What is a Certified Payroll?

What is a Certified Payroll?

If you work as a contractor for government projects then you are going to get paid a little differently than normal wage workers because of a little thing called a certified payroll. The certified payroll is a type of report that contractors have to make which details the hours and earnings of their employees. This came into effect back in 1931 under the name Davis-Bacon Act, since its inception the act has changed to include more jobs than simply construction. The jobs that can now file for a certified payroll includes alterations and repairs to buildings and repairs to Public Works.

The certified payroll reports and prevailing wages came into being in order to stop organizations from hiring cheap labor from out-of-area and shipping them into work. To make sure that everyone is paid fairly based on the “prevailing” wages in the area where the job will be completed. If the project is more than $2,000 then the workers will be paid based on the prevailing wage. The prevailing wage is wage calculated based on basic hourly rate, benefits for the job and expected overtime. Some states have different rules regarding their prevailing wage so make sure to check out what it is for your state.

During the pay period contractors must fill out a certified payroll report for each of their employees. Before starting the report it is important to gather information from their employees; the report requires the employee’s personal information, the hours that they worked, the earnings from those hours, the taxes and deductions, and any fringe benefits the employees might have. Now it is time to put the information in the report, this can be done manually (which can be time-consuming) or it can be done digitally using construction accounting software. The reports are due weekly to whoever is running the project and if they are not done in time there is a risk of being prosecuted. The report also requires a statement of compliance which contains all of the legal terms of the contract that is in place, this should be signed by a company official.

Read More:

Bacon Makes Everything Better – Davis Bacon, That Is

Davis Bacon Pension Plans Save Companies How Much Money?

Simplifying Pension Plans

Image by Matt Brown