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Do’s and Don’ts for Certified Payroll

Just last month, the U.S. Department of Labor’s Wage and Hour Division (WHD) found a New Jersey electrical subcontractor in violation of the Davis-Bacon and Related Acts on a federally funded project and recovered $799,479 in back wages.

This month, a Miami electrical and engineer contractor also violated the Davis-Bacon and Related Acts, owing $37,411 in back wages.

These two companies aren’t alone. In 2021 alone, the WHD recovered more than 230 million in back wages, including more than $36M from construction companies.

Annually, construction companies and contractors nationwide are investigated for failing to identify and pay workers accurately for prevailing wage and fringe benefits. Outside of paying back wages, failure to comply with the Davis-Bacon Act can lead to both civil and potential criminal consequences. It can also damage a company’s reputation and impact a company’s ability to secure grants, loans, loan guarantees, and insurance.

What is the Davis-Bacon Act?

The Davis-Bacon and Related Acts requires contractors and subcontractors on federally funded projects to accurately identify workers on work sites, pay them the local prevailing wages and fringe benefits and submit weekly certified payroll records to the contracting agency.

Certified payroll is a specific way of tracking a company’s practices on Davis Bacon jobs and ensure that local, state, and federal laws and prevailing wage requirements are being met. Certified payroll must be filed by companies, typically contractors, who are working on government-contracted projects.

In the last five years, more than 35,000 Davis-Bacon violations have been reported by the WHD.

Here are some do’s and don’ts for Certified Payroll and meeting Davis- Bacon requirements:

DO make it easy for workers to track hours per work role.

To meet Davis-Bacon requirements, construction companies need to ensure accurate records of hours worked on prevailing wage jobs and those hourly rates must correspond to the job spec. Reduce the time you spend chasing timesheets and tracking down time by using a time tracking solution so workers can track both their hours and the type of work they do. The job classifications can easily match to the corresponding prevailing wage and fringe rate so certified payroll reporting can be done accurately and properly.

DON’T ignore the language in your government contract.

Violations in certified payroll reporting often stem because companies aren’t familiar with the law and their responsibilities. Requirements around certified payroll reporting also involve very specific data elements, including the correct wage determination and job classifications. Companies need to understand the language in their government contract so they can track and report pay rates closely.

DO verify the worker’s time and work data.

While a certified payroll software saves employer’s time with automation, there’s no such thing as running completely on autopilot when dealing with certified payroll because if mistakes are found, you are responsible. Contractors must sign a statement of compliance on the WH-347 form in order to certify payroll for Davis-Bacon jobs. Reduce errors with built-in verifications, a checklist in place to verify worker’s time and work, and updates when prevailing wage rates may change.

DON’T pass up on ongoing education opportunities.

Between understanding the correct prevailing wages, the fact that larger contracts may have additional requirements and accurately calculating fringe benefits, certified payroll can be complex. Take advantage of the learning management system within your HRIS and networking opportunities at conferences, such as the Annual Payroll Congress.

DO adopt technology to make certified payroll more simple and accurate.

Adopting mobile time tracking solutions and a cloud-based certified payroll software is the easiest thing construction companies and specialty contractors can do for themselves. Make certified payroll simpler and accurate with a certified payroll software that eases that process for you and your HR department. Streamline prevailing wage setups, automate calculations and feel confident in certifications with a system that simplifies certified payroll reporting.

DON’T fret if you feel in over your head.

Certified payroll compliance can be a huge drain on your team — reduce stress by automating tasks. Take advantage of features within your certified payroll software that auto-assign rates, simply wage determinations and automatically generate certified payroll reporting within a click. Utilize a certified payroll software with automatic calculations and prevailing wage distributions for overtime and double-time for exempt and non-exempt employees

How CEM Business Solutions can help

With nearly two decades of experience, we provide the best-in-class digital EPC services. Utilizing our industry-specific knowledge and field-ready services, CEM’s Certified Payroll Software eases that certified payroll process for companies working on federally funded project with automatic calculations and distribution of prevailing wages and easy certified payroll reporting.