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What Is Certified Payroll?

Written by:

Edited by:

Reviewed by:
Daniel Eisner and Mark Stewart

Published on September 24, 2022

Updated on November 17, 2022

What Is Certified Payroll?

What Is Certified Payroll?

If you’re starting a business or have a business and are considering working on government-funded projects, you’ll need to figure out certified payroll. 

This means, essentially, that your company will have to submit certified payroll records to the relevant government body to prove you’re paying your workers fairly. But certified payroll reporting comes with additional complexities you’ll need to understand.

Fortunately, this handy guide lays out all you’ll need to know about certified payroll.

What Is Certified Payroll?

Any firm contracted to work on a federally funded project is required to submit a weekly certified payroll report using Form WH-347, detailing the number of workers on the project and their compensation. 

Under the Davis-Bacon Act, contracts of more than $2,000 for projects for the federal government or the District of Columbia that involve public works or construction must contain a clause setting forth the minimum wages to be paid to any laborers and mechanics involved in the work.

State-funded public works projects generally have similar certified payroll requirements, so you’ll need to learn and follow your state’s procedures.

a busineman and accountant discussing about financial

How Much Do I Have to Pay Laborers and Mechanics?

Federal law states:

“The minimum wages shall be based on the wages the Secretary of Labor determines to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State in which the work is to be performed, or in the District of Columbia if the work is to be performed there.”

You can find the prevailing wage rates here, but you’ll also have to make sure you’re in compliance with your state’s prevailing wage law. In the end you’ll pay whichever rate is higher, federal or state. 

Your contract must also stipulate that laborers and mechanics will be paid at least weekly at the work site, where their wage scale will be prominently displayed. 

Submitting Certified Payroll

Form WH-347 must be submitted weekly within 7 days of the pay date. The form includes the following information about each employee:

  • Names
  • Social Security numbers
  • Gross and net wages
  • Benefits
  • Hours
  • Job classification
  • Withholdings

Be sure to sign the Statement of Compliance on the back of the form, then submit to the agency funding the project.

Recordkeeping

You’ll need to maintain your certified payroll records for a minimum of three years after project completion. States often have recordkeeping requirements as well, so be sure to check with your state government. 

Potential Penalties

Failing to comply with certified payroll requirements can result in:

  • Contract termination
  • Contractor liability for the costs of terminating the contract
  • Disbarment from future contracts for up to three years