your state’s prevailing wage is higher than federal minimums, you’re required to pay the larger amount. The Department of Labor can help find your wage determination based on your locality, wage rates, and benefit rates. 

The DBRA also requires contractors to post the WH-1321 notice detailing construction workers’ rights at their worksite in a prominent area accessible to everyone. You must also post wage determinations and classifications for workers to see.  

What Data You Need to Collect

To comply with federal law, you must submit a weekly WH-347 form for every hourly worker in your project within seven days following your pay date. You’ll need to include information about your business and each of your employees, such as: 

• Business name: where you identify if you’re a contractor or subcontractor 
• Business address: the location where your business is headquartered 
• Project and location: where your project is located and your work classification 
• Payroll number: the week number of your federal contract, in sequential order starting with ‘1’ until the project is complete 
• Week ending: your last workday of the week 
• Contractor or project number: provided by your project’s contract 
• Employee names: full name of each on-site employee 
• Social security data: the last four digits of each employee’s social security number 
• Contact Information: the address, phone number, and/or email address of every employee 
• Employee job classification: whether they’re an electrician, carpenter, painter, etc. 
• Hours worked: total hours worked each week 
• Pay rate and benefits paid: prevailing wage data including fringe benefits you paid 
• Deductions or withholdings: by the employer 
• Apprenticeship programs: if applicable 

In addition to the above information, authorized personnel—like your contractor, subcontractor, payroll administrator, or other supervisor—must sign the form’s Statement of Compliance to validate the accuracy of your payroll data. To stay in compliance, you must send a certified payroll report to your funding agency each week that your construction project is active.   

Compliance Challenges and Certified Payroll Mistakes to Avoid 

Compliance issues are your main challenge when dealing with certified payroll. Mistakes can happen if you’re not using payroll specialists or other experienced professionals. Here are some common payroll errors you’ll want to avoid: 

• Misclassifying workers 
• Inaccurate pay rates, like miscounting overtime or regular hourly wages  
• Failing to pay prevailing wages, including all benefits, for total hours worked 
• Using the wrong occupational classification for your company 
• Poor recordkeeping 
• Failing to process and submit weekly certified payroll reports for construction projects on time 
• Submitting the wrong state or federal forms based on your project’s location 

What Happens When Payroll Certification Fails 

Failing to comply with certified payroll regulations can result in penalties and other serious consequences for your construction business. Violating the Davis-Bacon Act can lead to: 

Barred from Future Construction Contracts 

Contractors who fail to meet payment commitments to their workers or subcontractors can be banned from future government contracts for up to three years.  

Payments Withheld 

The government may withhold contract payments to your company and use the funds to reimburse unpaid wages and other liabilities or award damages from overtime violations per the Contract Work Hours and Safety Standards Act (CWHSSA). 

Termination of Your Contract 

Breaching any requirements of the DBRA can result in immediate termination of your government contract. 

Subjected to Prosecution 

Falsification of certified payroll reports can lead to civil or criminal prosecution. If charged and found liable, you may face steep fines or imprisonment.   

Tips & Best Practices to Simplify Payroll Certification 

Trying to meet weekly certified payroll requirements and avoid penalties may feel like an overwhelming challenge, but there are steps you can take to simplify the process. 

1. Document Your Certified Payroll Process

Construction projects aren’t static—you’re dealing with shifting pay rates, multiple trades, and workers coming and going from various sites. Every detail must be processed accurately through your payroll system.  

To avoid delays or mistakes when entering payroll information, have site superintendents, project managers, and payroll administrators follow a documented process to check for errors and confirm their approval.  

2. Maintain Organized Payroll Records

According to the Fair Labor Standards Act, employers must keep payroll records for at least three years following each construction project’s completion date. Having clear and organized records helps you avoid mistakes from the beginning and quickly manage any problems.

3. Work with Payroll Specialists

Using a certified payroll specialist to handle your construction payroll helps your business stay in compliance. These licensed professionals must pass the Certified Payroll Professional exam and earn accreditation from the American Payroll Association, so they understand the unique requirements of certified payroll for construction projects. 

4. Leverage Payroll Software

You no longer have to manage your construction payroll through paper timesheets or multiple spreadsheet files per employee. Construction payroll software automates your entire payroll process. From allowing crew members to accurately track their time and code their work to sending data for managers’ and payroll specialists’ approval, our payroll software makes construction certified payroll run 70% more efficiently and with fewer errors. 

 Construction Certified Payroll Reporting Made Easy  

Simplify your construction certified payroll process with our remote payroll solutions. Our software is designed for the unique needs of the construction industry, allowing you to track time, code work, and approve on-site construction hours more accurately. Features like multiple time-entry methods and custom automated payroll approval paths help reduce delays and mistakes, ensuring you meet your weekly certified payroll deadlines.  

Further Readings

• What is certified payroll?
• Why is certified payroll so important to construction?
• When is certified payroll required?
• You complete guide to certified payroll for construction