How to Do a Certified Payroll Report: A Stress-Free Guide

Managing federally funded construction projects means you need to master certified payroll reporting. The Davis-Bacon Act requires contractors and subcontractors to submit weekly reports proving that workers receive prevailing wages. Miss the mark and you'll face audits, penalties, or disqualification from future contracts.

This guide shows you exactly how to prepare and submit certified payroll reports. You'll learn to calculate wages correctly, sidestep common errors, and use automation to stay audit-ready without the paperwork headache. 

Understanding Certified Payroll Requirements

Before submitting your first certified payroll report, you need to know exactly when these requirements apply to your projects and what legal framework governs the process. These aren't optional guidelines; they're federal law for specific types of work. Misunderstanding them can trigger compliance issues that prevent you from bidding on future contracts.

What Is Certified Payroll?

Certified payroll is a weekly payroll report that contractors and subcontractors must submit when working on federally funded or federally assisted construction projects. The report documents each worker's classification, hours worked, wages paid, and fringe benefits provided. What makes it “certified" is the signature from a company representative attesting that the information is accurate and complete under penalty of perjury. It shows that you've paid every worker according to the prevailing wage rates set by the Department of Labor.

Certified payroll proves that workers on federal projects receive prevailing wages, which are typically higher than standard minimum wage rates and include fringe benefits like health insurance and retirement contributions.

When Is Certified Payroll Required?

You'll need to file certified payroll reports for any construction project where federal dollars are involved, either through direct funding or through programs like grants, loans, or loan guarantees. This includes highway construction, public building projects, and infrastructure work funded by federal agencies. Even if you're a subcontractor working for a general contractor, the requirement applies to you if the prime contract involves federal money exceeding $2,000.

State and local governments may also require certified payroll for their publicly funded projects, so review your contract documents carefully. Some states have their own prevailing wage laws that mirror federal requirements, effectively doubling your reporting obligations on certain jobs.

Legal Obligations Under the Davis-Bacon Act

The Davis-Bacon Act, passed in 1931, establishes the prevailing wage requirement for laborers and mechanics on federal construction contracts. It requires that you pay each worker at least the wage rate and fringe benefit amount predetermined for their specific job classification in your geographic area. These wage determinations are published by the Department of Labor and become part of your contract specifications.

Your legal obligations go beyond just paying the correct wages. You must maintain accurate daily records showing each worker's name, address, Social Security number, job classification, hours worked each day, and actual wages paid. You also need to post the applicable wage determination at your job site where workers can easily see it. Violations can result in contract termination, debarment from future federal work, and back-wage liability for underpaid workers.

How to Do Certified Payroll, Step-by-Step

Preparing your first certified payroll report can feel overwhelming, but breaking the process into clear steps makes it manageable. You'll follow the same sequence each week, and once you establish a routine, the process becomes second nature. Let's walk through each stage so you can submit accurate reports that pass auditor scrutiny.

Step 1: Gather Employee and Project Information

Start by collecting the essential details for every worker who performed labor on the federal project during the pay period. You'll need their full legal name, Social Security number, current home address, and job classification exactly as it appears on the wage determination. Don't use informal titles, which are a red flag for auditors.

Document which specific project each employee worked on, including the project name and contract number. If a worker splits time between a federal project and a private job during the same week, track those hours separately. Keep daily time records showing the exact hours worked each day on the covered project; this differs from standard biweekly payroll where you might just record total hours.

Step 2: Calculate Wages and Fringe Benefits

Look up the prevailing wage rate for each worker's classification in your project's wage determination. You'll find two components: the basic hourly rate and the fringe benefit rate. The basic rate goes directly to the employee as wages, while the fringe benefit amount can either be paid to the worker in cash or applied toward qualified benefits like health insurance or retirement contributions.

Calculate regular and overtime hours separately. Federal projects require overtime pay at one and a half times the basic rate for any hours over 40 in a workweek. If your state has stricter overtime rules (like California's daily overtime requirements), you must follow whichever rule is more favorable to the worker. Factor in any deductions you're legally allowed to make, keeping in mind that some standard deductions might not apply under prevailing wage rules.

Prevailing wages often include separate hourly rates for base pay and fringe benefits, which together must equal or exceed the total rate specified in the wage determination for each classification.

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Step 3: Complete the WH-347 Form

The WH-347 form is the standard certified payroll report template. You can download it from the General Services Administration website or use payroll software that generates compliant reports. Fill out the header section with your company information, the project details, and the payroll period dates.

