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.
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
Beginning August 1, 2010 contractors working on public works construction projects in California will find that they are subject to the regulations of the Public Works Compliance Monitoring Unit (CMU) – part of the California Department of Industrial Relations – in accordance with State Senate Bill X2-9, that was signed into law in February 2009.
The CMU will conduct the required monitoring and enforcement of the states public works prevailing wage laws on specific state bond funded and/or design-build procurement construction projects undertaken by public entities in California and awarded on or after the effect date of the regulations – August 1, 2010.
The California Department of Industrial Relations Compliance Monitoring Unit’s mission is to ensure that workers on state bond funded and/or design-build procurement construction projects are being paid the proper prevailing wage rates, published by the DIR through the Division of Labor Statistics & Research (DLSR) for the they of work they are performing (work classification). This is all done to create a level playing field for contractors and to verify that state construction projects are completed in compliance with state labor laws.
As a contractor working on these projects, how does this affect me?
The bottom line is that you will need to electronically file your certified payroll reports (rather than submit a paper form) using an independent on-line or internet based Labor Compliance Program (LCP), which has been developed by TRS Consultants, Inc. (http://www.trsconsultants.com/trs/cm/index.html and http://www.mylcm.com/index_jc.html)
You will be able to either manually enter your payroll data or upload your payroll data, from major construction accounting and payroll program (including QuickBooks when used in conjunction with our Certified Payroll Solution QuickBooks integrated add-on), into the electronic certified payroll reporting (eCPR) system.
You will need to register, and make sure that ALL of your subcontractors and lower-tier subcontractors are registered with the Labor Compliance Program (LCP), are trained in the use of the eCPR system, and are electronically submitting their certified payroll data.
eCPR training and on-going support is provided at no charge to contractors and participating sub-contractors.
As an added “bonus” ALL contract-specific wage rates and classifications are available within the eCPR system; this makes it easier for contractors to find the wage decision and applicable wage rates for their employees.
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Certified Payroll Solution has provided a bridge between QuickBooks and the Labor Compliance Program developed by TRS Consultants, Inc. since August 2004, by taking the certified payroll data and saving it in a specific file format – the user then logs into the on-line program, and uploads the file from their computer.
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Web Resources:
- California Department of Industrial Relations, Public Works Compliance Monitoring Unit Website – http://www.dir.ca.gov/dlse/cmu/cmu.html
- Current List of Bond Projects under jurisdiction of the CMU – http://www.dir.ca.gov/dlse/cmu/Bond_projects.html
- TRS Consultants Labor Compliance Management Program ONLINE DEMO – http://www.mylcm.com/index_jc.html
- How do I file electronic payroll reports – http://www.dir.ca.gov/dlse/cmu/How_to_file_epr.html
- Labor Compliance Programs & SBX2-9 Implementation – http://www.dir.ca.gov/lcp.asp
- California DIR CMU Frequently Asked Questions – http://www.dir.ca.gov/dlse/cmu/Frequently_asked_questions.html
One of the biggest causes of confusion for contractors working on government funded construction projects is “how to calculate and display fringe benefits” on a certified payroll report.
In recent months, I have repeatedly seen posts from QuickBooks users on the Intuit Community Forums asking how the fringe benefit rate is calculated and then displayed on the Certified Payroll Report in Excel, which is now a standard function of QuickBooks Premier and Enterprise when used in conjunction with Enhanced Payroll, and I really haven’t seen any good responses. Hence today’s blog post.
Background:
Contractors who work on government funded construction projects are required to pay their employees a “prevailing” rate of pay; based on where the project is located and the type of work they are performing. This “prevailing rate of pay includes both an hourly wage rate AND an hourly fringe benefit rate. These rates are found on the Prevailing Wage Determination that is included in the contact package and you MUST pay your employees these rates of pay.
