Unraveling Certified Payroll Requirements On Federal Construction Projects webinar presented for L2 Federal Resources, LLC
Wednesday, May 18, 2011 • 1:00 – 2:30 PM EDT
Presented by: Nancy Smyth, Sunburst Software Solutions, Inc.
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Making the move from residential/commercial construction projects to government-funded construction projects, which have certified payroll reporting requirements, can be overwhelming for most contractors, their office staff, and the accounting professionals who support them. This often misunderstood requirement can lead to major problems, including non-approval of payment requisitions, denial of payment for change orders and claims, and contract termination. Don’t get caught in a payroll certification trap; learn the ins and outs of federal certification payroll requirements and get all your questions answered.
Our live, instructor-led, on-line training class focuses on the following:
- What government agencies make the laws behind certified payroll reporting requirements?
- How to comply with Labor Standards & Payroll Reporting requirements
- How to complete a Certified Payroll Report & Statement of Compliance
- Common methods for creating Certified Payroll Reports, Statements of Compliance, EEOC, ARRA and Fringe Benefit Reports
- State prevailing wage vs. Davis-Bacon forms and which form applies
- Electronic certified payroll filing requirements
- Ways contractors pay fringe benefits and how to report them
- Tracking employee time and work classifications
- Requesting additional “trade/work classifications” and wage rates
- Typical errors that require correction
- Don’t forget to include your subcontractors
- What happens when things go wrong
- Automating these time-consuming, error-prone tasks
- And much, much more!
In addition, a 10-to-15 minute period has been reserved at the end of the speaker’s presentation for an interactive question-and-answer session so you can discuss specific issues or gain additional knowledge about topics discussed.
Who Will Benefit?
Contractors who are currently (or are interested in) contracting with the federal government, and who want to better understand and improve their certified payroll processes. Certified payroll is everyone’s business; gather your whole team, including:
- Owners
- Estimators
- Controllers
- CFO’s
- Payroll processors
- Office managers
- Business development experts
- Accounting & Consulting professionals
- Union and non-Union Contractors
Register ONLINE, at the L2 Federal Resources, LLC registration page.
A prevailing wage job is typically a government funded project. The Davis-Bacon and Service Contract Acts govern federal projects. Most states have a prevailing wage law, but there are some that do not so it is a good idea to know the rules before you bid a project.
Governments, in their idea of fairness, mandate union rules and compensation packages on the jobs. So, one of the simple ways to prepare yourself to do prevailing wage jobs is to have an action plan at the ready that will allow you to cope with the requirements. We will briefly discuss the compensation package.
All prevailing wage projects will come with wage determination schedules that detail the base rate and fringe rates for all craft and trades. The base rate most likely will be the union W-2 payroll rate for the local collectively bargained craft and trades. The wage determinations (WD) will vary because of this. So, it is very possible to see a WD in one part of a state or county different from another. Make sure you are working with the WD that applies to where the job is located, and that they are dated for the time you are on the project. If you are apt to work through the date on you WD, ask the contract office for the new one. You will be held liable for the rates.
The fringe rate is the most confusing for many contractors. The fringe rate is the hourly cost of the collectively bargained benefit package for the craft and trade where the job is located. Fringe rates can vary just as base rates can vary and a contractor must make sure they are working with current fringe rates. The government expects each contractor to pay into bona fide benefit plans at the same rate while on a prevailing wage job. It is easy for the union contractor, but often difficult for the non union contractor because the hourly cost of his employer paid benefits is likely to be less than the fringe rate. If this is the case, the government will compel the non union contractor to pay the difference to payroll.
Non union contractors must understand that they can’t really put fringe dollars into payroll. They must actually pay a bonus equal to the fringe rate liability. Fringe dollars are business expenses, payrolls are wage expenses. Big difference. Fringe dollars as payroll will be subject to FICA and Medicare, SUTA and FUTA taxes. In addition, the bonus will inflate the basis for general liability insurance and workers compensation. Worse yet, fringe dollars to bona fide plans don’t have to be paid weekly. Many contractors don’t get paid frequently enough for weekly payrolls and are forced to use lines of credit until being paid. So, many non union contractors wind up paying fringe dollars as bonuses with borrowed money. Little wonder so many non union contractors do prevailing wage jobs unprofitably.
There is hope however. The action plan must have at the ready bona fide benefit plans that can be legally adopted for the project and expensed as business expenses and not payroll. We can help you develop a prevailing wage action plan. Contact Nancy for more details.
