What Is Certified Payroll (Form WH-347)?
Certified payroll is a weekly payroll report submitted to the contracting agency by contractors and subcontractors working on prevailing wage projects. The standard form is WH-347, published by the Department of Labor. The form certifies that all workers were paid at least the applicable prevailing wage rates for each classification of work performed.
What Information Does Form WH-347 Include?
For each worker: name, last 4 digits of SSN, work classification (electrician, carpenter, laborer, etc.), hours worked each day, total hours, rate of pay, gross wages earned, payroll deductions, and net wages paid. The form also separately tracks fringe benefits paid — because prevailing wage rates include both a cash wage rate and a fringe benefit rate. The contractor signs a Statement of Compliance certifying under penalty of perjury that the information is accurate and complete.
When Must Certified Payroll Be Submitted?
Certified payroll must be submitted weekly — typically within 7 days of the regular pay period end. Submissions go to the contracting agency listed in the contract. For federal projects, submissions may also be required through the agency’s electronic compliance portal (such as LCP Tracker).
Common Certified Payroll Errors to Avoid
- Incorrect worker classification: Paying an apprentice at journeyman rates or vice versa triggers back-wage liability
- Fringe benefit calculation errors: If benefits cost less than the required fringe rate, the difference must be paid in cash
- Missing or incorrect SSN digits: WH-347 requires the last 4 digits of each worker’s SSN
- Late submission: Missing the weekly deadline can trigger contract withholding by the contracting agency
Software for Certified Payroll Reporting
- LCP Tracker: Most commonly required for federally funded projects. Many contracting agencies require electronic submission through LCP Tracker specifically.
- Procore: Includes certified payroll reporting for contractors already using Procore for project management.
- Foundation Software and Sage 300 Construction: Both include certified payroll modules integrated with standard payroll processing.
How It Works
The Certified Payroll Report is designed to provide transparency and confirm that contractors are adhering to the prevailing wage rates for federally funded projects. Contractors must submit this report weekly, detailing:
- Worker Information: The names, addresses, and job classifications of all workers employed on the project.
- Wages: The amount paid to each worker for the reporting period, including overtime pay if applicable.
- Hours Worked: The number of regular and overtime hours worked by each employee.
- Deductions: Any deductions from wages, such as taxes or union dues.
The report is certified by the contractor, ensuring that the information is accurate and that the workers have been paid in accordance with the prevailing wage laws. The report must be submitted to the contracting agency or government body overseeing the project.
Why Certified Payroll Matters
- Compliance with Laws: Certified Payroll ensures that contractors and subcontractors are paying their workers in compliance with prevailing wage laws, which are designed to protect workers and ensure fair compensation for labor on government-funded projects.
- Transparency: These reports provide transparency to government agencies, ensuring that taxpayer dollars are being spent in a way that meets legal requirements and supports fair wages.
- Preventing Wage Fraud: Certified Payroll helps prevent wage fraud by requiring detailed records of wages and hours worked. This accountability ensures that workers are being paid the correct amount and that there are no discrepancies or underpayment.
- Government Oversight: By submitting Certified Payroll reports, contractors allow government agencies to monitor and verify compliance. If the reports show violations of wage laws, penalties or fines can be imposed.
Real-World Example
Suppose ABC Construction is working on a federally funded highway project. As part of the contract, ABC Construction is required to submit a Certified Payroll Report every week to demonstrate that their workers are being paid the correct prevailing wages.
For a particular week, ABC Construction submits the following data:
- Worker: John Doe, Carpenter
- Hours Worked: 40 hours (including 5 hours of overtime)
- Hourly Wage: $30 (regular), $45 (overtime)
- Total Wages Paid: $1,200 (for regular and overtime)
ABC Construction must also confirm that this report is accurate and consistent with the labor laws for the location and type of work. This report is submitted to the government agency overseeing the project for review.
If ABC Construction is found to be paying less than the prevailing wage, they could face penalties or be required to pay back the underpaid wages, which could result in delays or additional costs to the project.
Challenges
- Time-Consuming: Completing and submitting certified payroll reports can be time-consuming, especially on large projects with many workers. The company must ensure that records are accurate and submitted on time every week.
- Complexity of Compliance: Ensuring compliance with prevailing wage laws, including correctly classifying workers and tracking hours, can be complex. Contractors must stay up-to-date on wage rates and changes in regulations to avoid violations.
- Potential for Errors: There is a risk of human error in completing the certified payroll report, such as misreporting hours or wages, which can lead to penalties or audits.
Best Practices for Contractors
- Accurate Record-Keeping: Contractors should maintain thorough and accurate records of all employees, hours worked, and wages paid. This helps ensure that Certified Payroll reports are accurate and compliant.
- Regular Monitoring: Keep track of changes in prevailing wage rates and ensure that any adjustments are reflected in payroll calculations and reports.
- Use of Payroll Software: Investing in payroll software designed for government contracts can help automate the generation of Certified Payroll reports and reduce the risk of errors.