List each employee on a separate line with their classification, hours worked each day, total hours for the week, rate of pay, gross wages, deductions, and net wages. Include the fringe benefits paid, specifying whether you paid them in cash or applied them to qualified benefit plans. If you contributed to a benefit plan, attach documentation showing the contribution amounts. The form requires signatures from both the person who prepared the payroll and a company officer or owner who certifies its accuracy under penalty of perjury.

Step 4: Review and Verify Accuracy

Before submitting your report, cross-check every entry. Confirm that each worker's classification matches the wage determination exactly. Verify that wage rates meet or exceed the required prevailing wages for your project location. Double-check your overtime calculations, since they are where errors frequently occur. Make sure the fringe benefit amounts add up correctly and that you've attached supporting documentation for any benefit plan contributions.

Review your employee addresses and Social Security numbers for accuracy. Auditors will compare this information against other records, and mismatches trigger investigations. If you discover an underpayment, correct it immediately and include the adjustment in your next submission with a clear explanation.

Step 5: Submit Your Certified Payroll Report

Submit your completed WH-347 form to the contracting agency or general contractor within seven days after the pay period ends. Some agencies accept electronic submissions through designated portals, while others require physical copies. Check your contract specifications for the exact submission method and address. Keep copies of every submitted report along with your supporting documentation because you're required to maintain these records for at least three years after project completion.

If you're a subcontractor, you'll typically submit your certified payroll to the general contractor, which then consolidates all reports before forwarding them to the contracting agency. Set calendar reminders for your submission deadlines because late filings can result in payment holds on your invoices.

Common Certified Payroll Mistakes and How to Avoid Them

Even seasoned contractors run into trouble with certified payroll reporting. What starts as a minor oversight can quickly escalate into serious compliance issues that result in audits, delayed payments, or losing access to future federal contracts. Knowing where most people trip up helps you keep your submissions accurate and ready for any scrutiny.

Incorrect Wage Classifications

Misclassifying workers or using job titles that don't align with wage determinations are among the most common errors. Your internal systems might label someone as a “construction laborer," but if the wage determination specifies “laborer, common or general," that's the exact wording you need on your WH-347 form. Auditors compare classifications directly against wage determinations, and any mismatch immediately raises concerns.

Things get trickier when workers perform different types of work throughout the week. Say an electrician handles electrical work Monday and Tuesday, then assists with general labor on Wednesday. You need to track and report those hours separately under different classifications, each with its own prevailing wage rate. Combining everything under a single title breaks Davis-Bacon requirements and usually means you've underpaid someone.

Missing Fringe Benefit Documentation

Fringe benefits make up a substantial portion of prevailing wage requirements, yet contractors frequently mishandle them on certified payroll reports. When you contribute to health insurance, retirement plans, or other qualified benefits instead of paying cash, you must document these contributions with supporting records. Auditors want proof that your contributions meet or exceed the required fringe benefit rate for each worker's classification.

The situation becomes more complicated when contractors combine payment methods. Perhaps you pay part of the fringe benefits in cash and contribute the rest to a health plan. That works, but your report needs to clearly separate both components and demonstrate that the total satisfies the requirement. Missing or incomplete documentation here routinely triggers demands for back wages plus interest.

Late or Incomplete Submissions

You have seven calendar days after the pay period ends to submit your report. Missing this deadline can freeze payment on your invoices, and repeatedly filing late may lead to contract default. Set up calendar reminders and designate backup staff who can handle submissions when the primary person isn't available.

Incomplete submissions cause as many headaches as late ones. Forgetting to sign the certification statement, leaving out employee addresses, or failing to attach required documentation forces the contracting agency to request corrections. Each round of back and forth delays approval and piles on administrative work. According to Criterion HCM, payroll professionals who pursue certification report significantly fewer compliance errors because they understand the complete documentation requirements from the start.

Creating a pre-submission checklist prevents these common oversights. Before sending any certified payroll report, verify that you've included all employee information, double-checked classifications against wage determinations, calculated overtime correctly, attached fringe benefit documentation, and obtained the required signatures. This straightforward quality control step catches most errors before they turn into compliance problems.

Streamlining Certified Payroll with Automation

Manual certified payroll processing drains resources and creates unnecessary risk. Each week brings the same cycle: collecting timesheets, cross-referencing wage determinations, calculating fringe benefits, filling out forms, and double-checking every entry before submission. This administrative burden quickly becomes overwhelming for contractors managing multiple federal projects with dozens of workers across different classifications. Automation transforms this process from a weekly challenge into a streamlined operation that protects your profitability while maintaining compliance.

The Cost of Manual Certified Payroll Processing

Processing certified payroll manually costs your business far more than just time. Consider what happens when your payroll staff spends hours each week manually entering employee data, verifying classifications, and calculating prevailing wages. That's productive time they could spend on strategic initiatives that actually grow your business. The direct labor costs add up quickly, but the indirect costs are even more substantial.

