Wage Restitution and Certified Payroll Revisions
Wage restitution and certified payroll revisions happen when you miss an update to the wage determination which increases the prevailing wage rate and the fringe benefit rate or perhaps you weren’t informed until after working on the project for several weeks/months that this project was subject to prevailing wage. Unfortunately, there isn’t a lot of clear guidelines for submitting revised certified payroll reports, however, I’ve had experience in following two different sets of requirements. See this question submitted by a reader.
My question is, if a subcontractor pays restitution for an employee(s), do they have to send the same Certified Payroll Reports back with revision on top? Or will they have to send a separate Certified Payroll Report with the dates they were owed restitution stating the dates they were owed for the week (ie. March18 – June 30)? Or would they be separate Certified Payroll Reports for each week they are owed restitution, with only them (who are owed restitution) be on the report?
It is very vague as to what needs to be done…from what I have been reading. Any information would be greatly appreciated!!! Tracee
I agree with you, much of the information that is available is very vague. In the past I’ve had to submit revised reports and pay restitution on occasion, using two different methods, which I’ve explained below.
Here is what I know about wage restitution and revised certified payroll reports.
The Contract Administrator usually notifies the prime/general contractor in writing when a wage underpayment is found during payroll reviews. The notice should describe the underpayments (perhaps a specific work classification) and provide instructions for computing and documenting the payment of additional wages owed. Wage restitution should be paid promptly in the full amount due – minus the employee portion of payroll taxes and any other permissible deductions (union dues for example). If the employer owing the wage underpayment is a subcontractor, the general contractor will pass along the information received from the contract administrator – the subcontractor will then make additional wage payments to the employee(s) and submit the required information to the general contractor, who will then submit it to the contract administrator.
Calculating Wage Restitution:
Calculating the amount of wages that is owed is really pretty simple – it’s the difference between what the employee should have been paid MINUS what he was actually paid MULTIPLIED by the number of hours during which the deficit occurred. The difference between the two rates is called an adjustment rate. If overtime is involved, the calculation will also include an adjustment of the overtime rate as well.
For example, you should have paid the employee $18.00 per hour but you paid him $17.00. The employee worked 100 hours of straight time and 10 hours of overtime, you would calculate restitution as follows:
$18.00 MINUS $17.00 = $1.00 straight time adjustment
$27.00 MINUS $25.50 = $1.50 overtime adjustment
100 hours x $1.00 p/h ($100.00) PLUS 10 hours x $1.50 p/h (15.00) = $115.00
NOTE: Additional calculations may be necessary depending upon how you pay the fringe benefit portion of the prevailing wage rates and details are NOT provided in this article).
Submitting Revised Certified Payroll Reports
Usually the requirements for submitting revised certified payroll reports are provided in the notification form the contract administrator.
Usually, the corrected payroll will reflect the period of time for which restitution is due, for example – Payrolls 1-6 OR 01/01/12 – 01/31/12; meaning that you can issue a single paycheck for the full amount of the money due the employee. The revised payroll(s) should list:
- each employee who was due restitution
- their work classification
- the total number of hours involved (Straight time hours AND Overtime hours) – daily hours are usually not applicable for restitution
- the Straight time and Overtime adjustment rates (the difference between what they SHOULD have been paid and what the WERE paid
- gross amount of restitution
- deductions for taxes
- net amount paid
NOTE: There have been times, at the request of the contract administrator, that you take a copy of the original report, add the restitution information to the bottom of it for each employee (as outlined above), and add the word “Revised or Corrected” at the top of the report (this is usually handwritten and I recommend highlighting it with a very bright orange or green highlighter). This means that you will need to issue multiple “small checks” to each employee effected.
A signed Statement of Compliance must be attached to the corrected report(s).
You must provide proof of receipt for the wage restitution
You must have each employee sign a restitution receipt, and/or get a copy of both sides of the cancelled check must be obtained as evidence of receipt of payment.
I’ve never seen any sort of official restitution document, so I’ve always just created a simple Word document with a header that says “Restitution Receipt”, included the relevant information about why this additional money was being paid – including the calculations I made to determine the amount owed, and made the employee sign it before handing over the check to them. You’ll need to access your on-line banking account and print an image of the cashed check, if your bank no longer returns your checks to you.
Once you’ve submitted all this to the Contract Administrator (or if you are a subcontractor you’ll submit it the the general, who will submit it to the contract administrator); the revised report and supporting documentation will be reviewed to make sure that the full amount of restitution was paid. If further problems are discovered, they will be documented and the information forwarded.
If employees cannot be located, you must submit evidence that you cannot locate the employee – a returned envelope sent to the last known address, is usually sufficient. However, you must provide a list of employee names, last known address, social security numbers, and the gross amount of the restitution due. This amount is then deducted from monies owed and forwarded to the General Accountability Office for direct disbursement to the employees or retained by the government, if they are unable to locate them.
I hope you’ve found this article to be helpful, if so, please take a moment to leave a comment 🙂
4 Responses to Wage Restitution and Certified Payroll Revisions
Leave a Reply
- The Great Debate – QuickBooks Desktop vs. QuickBooks Online
- Using Account Numbers in Your QuickBooks Chart of Accounts
- QuickBooks Creating a More Meaningful Payroll Expenses Section
- Calculating & Displaying Fringe Benefits on a Certified Payroll Report
- How To Turn On and Use Manual Payroll in QuickBooks
- QuickBooks Payroll Tip - Tracking Employee Advances or Loans
- Create a QuickBooks Job Cost Report With Hours & Payroll Costs
- QuickBooks Tip - Child Support Garnishments
- QuickBooks Tip - Job Costing Starts With A Simple Item
- QuickBooks for Contractors Tip – Basics of Progress Invoicing
- QuickBooks Tip-Creating a Functional Payroll Liabilities Section
- Welcome to the QuickBooks for contractors blog
- QuickBooks Tip: Important Facts About Items Left as Billable
- QuickBooks Tip-Handling Employee Reimbursements for Expenses
- QuickBooks Tip - Determing Cost of Goods Sold
- Straight from the IRS - Social Security Tax Reduced to 4.2%
- QuickBooks 2013 Upgrade Do's, Don'ts & Frequent Questions
- QuickBooks 2012 - Frequently Asked Questions About Upgrading
- QuickBooks 2015 Announced - Important System Requirements
- QuickBooks 2015- The Good, Bad and Ugly, Part 1