Certified Payroll Requirements: Contractor Compliance Guide for 2025

Certified payroll is a mandatory weekly reporting requirement for contractors and subcontractors on government-funded construction projects. Understanding and implementing proper certified payroll procedures is critical—violations can result in back wage liability, contract termination, and debarment from future government work.

Why Certified Payroll Matters

Certified payroll ensures workers receive legally mandated prevailing wages on public projects and provides accountability for taxpayer-funded construction spending.

What is Certified Payroll?

Certified payroll is a weekly report documenting worker hours, wages, and classifications on government construction projects. Contractors certify under penalty of perjury that the information is accurate and workers received at least prevailing wage rates.

Core Components

Worker Information: Names, addresses, classifications
Hours Worked: Daily and weekly hours per worker
Wage Rates: Base rate and fringe benefits paid
Deductions: All withholdings and deductions
Certification: Signed statement of compliance

Purpose

• Verify prevailing wage compliance
• Document worker classifications
• Track fringe benefit payments
• Create audit trail for investigations
• Ensure subcontractor compliance
• Protect worker rights

When Is Certified Payroll Required?

Federal Projects (Davis-Bacon Act)

Required On:

• Federal building construction over $2,000
• Federal highway projects (FHWA)
• Federal transit projects (FTA)
• HUD-funded construction
• VA hospital and facility projects
• Military construction (DoD)

Key Threshold:

$2,000

Contracts exceeding this amount require certified payroll

State and Local Projects

State	Required	Threshold
California		$1,000
New York		Varies by agency
Illinois		All prevailing wage work
Washington		All public works
Texas		Not required (no prevailing wage)
Florida		Not required (no prevailing wage)

Note: Approximately 30 states have prevailing wage laws requiring certified payroll reporting.

WH-347 Form Requirements

The WH-347 is the standard federal certified payroll form. While some agencies and states have their own formats, most follow the WH-347 structure.

Required Information (Part 1: Payroll Data)

Worker Information

Name: Full legal name
Address: Current residence
SSN: Last 4 digits only (privacy)
Classification: Work performed (electrician, laborer, etc.)

Hours and Wages

Daily Hours: Hours worked each day (M-Sun)
Total Hours: Weekly total (regular + overtime)
Rate of Pay: Basic hourly rate
Fringe Benefits: Amount per hour paid
Gross Pay: Total earned before deductions
Deductions: Itemized withholdings
Net Pay: Amount actually paid

Required Information (Part 2: Statement of Compliance)

"I certify that the payroll is correct and complete; that the wage rates contained herein are not less than those determined by the Secretary of Labor... and that the classifications set forth for each laborer or mechanic conform with the work he performed."

Signature Required: Authorized company representative

Title: Position of signatory

Date: Date of certification

Warning: Certification is made under penalty of perjury. False statements can result in criminal prosecution.

Weekly Submission Process

Timing

Frequency: Every week work is performed
Pay Period: Typically Sunday-Saturday
Due Date: Within 7 days of pay period end
First Report: Week containing first day of work

Who Submits

• Prime contractor (for own workers)
• Each subcontractor (own reports)
• All tiers of subcontractors
• Material suppliers performing installation

Prime collects and submits all payrolls to contracting agency

Submission Methods

• Agency-specific portals
• Email submission (if allowed)
• Certified payroll software uploads
• Paper submission (rare)

Check contract for specific submission requirements

Submission Checklist

Complete WH-347 form for each worker

Include all required fields (no blanks or "N/A")

Verify classifications match wage determination

Ensure each worker classified according to work performed

Confirm rates meet or exceed prevailing wage

Check both base rate and fringe benefits

Include signed statement of compliance

Original signature required (not stamped)

Collect subcontractor certified payrolls

Review for completeness before submitting

Submit within required timeframe

Late submissions may trigger audits

State-Specific Requirements

States with prevailing wage laws often have additional requirements beyond federal Davis-Bacon standards.

California (DIR)

Portal: Electronic Certified Payroll Reporting (eCPR)
Threshold: $1,000 contract amount
Registration: Contractors must register with DIR
Penalties: $100 per worker per day for non-compliance
Public Access: Payrolls publicly available (redacted)

New York

Form: State-specific payroll form
Scope: State and local public work
Enforcement: Comptroller's office oversight
Additional: Apprenticeship ratio requirements
Record Retention: 6 years (longer than federal)

Illinois

Portal: Illinois Department of Labor system
Monthly: Also requires monthly compliance reports
Coverage: All prevailing wage projects
Penalties: 20% liquidated damages for violations

Washington

Agency: Department of Labor & Industries (L&I)
Intent and Affidavit: Required in addition to payroll
Coverage: Comprehensive public works definition
Apprenticeship: Strict ratio enforcement

Common Compliance Mistakes

Top Violations and How to Avoid Them

1. Incorrect Worker Classifications

Listing skilled workers as laborers to avoid higher wage rates.

