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Certified Payroll Reporting & Prevailing Wages Explained

Have you heard of the Davis-Bacon Act? Or the term, Prevailing Wages? The construction industry may be subject to both, as it pertains to employees performing work on public construction projects. Waste management and manufacturing companies must be aware of this law too. Read more for ways your organization can stay compliant and avoid having to back pay wages to employees.

First, what is the Davis-Bacon Act?

The Davis-Bacon Act was passed in 1931 to make sure local workers were paid a fair wage and to give equal opportunity to all local contractors for federal government contracts. This law applies to “…contractors and subcontractors performing on federally funded or assisted contracts of $2,000 for the construction, alteration, or repair of public buildings or public works.”

This wage is otherwise known as the Prevailing Wage. Not to be mistaken with minimum wages, prevailing wages are rates of pay established by the U.S. Department of Labor and based upon geographic location, specific class of labor, type of project or rates specified in bargaining agreements.  

For Example: If you are an owner of a construction company in one county and you’re contracted by the government to repair potholes or do road work in a neighboring county, you must pay your on-site workers the prevailing wage in that neighboring county.

Here are some FAQs about the prevailing wage in California.

To ensure compliance, that’s where Certified Payroll Reports come in.

What is Certified Payroll?

Certified payroll is a form (Federal Form WH-347 is an example) provided to governmental entities to certify that the proper prevailing wages and fringe benefits are being paid to the contractors and subcontractors.

The form should be submitted weekly to the agency overseeing a government contract. This form lists every employee, their wages, the benefits they’re entitled to, the type of work they performed, and the hours they worked. It shows withholdings and gross wages and includes a statement of compliance.

A report is considered certified when it has a signed statement of compliance indicating the payroll forms are correct and complete, and each employee has been paid no less than the proper prevailing wage for the work performed.

In California, there are several projects that have been exempted by the Labor Commissioner, including:

Projects monitored by –

  • California Department of Transportation
  • City of Los Angeles
  • Los Angeles Unified School District
  • County of Sacramento

Projects covered by a qualifying project labor agreement

Projects covered by the small project exemption – these do not exceed $25,000 for new construction, alteration, installation, demolition, or repair or $15,000 in maintenance.

Some Common Misunderstandings about Certified Payroll:

  • Contractors and payroll providers may think they must be a certified payroll professional (CPP) to file the forms, but this is not necessary if you meet the criteria specified by the governmental entity.
  • Some contractors and payroll providers believe one payroll form or format will meet certified payroll requirements in all 50 states…it varies. Please check your state requirements for these reports.

How Payroll Systems Can Help

Filing proper certified payroll reports starts with a good data collection system, so all information related to certified jobs can properly populate in payroll for reporting. Tracking job codes, hours worked per job, job pay rates, and the starting and ending dates per job are all typically required.  Payroll Systems works with different timekeeping systems that can collect this information each time an employee clocks in and out of a job and then feed the data to payroll for processing. 

Once data is imported into payroll, a certified payroll report can be generated and submitted to the appropriate government entity for the certified job. 

It is also common that a 3rd party, such as LCP Tracker is required for certified payroll reporting and filing.  If your company utilizes LCP Tracker, Payroll Systems can interface with LCP Tracker to eliminate the need for any duplicate entry of the certified job data. 

Contact us by filling out the following form if you are in need of certified payroll!

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.