Reporting Fringe Benefits Paid in Cash on Certified Payroll
Reporting prevailing wage fringe benefits paid in cash to the employee has specific requirements when completing the Federal WH-347 Certified Payroll Report. Here is a question from a reader who is submitting the built-in QuickBooks certified payroll report and is being told that she is not correctly reporting the cash fringe benefit amounts.
Hi, I found your blog through a Google search and can’t believe all the information you have here about certified payroll, prevailing wage and using QuickBooks – so far I’ve learned so much! I could really use some help and couldn’t find anything that I thought fit our specific situation. We are a non-union contractor working on prevailing wage jobs and we pay the full fringe benefit amount to the employee in cash. We use the QuickBooks approved Certified Payroll report and our certified payroll reports are being rejected because we aren’t reporting the Cash Fringe Benefit amount correctly – so we are told. I’ve posted on the QuickBooks forums and even called QuickBooks themselves and no one seems to be able to tell me HOW fringe benefits are supposed to be reported or displayed on the certified payroll report – they just keep telling me that the form is approved. I found that you have a certified payroll add-on program for QuickBooks (and I’ll tell my boss about it), so I feel a little funny asking you about the built-in QuickBooks report – I hope you’ll still answer my question because I’m new to dealing with prevailing wage and my boss is mad because we aren’t getting paid. Thanks so much, Becky.
Unfortunately, you aren’t the first person who has told me that the built in QuickBooks Certified Payroll Report is being rejected, many states have their own specific requirements which are far more complex than that report can handle. I’ve seen a lot of people say, on the Intuit forums and other groups that I belong to, that they print out the report from QuickBooks and then manually enter the information into the form that they download from either the U.S. Department of Labor’s website or their State Department of Labor, personally I think that’s a lot of extra work and is prone to transposition errors.
Without knowing if you are dealing with a Federal or State Prevailing Wage law, I’ll focus on how the U.S. Department of Labor wants it done. The following information is straight from the U.S. Department of Labor’s Wage and Hour Division’s – Instructions for Completing Payroll Form, 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, “$12.25/.40” would reflect a $12.25 base hourly rate plus $0.40 for fringe benefits. This is of assistance in correctly computing overtime. See “Fringe Benefits” below. 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; otherwise, you may skip this box. See “Fringe Benefits” below. Payment of not less than time and one-half the basic or regular rate paid is required for overtime under the Contract Work Hours Standard Act of 1962 if the prime contract exceeds $100,000. In addition to paying no less than the predetermined rate for the classification which an individual works, the contractor must pay amounts predetermined as fringe benefits in the wage decision made part of the contract to approved fringe benefit plans, funds or programs or shall pay as cash in lieu of fringe benefits.
Now, let’s see if I can put this into more simple terms for you. Basically what this says is:
If the wage determination says that the base hourly rate is $12.25 per hour and the hourly fringe rate is $0.40 per hour AND you do not pay the fringe rate to approved fringe benefit plans, funds or programs you need to pay the $.40 per hour to the employee in cash – and the employee’s rate of pay becomes $13.35 per hour and that would be the hourly rate that you assign to the employee in QuickBooks when he/she works on the prevailing wage project.
When you complete the report you are then supposed to show the “split” in Column 6 – Rate of Pay or $12.25/$0.40; which represents $12.25 base hourly rate PLUS $0.40 cash paid in lieu of fringe benefits. This is where the built-in QuickBooks Certified Payroll Report fails miserably – because it reports the full $13.35 per hour as the rate of pay and in order to properly show that “split” you have to manually make changes before you print your reports for each job. QuickBooks does allow you to make changes to the form in Excel prior to printing it – but you need to do this for each employee on each job, each week – this can become time-consuming and is error prone.
I’m betting this is why your reports are being rejected and why you are being told that you are not reporting the cash fringe benefits correctly.
Different states have different reporting requirements – and unfortunately, Intuit provides a single form – giving the impression that it will be accepted – this is not always the case, as you’ve found out.
Now our software works a little differently – for each payroll wage item that you have in QuickBooks, there is a “linked record” in our program where you indicate what the Cash Benefit Rate is that is included in the total hourly rate of pay in QuickBooks, so if you were to enter .40 in the Cash Benefit Rate field – the program would “know” that it was to back out that amount from the total $13.35 per hour found in QuickBooks and display it in Column 6 as $12.25/$0.40.
I hope this article has helped you to determine why your reports are being rejected and how you are supposed to report fringe benefits paid in cash on the Federal WH-347 form. If you discover that you are supposed to be filing a State specific report and have additional questions, please feel free to leave a comment with additional information and I’ll be happy to respond.