Payroll which involves the payment of Davis Bacon or prevailing wage can be quite complex, especially for non-union or open shop contractors, who work on both private and prevailing wage jobs.
When a contractor works on both prevailing wage and non-prevailing or private jobs there is often times two different sets of hourly wage rates that an employee might be paid; one for when he works on a Davis Bacon project and another, usually lower rate, for when the company works on a non-prevailing wage job.
One specific and complex issues involves the question of whether or not the contractor is required to pay his/her employees the Davis Bacon wage scale rate for the holidays that they are eligible for OR if they can pay them their normal non-scale rate that they are paid on private or non-prevailing wage jobs.
Unfortunately, this is one of those “gray areas” that many contractors and their payroll clerks run into.
Davis Bacon rules clearly state that an employee must be paid the appropriate prevailing wage rate PLUS applicable hourly fringe benefit rate, based on the type of work he or she is preforming, for each hour that they spend on the job site.
In some cases, it is a safe assumption then, that the employee can be paid his normal non-prevailing rate of pay for any paid holidays.
However, I have sometimes seen in the Labor Standard clause (a section of the actual contract that spells out the contractors responsibilities regarding payment of prevailing wages) a section that specifically states that employees must be paid the higher wage rate for specific holidays.
The bottom line about Davis Bacon Wages & Holiday Pay:
- Read the Labor Standards clause of the contract carefully when you receive the bid package AND again when you receive the final contract.
- Make sure that you give the person responsible for processing payroll a copy of the Labor Standards clause AND the prevailing wage determination, so they will pay the employees appropriately.
If in doubt about your liability to pay prevailing wage PLUS applicable fringe benefits for Holidays, follow the appropriate protocol; and send a letter to whoever awarded you the contract – be it the General Contractor or the Contract Administrator. Always leave a paper trail.
If you’ve found this article to be helpful, please consider taking a moment of your time to leave a comment.
Each Friday, here on the QuickBooks for Contractors blog, we will be offering a free QuickBooks related eBook, offering tips, tricks, and training – so stayed tuned, visit often or sign up to have our posts delivered daily via email.
This week’s eBook provides information on paying and tracking prevailing wage fringe benefits, when you work on a government funded construction project that requires the submission of certified payroll reports. Tracking fringes gets quite complicated, as they can be:
- paid to a Union on behalf of the employee
- paid to a bona-fide fringe benefit plan on behalf of the employee
- paid in cash to the employee
- or, a portion of the total hourly fringe benefit amount can be split between payments to a bona-fide plan with the balance in cash to the employee
Request our FREE 27 page eBook – 4 Ways Contractors Pay Prevailing Wage Fringe Benefits
How to Fulfill Your Certified Payroll Requirements Webinar – Associated Builders & Contractors, Inc. Merit Choice
Date: Wednesday, November 17
Time: 2 p.m. (ET) / 1 p.m. (CT) / 12 p.m. (MT) / 11 a.m. (PT)
Length: 90 minutes
Fee: Free for ABC members
Speaker: Nancy Smyth, President of Sunburst Software Solutions
For more information or to register, visit http://www.abc.org/Hot_Links/Meetings_and_Events/Webinars/2.aspx
Join ABC Merit Choice for a complimentary webinar on certified payroll!
Learn everything you need to know to fulfill your certified payroll requirements in the most compliant and efficient manner.
- What government agencies make the laws behind certified payroll reporting requirements?
- How to comply with labor standards and payroll reporting requirements
- How to complete a Certified Payroll Report and Statement of Compliance
- Common methods for creating Certified Payroll Reports, Statements of Compliance, EEOC and Fringe Benefit Reports
- State prevailing wage vs. Davis-Bacon forms and which form applies
- Ways contractors pay fringe benefits and how to document the credit you can take
- Tracking employee time and work classifications
- Requesting additional “trade/work classifications” and wage rates
- Typical errors that require correction
- What happens when things go wrong
Who Should Attend
- Owners
- Estimators
- Controllers
- CFOs
- Payroll processors
- Office managers
- Business development experts
About the Speaker
Nancy Smyth, President of Sunburst Software Solutions, has helped over 4,000 contractors learn about their certified payroll requirements, automate their processes and stay compliant with all of their certified payroll, statement of compliance and EEOC requirements. Sunburst Software Solutions, Inc. provides fully integrated, time saving solutions for certified payroll, AIA Billing, and payroll wage management for contractors using QuickBooks. www.Sunburstss.com