Solution: Classify workers based on actual work performed, not job title. When in doubt, use higher classification.

2. Missing or Incomplete Forms

Blank fields, missing signatures, or unsigned statements of compliance.

Solution: Implement weekly checklist review. Use software validation to catch missing data.

3. Late Submissions

Failing to submit payrolls within 7 days of pay period end.

Solution: Set calendar reminders. Automate submissions where possible.

4. Fringe Benefit Calculation Errors

Not paying full fringe amount or miscalculating cash-in-lieu.

Solution: Clearly document how fringe is paid (benefits vs. cash). Double-check calculations.

5. Subcontractor Payroll Issues

Not collecting or reviewing subcontractor certified payrolls.

Solution: Require subs to submit payrolls to you before you pay them. Review all sub payrolls.

6. Using Wrong Wage Determination

Applying rates from different location or project type.

Solution: Verify wage determination in contract documents. Check for modifications.

7. Overtime Miscalculations

Not paying 1.5x basic rate plus full fringe for overtime hours.

Solution: Overtime = (Basic Rate × 1.5) + Fringe Benefits. Use software to automate.

8. Poor Record Retention

Not keeping supporting documentation (time cards, pay stubs) for required period.

Solution: Retain all payroll records for 3 years minimum (longer for some states). Use cloud backup.

Certified Payroll Software Solutions

Dedicated certified payroll software reduces errors, saves time, and ensures compliance across federal and state requirements.

Key Software Features

Automation & Accuracy

• Auto-populate WH-347 forms
• Built-in wage determination lookups
• Automated overtime calculations
• Fringe benefit tracking
• Error detection and validation

Compliance & Reporting

• State-specific form generation
• Electronic submission to portals
• Audit trail maintenance
• Document retention management
• Multi-project tracking

Standalone Solutions

• CMIC
• Sage 300 CRE
• Foundation Software
• ComputerEase

Payroll Integration

• QuickBooks + Plugins
• ADP Workforce Now
• Viewpoint Vista
• Jonas Premier

State-Specific

• CA: LCPtracker, Elation
• NY: Various certified options
• Multi-state compliance tools

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Frequently Asked Questions

Do I need to submit certified payroll if no work was performed that week?

No. Only submit certified payroll for weeks when your workers performed labor on the project. If no work occurred, no payroll submission is required.

Can I use my regular payroll system for certified payroll?

Most standard payroll systems don't generate compliant certified payroll reports. You'll need either specialized software or manual WH-347 form completion. Some payroll providers offer certified payroll add-ons.

What if I discover an error after submitting certified payroll?

Submit a corrected payroll immediately with a note explaining the correction. If the error resulted in underpayment, pay affected workers the difference plus any interest required by the agency. Document the correction thoroughly.

Are subcontractor workers my responsibility?

Yes. Prime contractors are responsible for ensuring all subcontractors comply with certified payroll requirements. Include compliance language in subcontracts, collect their payrolls weekly, and review for accuracy before submitting to the agency.

How long must I keep certified payroll records?

Federal requirement: 3 years from project completion. State requirements may be longer (e.g., New York requires 6 years). Keep all supporting documentation including time cards, pay stubs, and benefit records.

What happens if I'm audited?

Auditors will review your certified payrolls against supporting documentation (time cards, cancelled checks, benefit records). They'll verify workers were classified correctly and paid at least prevailing rates. Keep organized records to facilitate audits.

Can I pay fringe benefits in cash instead of providing benefits?

Yes. You can pay the fringe benefit amount as additional hourly wages (cash-in-lieu). However, this amount becomes taxable wages subject to payroll taxes. Providing bona fide benefits (health insurance, pension) may be more cost-effective.

Do office staff and project managers need to be on certified payroll?

Only workers performing manual labor or trade work on the project site need to be on certified payroll. Office staff, estimators, and project managers working primarily from the office are typically exempt. However, superintendents and foremen directly supervising site work may need to be included.

Conclusion

Certified payroll compliance is non-negotiable for government construction work. Understanding requirements, implementing proper procedures, and using appropriate software protects your business from costly violations while ensuring workers receive legally mandated wages.

While the weekly reporting adds administrative burden, government projects offer stable revenue, reliable payment, and significant growth opportunities for contractors who master compliance requirements.

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