What is a Certified Payroll Report?
A U. S. federal law, the Davis-Bacon Act of 1931, set wage rate requirements on government funded construction projects (public works projects). All contractors and subcontractors who perform work on government construction contracts and federally-assisted construction projects over $2,000.00 are required to submit weekly-certified payroll reports to ensure government contract compliance.
Many government contractors are currently subject to the Davis-Bacon Act, including more and more construction-industry firms and subcontractors, as a result of the American Recovery and Reinvestment Act of 2009.
Construction, in this case, is a broad term; but, includes the alteration and/or repair of public buildings (including: painting, decorating, plumbing, electrical, HVAC, drywall, etc.), it also includes Public Works Projects (the building or repair of roads and bridges), and under the American Recovery and Reinvestment Act (ARRA), weatherization is included.
A certified payroll report is a specially formatted payroll report, consisting of two pages:
- Certified Payroll Report – this contains information about who worked on the job, how much you paid them, etc.
- Statement of Compliance –this contains certain legal language and requires the original signature of a company official who is signing this document under penalty of perjury.
You need to realize that a weekly certified payroll report is only one of the many possible reports that, you as a contractor, working on these types of projects, will have to submit — other required forms, such as; Fringe Benefit Report, EEOC/Work Utilization Reports, and ARRA Reports; are an important piece of your overall cash flow management. When mistakes happen on certified payroll reports, bad things happen; none of which put you in good standing with the Project Owner, General Contractor, Project Manager, or Department of Labor, and can damage the overall cash position of your company. Below are some examples:
- Your reports are rejected due to inadequate information – perhaps you didn’t submit the correct form OR you didn’t totally complete the forms – you are told that you need to correct the forms and resubmit them by the “deadline” or you’ll have to wait another 30 (60, 90, 120) days for payment. You may not receive a payment at all, especially if you have waited until the last day before the deadline (usually 30 days from the date that the initial notification was made to the General Contractor), to submit your reports in the first place. Not only can your payment be delayed, but also the payment to the General Contractor.
- You did not pay your employees the wage rates listed on the Wage Decision – you will need to make “wage restitution” to the employees (the difference between what you should have paid them vs. what you did pay them), provide proof of wage restitution, AND submit revised or correct payroll reports before you are paid. Usually, you will have 30 days from the date of the initial notification of the General Contractor, not only can your payment be delayed, but also the payment to the General Contractor.
- You paid your employees their normal “non-prevailing wage rate” and you didn’t submit certified payroll reports. You need to make wage restitution AND issue certified payroll reports within 30 days from the date that the General Contractor was notified. Both your payment and the General Contractors payment can be delayed.
- Continued violation of these requirements can lead to disbarment – meaning, that you cannot bid on or perform work on prevailing wage projects for up to 3 years.
Situations such as these can be held against you when you need a favor or are looking for new/more work. Like anyone else, a Project Owner, General Contractor, or Project Manager likes working with people who do not create headaches for him/her.
Prevailing Wage Laws require:
- That you should pay your employees on a weekly basis.
- That Certified Payroll Reports should be completed and submitted on a weekly basis to the company that hired you within 7-10 business days from the date that you paid your employees.
- No Work Payrolls are required whenever there is a temporary break in your company’s work on the project.
- Reports must be numbered consecutively, including the “No Work” payrolls.
- Every Contractor or Subcontractor is required to keep a complete set of their own certified payroll reports and other basic records, such as, time cards for the project and payroll records, for at least 3 years AFTER the project is completed.
- AARA Reports are required to be submitted Monthly.
- EEOC/Work Utilization Reports can be required to be submitted Weekly, Monthly, or Annually; depending upon the state your business resides in and the Public Entity that originally put the job out to bid.
- Fringe Benefit Reports can be required to be submitted monthly but no less than quarterly.
This form is available for contractors and subcontractors required by their federal or federally-aided construction-type contracts and subcontracts to submit weekly payrolls. It satisfies the requirements of certain regulations as to payrolls submitted in connection with contracts subject to Davis-Bacon Act. Note that completion of this form is optional, however it is mandatory for contractors and subcontractors to provide certain information obtained on the report. Learn more from the US Department of Labor.
Information Needed for a Certified Payroll Report
Certified payroll reports can come in a variety of required formats depending on local, state and federal requirements but the common pieces of information needed are as follows:
- Identifying information about your company
- The job that’s being worked on
- How many weeks the job will be worked on
- Employee information including name, address and possibly Social Security number
- Hours the employee worked that week and a breakdown of the pay rates for those hours.
- The employee’s gross and net earnings for the week
- Tax withholdings and other deductions for the week
- Any fringe benefits provided that week