With a normal payroll process, an employer tracks hours, applies the worker’s pay rate, withholds taxes, and issues a paycheck. Certified payroll adds several more steps. Employers must connect the worker’s hours to the correct project and labor classification, apply the required base wage and fringe benefit amount, and file a signed weekly report showing that the worker was paid correctly.
Each extra step creates more room for error. A vague timesheet can lead to the wrong labor classification. A fringe benefit mistake can cause underpayment. A missing signature or late report can leave the contractor correcting payroll, paying back wages, or searching for records when the project is reviewed.
When a staffing firm employs workers on a covered project, it may need to manage certified payroll for those workers. Many staffing agencies can recruit talent and run standard payroll, but they haven’t built the systems and processes needed for Davis-Bacon prevailing wages reporting.
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Who Needs Certified Payroll?
These rules apply to certain contracts and types of work that fall under the Davis-Bacon Act. The Davis-Bacon Act usually applies to federal contracts over $2,000 for the construction, repair, or alteration of public buildings and public works. Painting and decorating are also covered. Davis-Bacon Related Acts bring similar rules to some projects that receive federal aid.
When the law applies, each contractor and subcontractor must file a weekly payroll report for the covered laborers and mechanics it employs. The federal certified payroll rule also calls for a signed Statement of Compliance. The Davis-Bacon contract rules make the prime contractor responsible for collecting reports from its subs and overseeing their compliance.
If you employ a contractor who performs covered work through a staffing firm, the staffing firm will need to be part of the reporting process. The prime contractor still oversees the project as a whole, but the firm has to file certified payroll for its own covered workers.
How Reporting is Determined
Davis-Bacon often covers people who do manual or physical work, use tools, or work in a trade. It can also cover apprentices, helpers, and forepersons who spend part of the week doing hands-on work.
Many office, management, and professional roles fall outside the laborer and mechanic definitions, but this isn’t always the case. A field supervisor who works with tools may have covered hours while an engineer who performs only professional duties may not.
The Department of Labor’s Davis-Bacon definitions focus on the work a person does. The contract, job site, and wage determination also affect coverage. These facts should be checked and carefully determined by you or your staffing agency before the first day of work begins.
Why the Weekly Report is Tied to Prevailing Wage
Prevailing wage has two main parts. The first is the base hourly rate. The second is the required fringe benefit amount.
A firm may meet the fringe amount with approved benefits, cash paid to the worker, or a mix of both. The rate comes from the wage determination in the contract. Current federal wage determinations can be found through SAM.gov.
The weekly report shows whether each covered worker received the right pay for the work done. It includes:
- The project and wage determination
- The worker’s name and ID number
- The labor class used for the work
- Daily and weekly hours
- Base pay and fringe pay
- Gross pay, deductions, and net pay
- A signed Statement of Compliance
Form WH-347 is optional, but covered employers still have to send the required payroll facts and a signed statement. The Department of Labor’s WH-347 form and instructions show what must be reported.
Why Normal Staffing Payroll Won’t Cut It
Many staffing systems are built around one worker, one job, and one pay rate, but this simple payroll setup may fail when a worker changes projects or does more than one type of covered work.
For example, a worker might perform electrician work on one day of the project and the work of a laborer on another. The time sheet must show the hours spent in each class of work. If the firm can’t prove the time split, the WH-347 instructions say all hours must be paid at the highest rate that applies. The fringe amount must also match that rate.
A timesheet that only says “40 hours” leaves the payroll team guessing and forces them to pay the highest rate.
Fringe pay can cause its own errors. The firm must know which benefits qualify, how much credit it can take, and whether any balance must be paid in cash. Apprentice pay also calls for proof of program status, pay steps, and job-site ratios.
The report then has to be checked and signed. The signer must have paid or supervised the pay of the workers. Current rules allow for a handwritten signature or a valid electronic signature. A pasted or scanned image of a signature doesn’t meet the rule.
To add to the difficulty of the process, deadlines for these records are tight. Under 29 CFR 3.4, the report is due within seven days after the normal pay date. The staffing firm must also keep the payroll records and report copies for at least three years after the prime contract ends.
One record keeping error can lead to the wrong pay rate which can lead to back pay, a revised report, and more questions from the prime contractor or agency. Poor records can also hold up contract funds. False claims on the signed statement carry far more serious risk.