Errors in manual processing trigger expensive consequences. A misclassified worker might mean you've underpaid wages for weeks or months before an audit catches the mistake. You'll owe back wages plus interest, face potential penalties, and spend additional hours correcting records and resubmitting reports. One contractor who manually processed certified payroll for a highway project discovered during an audit that they'd used incorrect wage classifications for electricians, resulting in $47,000 in back wages and a payment hold that delayed their next draw for six weeks.

Disconnected systems create another layer of inefficiency. When your time tracking, payroll processing, and accounting software don't communicate with each other, your team manually transfers data between platforms. Each transfer introduces the possibility of transcription errors.

Manual data entry between disconnected payroll, time tracking, and accounting systems creates multiple opportunities for errors that can trigger audits and payment holds on federal contracts.

How Dapt Simplifies Certified Payroll Compliance

Dapt eliminates the manual chaos of certified payroll processing through its Intelligent SYNCHRONIZATION Engine, which connects your payroll, time tracking, project management, and accounting systems. Instead of manually transferring data between platforms and recreating the same information in different formats, Dapt automatically pulls accurate time and labor data directly from your existing systems and maps it to the correct projects and wage determinations.

The platform handles the complex labor rules that make certified payroll particularly challenging. Multi-rate tracking becomes automatic: When an electrician works on electrical tasks in the morning and assists with general labor in the afternoon, Dapt assigns the appropriate prevailing wage rate to each activity without requiring manual calculations. Granular cost allocation ensures compliance while giving you precise visibility into actual project costs.

Integration with major payroll providers like ADP, Paychex, Paycor, and Paycom means you don't need to replace your existing systems. Dapt works with what you already have, creating a single source of truth across all your platforms. Time data from QuickBooks Time flows automatically to your payroll system, while project details sync from platforms like JobTread and financial data feeds into your accounting software, all without the need for manual intervention.

Dapt automation significantly reduces the time your team spends on certified payroll reporting while maintaining the audit-ready records you need for compliance. You'll gain real-time visibility into project costs, allowing you to spot issues like cost overruns or incorrect classifications before they become expensive problems. When audit season arrives, your documentation will already be organized and accessible instead of scattered across spreadsheets and filing cabinets.

Ready to eliminate manual certified payroll processing while maintaining perfect compliance? Contact us to see how Dapt can transform your payroll operations and give you back the time to focus on growing your business.

Maintaining Compliance While Protecting Profitability

Accurate certified payroll reporting keeps you eligible for federal contracts while protecting your business from expensive penalties and back wage claims. The process requires attention to detail: correct classifications, precise wage calculations, complete documentation, and timely submissions. Each element matters because auditors will examine every aspect of your reports, and small mistakes quickly add up into serious compliance issues.

Whether you continue processing certified payroll manually or adopt automation to handle the complexity, establish a consistent system that captures accurate data from the start. Your investment in proper certified payroll processes will pay dividends through faster payment approvals, reduced audit risk, and the ability to bid confidently on more federal projects. Start by auditing your current process against the steps outlined here, identify where errors typically occur, and implement controls that prevent those mistakes before they reach your submitted reports.

FAQs

What are payroll certifications for construction professionals?

Payroll certifications are professional credentials that demonstrate expertise in handling construction payroll, including complex requirements like prevailing wages, union classifications, and multi-state compliance. These certifications help payroll professionals reduce errors and maintain accuracy when learning how to do a certified payroll for federal projects.

Who is required to submit certified payroll reports?

All contractors and subcontractors working on federally funded construction projects with values exceeding $2,000 must submit certified payroll reports, regardless of company size. This requirement applies even if you're several tiers down the subcontractor chain, as long as federal dollars fund any portion of the project.

What is the meaning of certified payroll reporting?

Certified payroll reporting is the process of documenting worker wages, classifications, and benefits on federal construction projects, then certifying under penalty of perjury that all information is accurate and complies with prevailing wage requirements. The “certified" aspect means a company representative legally attests to the report's truthfulness.

Can I use payroll software instead of the WH-347 form?

Yes, you can use certified payroll software that generates compliant reports as long as the output includes all required WH-347 information and meets Department of Labor standards. Many contractors use specialized software to automate how to do a certified payroll, reducing errors while maintaining the same compliance standards as the standard form.

How long must I keep certified payroll records after project completion?

You must retain all certified payroll reports, supporting documentation, and employee records for at least three years after the project is completed. Federal auditors can request these records at any time during this retention period, so maintain organized, accessible files that demonstrate your compliance.