Certified Payroll and Prevailing Wage: Getting It Right the First Time

What Certified Payroll Actually Is

If you work on federally funded construction, the Davis-Bacon Act requires you to pay locally prevailing wages and to file a weekly payroll report certifying that you did. Many states have their own equivalents covering state-funded work, often with their own forms and their own thresholds.

The federal report is Form WH-347. It lists every worker on the job that week, their classification, hours by day, rate, gross pay, deductions, and net. It is signed under a statement of compliance — meaning you are attesting to its accuracy, with penalties attached to getting it wrong.

The practical reality is simpler than it sounds, but unforgiving of sloppiness. Reports are due weekly, they must be filed whether or not anyone chases them, and a general contractor will typically withhold your payment until they are in hand.

Classifications Are Where the Money Is

Every worker must be paid the prevailing rate for the classification of work they actually perform — electrician, carpenter, labourer, operator. The wage determination for the job lists each classification and its rate.

Two things go wrong here regularly. The first is classifying a worker by their job title rather than the work performed that day. If a carpenter spends Tuesday operating equipment, Tuesday may need to be paid and reported at the operator rate. The second is split classifications — a worker doing two kinds of work in one week needs the hours split, each at its own rate.

Getting classification wrong is not a paperwork error. It means underpaying workers, which leads to back-wage liability, and the investigation typically looks at every worker on every job in the period, not just the one that was flagged.

Fringe Benefits: Pay Them or Fund Them

The prevailing wage is a base rate plus a fringe benefit amount. You can satisfy the fringe portion two ways: pay it in cash as additional wages, or provide bona fide benefits — health insurance, pension, approved training — of at least equivalent value.

If you fund it through benefits, you need to be able to show the hourly value of what you provide, and that it meets or exceeds the required amount. That calculation gets scrutinised. A plan that costs you a fixed monthly amount has to be converted into an hourly equivalent based on hours actually worked, and the arithmetic has to be defensible.

Cash is simpler and many contractors choose it for that reason. It also costs more, since cash fringe is wages and carries payroll tax. That trade-off is worth modelling rather than defaulting into — on a crew of any size the difference is real money, and it belongs in your labour burden calculation.

The Errors That Hold Up Payment

From reviewing these reports, the same handful of problems account for most rejections:

• Missing weeks. A report is required for every week work was performed, including weeks with no hours if the job is ongoing — many agencies want a "no work performed" filing.
• Rates below the determination. Usually the wrong determination was used, or it was updated mid-job and nobody noticed.
• Deductions not itemised. Anything beyond standard withholding must be identified and authorised.
• Apprentices without documentation. Apprentice rates are only permitted for workers in a registered programme, at the correct ratio, with paperwork to prove it.
• Owner-operators and working owners. Frequently omitted, frequently required.

Set It Up Once

Certified payroll is a reporting problem, and reporting problems are solved at setup rather than at deadline. Three things make it routine.

First, the wage determination for each job lives with the job file, and the rates are loaded into payroll before the first hour is worked — not reconstructed afterwards. Second, time entry captures classification at the point of entry, by day, so split classifications are recorded when they happen rather than remembered. Third, the report is produced from payroll data rather than retyped, because retyping is where transcription errors enter a document you are signing under penalty.

Contractors who set it up this way spend a few minutes a week on it. Contractors who do not spend a day a month reconstructing records and still get reports kicked back.

A Note on Keeping Records

Retain your payroll records and supporting documentation for the period your contract and applicable regulations require — typically several years after job completion, and longer under some state rules. Investigations do not always arrive promptly, and "we no longer have those records" is not a defence that helps you.

If you are taking on public works for the first time, or your certified payroll is currently being assembled by hand each week, that is worth fixing before it becomes a payment problem. Get in touch and we will look at how your payroll is structured.