The certified payroll process presents more risks throughout the process than a typical payroll service. Without a staffing partner who’s knowledgeable on the subject and capable of consistently taking care of the records, you could be forced to revisit your records in order to avoid higher costs or penalties.
What a Staffing Firm Needs Before the First Worker Starts
To ensure certified payroll is managed properly, a staffing firm should have:
- A payroll system that can use more than one project, class, rate, and fringe method
- Time records that show where the person worked and what work was done
- Staff who can read the wage determination and spot a pay issue
- A set process for getting job duties and approved time from the client
- A signer who knows the payroll facts
- Access to the portal or method used to file the report
- A way to fix errors and keep a clear record of each change
The process needs to be repeatable and consistent to meet the requirements of the weekly reporting and should be in place at the time of the hire. Trying to build a process after a placement starts puts pressure on the worker, staffing firm, and client.
Our Experience with Certified Payroll Management
At PeopleSolutions, we’ve dealt with strict prevailing-wage and payroll rules when providing contract professionals to a critical semiconductor manufacturing center in Manassas, Virginia.
For the workers we employed, our team set up the payroll, applied the right pay and fringe amounts, prepared the weekly reports, filed them, and kept the records.
“Many staffing firms know how to find the worker, but they aren’t set up to complete and file certified payroll every week. We’ve already worked through that process on a prevailing-wage project, so we know what has to happen after someone is placed.”
- Alan Chamberlin, President of PeopleSolutions
For companies working on construction, engineering, manufacturing, infrastructure, and other projects with strict labor rules, PeopleSolutions offers reliable contract staffing services with certified payroll services from experienced and capable professionals.
Our team can recruit for engineering, maintenance, controls, electrical and mechanical work, quality, safety, field support, scheduling, startup, and plant operations.
What’s Included with our Certified Payroll Services
PeopleSolutions can set up and run certified payroll for the covered workers we employ. We apply their pay and fringe rates, prepare the weekly report, file it through the right channel, correct our records, and answer questions about our payroll.
The client and prime contractor still manage the rest of the project. They decide how the contract is treated, give us the right project facts, explain the work, approve time, report duty changes, and manage their own staff and other subs. The prime contractor keeps full oversight of the project.
With PeopleSolutions, you get a reliable staffing partner with prior experience and a proven process for handling prevailing wages and certified payroll for Davis-Bacon projects. Our carefully managed records and reports help employers reduce the chance of pay errors/overpayment and keep you prepared in the off chance that the project is audited.
For more on the rules that may follow federally funded projects, see our article discussing how federal contractors can reduce compliance risk on CHIPS, IRA, and IIJA projects.
Certified Payroll Questions to Ask Before Hiring a Staffing Firm
Certified payroll should come up during vendor review. Ask:
- Have you filed certified payroll on a prevailing-wage project?
- Can your payroll system handle more than one class and rate?
- What job and project facts do you need before the worker starts?
- How will you track a worker who does more than one type of work?
- Who checks and signs the weekly report?
- Can you use our filing portal or process?
- How do you fix an error and keep proof of the change?
A firm that can’t answer these questions may still be able to fill the job, but the chance that they can accurately manage certified payroll is low.
On a prevailing-wage job, the staffing firm must connect the work done on site to the pay and report filed that week. PeopleSolutions has built and used that process in a high-compliance setting already.
If your next project involves Davis-Bacon or certified payroll, talk with PeopleSolutions about the solutions we can provide.
Frequently Asked Questions
Do all federal contractors need certified payroll?
No. It usually applies to contractors and subs that perform work covered by the Davis-Bacon Act or a Related Act. The contract, source of funds, type of work, job site, and worker duties all affect coverage.
Is form WH-347 required?
The form itself is optional, but the weekly payroll facts and signed Statement of Compliance that are part of it are still required for covered work.
How often is certified payroll due?
A report is required for each week in which covered work takes place. It must be sent within seven days after the normal pay date.
Are engineers and project managers included?
It depends on what they do. People whose main duties are professional, office, or management work are often outside the laborer and mechanic definition. The title alone doesn’t decide coverage.
Can a staffing firm file certified payroll?
Yes. The firm needs the right payroll setup, trained staff, time records, signer, filing access, and record process for the workers it employs. The prime contractor still oversees the project as a whole.
This information is for general use and isn’t legal advice. Davis-Bacon coverage depends on the contract and the facts of the job. Check your rules with the contracting agency and qualified counsel.
