Construction and other labor jobs performed on government property and payed for by the government have set special requirements. One of those requirements is certified payroll. Certified payroll is a special payroll report that all contractors working on federally funded projects must complete and submit to government authorities.
Under the Davis Bacon Act passed in 1931, during the time if the Great Depression, all workers that perform labor on federally funded projects must be paid a prevailing wage. The law was passed to protect workers from low pay as a result of a company’s low bid to win public work contracts. Certified payroll is a way of tracking a company’s pay practices on Davis Bacon jobs and ensure that local, state, and federal laws and prevailing wage requirements are being met. Failure to comply with Davis Bacon and certified payroll reporting can result in hefty fines for a contractor.
Three Fast Facts About Certified Payroll
- Federal Form WH-347 is the certified payroll form that must be filled out for Davis Bacon jobs and it must be completed with the most current and accurate information regarding the company, employees, contracts, and projects.
- Certified payroll reporting requirements are extensive and can be confusing and complicated. When filling out certified payroll it is extremely important to do so carefully as there are stiff penalties for wrong reporting.
- The actual prevailing wage pay rate varies by exact location of where the work is performed and job title. The exact amount of prevailing wage pay for each job in a specific area can be found online by providing the wage determination (WD) number. This is a reference number used to find prevailing wage by job type and location.
Certified Payroll Requirements
In addition to paying the local required prevailing wage to each worker performing labor on the federally funded job, the following rules must be complied with for Davis Bacon:
- Each employee on the certified payroll must receive weekly payment for work performed
- Each employee on the payroll must have legal name, address, correct job classification, rate of prevailing wage pay, daily hours worked, weekly hours worked, and amount paid clearly recorded on the required certified payroll report.
The payroll submission becomes technically certified once the contractor or owner of the business completing the work signs a statement of compliance included on the WH-347 form. There are instructions for completing the WH-347 form on the Department of Labor website.
It is important to know that when filling out the required certified payroll form, making sure you have the correct wage determination number and job classification for each employee is crucial to being in compliance with Davis Bacon laws. There are some classifications that are straightforward, but other job classifications can cause confusion and questioning.
Penalties of Davis Bacon Act Violation
With an increasing number of companies committing Davis Bacon fraud on federal labor jobs, the Department of Labor has put more attention on making sure companies are in compliance with Davis Bacon laws. From the years of 2009 to 2016 the Wage and Hours Division collected over $1.2 billion in back wages from contractors. They have also hired more investigators to look into contractor compliance on Davis Bacon jobs.
Penalties for violation of Davis Bacon can range from forced payment of back wages to withholding funds on projects, to contract termination, and even being banned from bidding on all government contracts for three years.
If you have question about complying with Davis Bacon and Davis Bacon pension plans please browse our website or contact us anytime.