Understanding Certified Payroll and the Davis Bacon Act

In 1927, Representative Robert L. Bacon of Long Island, New York introduced a bill designed to help protect workers from competitive pressures to keep wages low. However, it wasn’t until 1931 during the Great Depression that congressmen came together in an effort to help prevent wages from falling and local workers from missing out on local construction projects. The David Bacon Act was signed on March 3, 1931, finally providing protection for workers employed by construction companies that win public works projects.

Today, the Davis Bacon Act still exists although it has gone through many iterations. Included in the Davis Bacon Act, contractors who win in the bid for federally funded construction contracts over $2,000 are required to complete a certified payroll report. The reports provide proof workers are being paid the local prevailing wage and fringe benefits. If you are a contractor wishing to bid on or having won a bid for such a project, it is important to understand the Davis Bacon Act and how to complete certified payroll correctly.

Highlights of the Davis Bacon Act

The Davis Bacon Act covers residential, heavy, buildings, and highway construction projects and those tradespeople and workers hired to work on the project. It applies consistent wage and benefit regulations based on various crafts such as plumbing, electrical work, carpentry, roofing, etc. Wage data is managed by the Wage and Hour Division (WHD) of the United States Department of Labor. The department collects and reviews information every year to ensure wages remain fair and consistent using information collected from contractors and subcontractors as well as members of Congress, trade associations, and building trade unions as required. This information is then reviewed and analyzed before it is compiled and made available to the public on the Department of Labor website.

What is Certified Payroll?

Companies awarded a government contract must submit a federal form WH-347 every week to the managing government agency that lists:

• Each employee
• Wages
• Benefits
• Type of work
• Hours worked
• Withholdings and gross wages
• Statement of compliance

Information must be accurate and adhere to the state county-based wage rates. These rates can be found online using the wage determination (WD) number. If you do not follow the certified payroll requirements, there are tough penalties for violations. Therefore, you should always work with a payroll expert who understands the process. Certified payroll software is your best and most affordable option to ensure you are adhering to best practices.

Why Use Certified Payroll Software?

Certified payroll software provides the tools you need to ensure prevailing wage designation is used and everything is tracked accurately from day one. Working in hand with effective time tracking software your HR/payroll team can avoid issues and penalties associated with improper filing. You can ensure consistency in paying the prevailing wage and fringe benefits due to each laborer performing similar roles.

What is Required for DBA Compliance?

To remain compliant, Davis Bacon certified payroll requirements include:

• Paying employees weekly
• Documenting and submitting the WH-347 form

Submissions are “certified” when the contractor or business owner signs the statement of compliance on the WH-347 form. Compliance is also dependent on entering the correct job classification and ensuring the proper Wage Determination is used for all employees based on their category of work.

Penalties for Violating Davis Bacon

Any business with a government contract over $2,000 that violates the Davis Bacon Act can face steep penalties. While being forced to pay employees back wages and benefits is a given, you can face far more devastating penalties. Penalties can include contract termination and three-year debarment from bidding for further government contracts. If you are working on any form of government contract, the Davis Bacon certified payroll rules could apply to you, as there are over 60 federal statutes to which the Act applies. By introducing certified payroll software, you can ensure you remain compliant and don’t lose the privilege of bidding for further government contracts.

The Benefits of Certified Payroll Software

Certified payroll software offers the following benefits:

• 100 percent accuracy for hours
• Clear tracking of payroll activity and operations
• Certified payroll alignment across all roles for each employee
• Easy assignment of certified payroll application to automatically classify each employee and hours worked
• A certified payroll report
• Customized “certified payroll” cost codes that adhere to local wage and benefit policies for each employee
• Records for all employee timesheets for easy review
• Employee access from any job site making it easier for multiple projects
• Automatic tax filing
• Self-serve options for employees
• Reduction of human error

Using a compliant Davis Bacon Act certified payroll software and working with a vendor specifically experienced in the complexities of certified payroll allows you to avoid penalties, ensure workers are paid under the correct designation and remain compliant to all rules under the Davis Bacon Act.

About the Author

Kayla is the Marketing Manager at Paypro Corporation overseeing all inbound and outbound marketing and sales efforts. She has 7+ years of experience working within the B2B and SaaS based solutions space and thrives on creating messaging and campaigns that introduce products and services to those who need them most.