A wage decision might look like the screenshot below; just a listing of Work/Trade Classifications, along with hourly wage Rates and Fringes:
For the remainder of this article we will be working with various examples based on the Bulldozer Operator classification which has a base rate of pay of $16.22 and a fringe rate of $3.35 and how this information is to be reported. We will focus on the Federal or U.S. Department of Labor form WH-347 and we will compare the actual WH-347’s requirements to the alternate/substitute WH-347 produced by QuickBooks.
*The rules according to the U.S. Department of Labor regarding the calculation and reporting of Prevailing Wage Fringe Benefits on the WH-347
Column 6 – Rate of Pay (Including Fringe Benefits): In the “straight time” box for each worker, list the actual hourly rate paid for straight time worked, plus cash paid in lieu of fringe benefits paid. When recording the straight time hourly rate, any cash paid in lieu of fringe benefits may be shown separately from the basic rate. For example, “$16.22/$3.35″ would reflect a $16.22 base hourly rate plus $3.35 for fringe benefits. When overtime is worked, show the overtime hourly rate paid plus any cash in lieu of fringe benefits paid in the “overtime” box for each worker; “$24.33/$3.35”. In addition, check paragraph 4(b) of the statement on page 2 the payroll form to indicate the payment of fringe benefits in cash directly to the workers.
Item 4 FRINGE BENEFITS – Contractors who pay all required fringe benefits: If paying all fringe benefits to approved plans, funds, or programs in amounts not less than were determined in the applicable wage decision, show the basic cash hourly rate ($16.22) and overtime rate ($24.33) paid to each worker on the face of the payroll. Check paragraph 4(a) of the statement on page 2 of the WH-347 payroll form to indicate the payment.
How rates of pay and fringe benefits are to be displayed on the certified payroll report when fringes are paid in cash.
This example shows the correct method of reporting the base hourly rate ($16.22) PLUS the hourly fringe rate ($3.35) being paid in cash to the employee ($16.22/$3.35). {Note: the employees rate of pay in QuickBooks is $19.57). Pay particular attention to Column 6 – Rate of Pay/Cash Fringes.
Now let’s look at the same certified payroll report as it is generated by QuickBooks. Pay close attention to the Pay Rate and Fringe Rate Columns – the Pay Rate comes through as the full $19.57 and in order to show the Fringe Rate of $3.35 you would need to manually adjust both the rate of pay and the fringe rate.
How rates of pay and fringe benefits are to be displayed on the certified payroll report when fringes are paid to approved plan, funds or programs.
This example shows the correct method of reporting only the base hourly rate ($16.22). Pay particular attention to Column 6 – Rate of Pay/Cash Fringes, as you should ONLY be reporting/showing the $16.22 rate of pay.
Now, let’s look at this same report generated by QuickBooks, keeping in mind that you could choose any of 3 options when creating this report.
OPTION 1 – QuickBooks recognizes company contribution items that you have set up for the fringes (Health & Welfare, Pension, and Vacation Fund) do NOT select/click on any of the items in the Fringe Benefits Paid box.
The Rate of Pay ($16.22) is displayed correctly, but the Fringe Rate column contains $0.00. This is “ok”, however, it is very misleading, because it could be taken to mean that you are not paying any fringes. Remember the rules state that you are to report the hourly fringe benefit rate that you pay in cash on the report.
OPTION 2 – QuickBooks recognizes company contribution items that you have set up for the fringes (Health & Welfare, Pension, and Vacation Fund) you click on each of these 3 items to indicate that these are your fringe benefit items.
The Rate of Pay ($16.22) is displayed correctly, but the Fringe Rate column contains $3.35. This is “ok”, however, it is very misleading, because it could be taken to mean that you are paying the fringes in cash to the employee. Remember the rules state that you are to report the hourly fringe benefit rate that you pay in cash on the report and that if you pay the fringes to approved plans you report just the hourly rate of pay.
