If your business is being paid for via a government contract, then you have probably heard of certified payroll reporting. Certified payroll is a mandatory two-page report detailing payouts that you make to the employees employed to complete a federal- or state-funded project.
Reports are due weekly and based on the prevailing wage and fringe benefits compensation as illustrated by the Davis-Bacon Act. It is important to bear in mind that prevailing wages do not apply to trainees and apprentices who are assigned pay rates based on separate programs.
As an employer, your signature on this document certifies, as if under oath, that the information on the payroll report is true. The idea is that the government demands fair distribution of public money. As such, there are serious penalties for falsifying information.
Needless to say, you need to ensure accuracy. How you create and submit your reports depends on the complexity of your payroll and your personal preference. In this article, we will cover how to do certified payroll using one of three methods.
Creating a Certified Payroll Report Manually
Smaller businesses with few employees may opt for this route. The Department of Labor, or DOL, estimates that it takes about an hour to gather the information necessary for eight employees.
This job is made a lot simpler if you keep specific records regarding hours, positions and payouts to employees. You will also need to track fringe benefit pay.
Using government form WH-347, you will enter information about your business, employees and payment made as well as the specific job and any contractors you employ.
Labor classification on this form needs to be very specific. One mistake some employers make is to generalize different positions and average together separate pay structures. For instance, an electrician foreman who helps shingle a roof needs two separate entries for position, pay rate and hours.
Hiring a Certified Payroll Professional, or CPP
If you have a complicated payout system that involves complex fringe benefits or a several additional contractors, you may want to bring in a CPP.
While a CPP is likely to use the same type of software that is available to you, they are also trained to make difficult payroll distinctions and can advise in difficult situations. CPP training is extensive, and their services can help alleviate worries about violations in complex matters.
Larger businesses, where employees work in more than one function, often use software and mobile clocking applications. Mobile clocking allows employees to register the different types of jobs they are completing over their phone.
Entering prevailing wages into the system will automatically assign these wages based on job and divide hours. These figures automatically generate management reports, which clearly illustrate defined wage distribution.
The management report can then be exported or may be automatically transferred into other applications. This includes merging with the data mentioned above in the manual reporting section. Digitally compiled information can then be translated into the Form WH-347 format.
Finally, there should be a review section that allows you to look over your final report. Both state and federal reporting can be carried out online.
Bottom Line: With Certified Payroll, Accuracy Matters
Certified payroll can be time consuming, but it is a small price to pay for a government contract. If you keep good records and put in the time, effort and resources necessary to create an accurate report, then you should not run into issues.