When running a business of any size, it’s important to track your team member’s hours and wages accurately. Many companies won’t need to worry about certified payroll, especially if they have salaried employees. However, contractors and subcontractors are responsible for recording team members and sending weekly reports to a federal agency. If you’re not familiar with the practice, here are some important things to understand about certified payroll and why it’s important to practice compliance.
What Do I Need to Know?
Certified payroll is most commonly associated with the construction industry; certified payroll refers to a weekly payroll report sent in by employers fully or partially funded by federal money. Contracts have to include a value above $2,000 and must be submitted through a form WH-347. These include employee information like benefits, wages, and hours worked; it is also required to include a compliance statement before submission.
How Does it Work?
In addition to standard payroll forms, business owners must submit a signed and completed form WH-347 for every week of contract work. This report includes wages paid, deductions, and pay rates in compliance with the Department of Labor’s (DOL) payroll requirements. Subcontractors have to submit their own report to the contractor they’re employed under, and contractors need to submit the report to the federal agency financing the project. Reviewers evaluate the reports to confirm if employees are being paid according to their agreed wage.
What Should Business Owners Know About It?
For one thing, certified payroll is required when any federal agency finances employers. Thus, it’s important to fill out WH-347 forms to prevent any unnecessary penalties. If you’re an employer, make sure to familiarize yourself with the Davis-Bacon Act. Failure to comply with payroll requirements could result in the following penalties:
- Payments placed on hold
- Debarment from future contracts
- Termination of federal contracts
- Civil or criminal prosecution
Who is Exempt?
Certified payroll doesn’t apply to any salaried employees. Executive, professional, and administrative positions are all exempt from certified payroll. Employers only need to fill out WH-347 forms for on-site team members working for projects funded by federal agencies. Thus, many employers working in the construction industry need to complete certified payroll.