OPTION 3 – QuickBooks recognizes company contribution items that you have set up for the fringes (Health & Welfare, Pension, and Vacation Fund) you click on each of these 3 items to indicate that these are your fringe benefit items and you choose to Apply these Fringe Benefit items to this project only (do not pro-rate by job).
The Rate of Pay ($16.22) is displayed correctly, but the Fringe Rate column contains $4.47 – which is incorrect. This is very misleading, because it could be taken to mean that you are paying the fringes in cash to the employee AND paying a higher fringe rate than required. Remember the rules state that you are to report the hourly fringe benefit rate that you pay in cash on the report and that if you pay the fringes to approved plans you report just the hourly rate of pay.
The bottom line of my finding when reviewing the way the QuickBooks calculates and displays the fringe benefit portion of prevailing wage on the “built-in” certified payroll report – is that you REALLY have to understand the reporting requirements before you submit your reports and that you should review the reports VERY carefully before submitting them.
Authors Note:
The certified payroll screenshots, with the WHD logo in the upper right corner, have been generated with Certified Payroll Solution, a QuickBooks integrated application specifically designed to help contractors comply with prevailing wage requirements. For more information, click here.
*(Source: United States Department of Labor, Wage and Hour Division (WHD), Instructions for Completing Payroll Form, WH-347 – http://www.dol.gov/whd/forms/wh347instr.htm)
A reader wrote to ask the following question:
We were just awarded a contract with the Department of Defense and have to pay our employees “prevailing wage” and submit certified payroll reports. I called Intuit Support to ask them about prevailing wage, certified payroll, and how to track the fringe benefits; they weren’t very helpful – they just told me that QuickBooks can produce the certified payroll report…….can you help me understand all this?
Answer:
Ok, let’s start with some basics:
- The Davis-Bacon Act of 1931 (a Federal Law) set wage rate requirements on government funded construction projects.
- All contractors & subcontractors who perform work on these public works projects, that have a value of $2,000.00 or more, are required to submit a certified payroll report on a weekly basis.
Prevailing Wage(s) rates are comparable to hourly wages PLUS hourly fringe benefit rates for the area in which the construction project is located in, type of construction it is, and the type of work employees are doing – carpenter, laborer, equipment operator, etc. Prevailing Wage Rates are found in the Contract Package and each employee must be classified and paid accordingly – these rates are often times higher than the hourly rate that you normally pay your employees.
A certified payroll report is a specially formatted payroll report, consisting of two pages:
- Certified Payroll Report – this contains information about who worked on the job, how much you paid them, etc.
- Statement of Compliance – this contains certain legal language and requires the original signature of a company official who is signing the document under penalty of perjury.
In your case, you will be required to file the U. S. Department of Labor Form WH-347 Certified Payroll Report, however, because this is a Department of Defense job – you will need to submit their Statement of Compliance (even though it has an expiration date of June 30, 2000).
Paying and tracking prevailing wage fringe benefits 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
Intuit was partially correct, QuickBooks does have an alternate/substitute Certified Payroll Report built into it – however, it is only available if you have an Enhanced Payroll Subscription AND you are using QuickBooks Premier (any flavor – Contractor, Accountant, etc) 2009 or 2010 OR Enterprise 9.0 and 10.0; but it is very different than the Federal WH-347 form.
What Intuit didn’t tell you – is that these prevailing wage projects require more than just the submission of a certified payroll reports, you may also be required to:
- submit EEOC/Work Utilization reports on a weekly, monthly or annually
- submit ARRA (American Recovery & Reinvestment Act) reports on a monthly basis
- generate Fringe Benefit Statements on a monthly basis (if you are paying the fringe benefits to the Union or a bona-fide plan)
- electronically file your certified payroll reports using Labor Compliance programs such as LCPtracker, TRS Consultants, Elation Systems, and others.
Watch a brief 10-minute video demonstrating how Certified Payroll Solution interfaces with QuickBooks to generate these reports.
