Many contractors across the United States are subject to the Davis-Bacon Act – including a growing number of small, medium, and large construction firms as a result of the American Recovery and Reinvestment Act of 2009 (ARRA).
ARRA provides billions of dollars in funding for the improvement of the nations’ infrastructure that in turn created a slew of new government-funded construction projects requiring certified payroll reporting.
According to USASpending.gov, as of November 23, 2009, there was $43.9 billion in spending targeted for the “construction of structures and facilities.”
A U.S. Federal Law, the Davis-Bacon Act of 1931, set “prevailing wage” rate requirements on public works projects. All contractors and subcontractors who engage in government construction contracts and federally assisted construction projects over $2,000.00 are required to submit weekly – certified payroll reports to ensure government compliance.
What is a “prevailing wage”?
- Determined by the U.S. Department of Labor
- Based on wages for the area (including Union wages) in which the project will occur and the type of construction
- Prevailing wage rates differ based on the type of work the employee performs and their level of skill
- Can change by city, county, or job
- Prevailing wage rates include BOTH an hourly wage rate PLUS an hourly fringe benefit amount
- Can be more than what you currently pay your employees
What is the “hourly fringe benefit amount” and HOW is it paid?
- Specified dollar amount in ADDITION to a base hourly rate of pay
- Can be paid:
- To the Union on behalf of the employee
- To a “bona-fide” fringe benefit plan
- In cash to the employee as part of his/her gross hourly rate of pay
- The total hourly fringe benefit amount can be “split” between a bona-fide plan(s) with the balance paid in cash to the employee
What is a certified payroll report and what makes it “certified”?
- Specially formatted payroll report consisting of the actual payroll report and a certification page
- Must be submitted on a weekly basis
- “Certification” is obtained via an ORIGINAL SIGNATURE of a company official
Is there a single, standard certified payroll-reporting format or form?
Not really – it will depend upon the state in which the construction project exists and if the project is funded with Federal or State money.
- 24 states follow the reporting rules of the U.S. Department of Labor – Wage and Hour Division and require the filing of the Federal (USDOL) Form WH-347.
- 13 States have their own State Prevailing Wage Laws and forms OR can require the WH-347 form when a job is funded fully by federal dollars.
- 13 states have multiple State Agencies issuing Prevailing Wage Laws and forms, multiple compliance companies, electronic certified payroll reporting requirements OR can require the WH-347 form when a job is funded fully by federal dollars.
In addition to a weekly-certified payroll report, are their other reports that are required?
Absolutely! It is a common misconception that all you have to do is submit a certified payroll report for each week that you work. Additional reports include:
- “No Work” Performed Report for weeks in which you have no employees on the job site.
- Union/Bona-fide Plan Fringe Benefit Reports – on a monthly basis.
- Union Dues Reports – on a monthly basis.
- Federal, State, or Local EEOC/Workforce/Manning Reports – on a weekly, monthly, or annual basis (depending upon the State that the project resides in).
- American Recovery & Reinvestment Act (ARRA) Reports – on a monthly basis.
How are contractors who use QuickBooks complying with prevailing wage reporting requirements?
- Complex Excel spreadsheets which are manually updated each week
- Use of the “alternate, substitute” certified payroll report (found in QuickBooks Enhanced Payroll and used with Premier or Enterprise Editions)
- Stand-alone software programs which have no QuickBooks interface and require double-data entry each week
- Through the use of QuickBooks integrated applications, specifically designed for compliance with prevailing wage requirements.