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How To Report an Owner/Employee on Certified Payroll

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Certified Payroll is complex and so are the reporting requirements for owner/employees.  See this question submitted by a reader.

Ask the Expert - Q & AI am unsure of how to report the owner of the company on the certified payroll report.  He is a union member but not paid union benefits.  He is paid the prevailing union wage in our area.  He is paid thru QuickBooks payroll & the appropriate payroll taxes are paid.

The accountant suggests we do not report the fringe benefits on the certified payroll because he does not receive union benefits as he is the owner & does not have union benefits.

I am confused as to how to report his wages.  Must I make a ‘separate’ payment to him of what the total prevailing wage for a union worker would receive?  Or would I simply ‘add’ the amount of the prevailing wage to his hourly rate?  Please advise, thank you! Lynda

Hi Lynda,

You do have quite an interesting situation on your hands!

wh-347 certified payrollFederal Prevailing Wage requirements, through the U. S. Department of Labor, indicate that working foreman or supervisors that regularly spend more than 20% of their time performing actual construction work on the project are considered to be covered and, therefore, required to be reported on the certified payroll report.  I’m making a HUGE assumption that the owner of your company falls into that “working foreman or supervisor” category when he is out on the job site.

Some states, including Alabama, have a special requirement for the Foreman category.  In Alabama, employees who fall under the “Foreman” Work Classification are reported with no hours, pay rates, earnings, or deductions – just their name, last 4-digits of their social security number, number of withholding exemptions and work classification.

Under the Davis-Bacon and related Acts, the contractor is required to pay not less than prevailing wage, including fringe benefits, as predetermined by the Department of Labor.  The contractor’s obligation to pay fringe benefits may be met either by payment of the fringe benefits to bona fide benefit plans, funds or programs or by making payments to the covered workers as cash in lieu of fringe benefits.

I totally agree with your accountant that you do not report any fringe benefit amounts on the certified payroll report for the owner, because he isn’t receiving them – during an audit that would cause quite a problem.

My recommendation based on the information that you have providedwould be that the owner of the company be paid the TOTAL of the Union wage PLUS the full fringe benefit amount – for example if the hourly union wage was $20.00 and the total fringe benefit rate equaled $10.00 his QuickBooks rate of pay would be $30.00 for Straight time and $40.00 for Overtime.  Overtime would be calculated as $20.00 (base) + $10.00 (1/2 base) + $10.00 (Fringe).  On most state specific forms you would report $30.00 in the Rate of Pay box, however, on the Federal WH-347 you would report the rate of pay in Column 6 as $20.00/$10.00 for Straight/Regular time and $30.00/$10.00 for Overtime.

This is indeed a complicated situation and I suggest that you discuss my recommendation with the Union Hall, the General Contractor or Project Administrator, AND your local Department of Labor’s Prevailing Wage Division to ensure that what I have suggested will meet with their reporting requirements.

I hope this helps.


About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert

I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.

QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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