Certified Payroll

What Is Certified Payroll?

Certified payroll is a government-required system for documenting and reporting worker pay on government-funded construction projects. By law, contractors and subcontractors must pay workers at least the prevailing wage rate set by the U.S. Department of Labor (DOL) for these projects and submit detailed weekly certified payroll reports showing each worker’s pay, work hours, and job classification, verifying that wages and benefits were provided as required.

If your company is working as a government contractor, getting certified payroll right is essential for staying eligible for public projects and avoiding costly penalties.

These requirements originate from the Davis-Bacon Act, a 1931 law created to prevent contractors from undercutting wages on federally funded construction jobs. In addition, the Service Contract Act is a federal law that requires contractors on federal service contracts over $2,500 to pay their service employees at least the prevailing wage and fringe benefits for the locality.  

Certified payroll plays an important role in helping the government confirm that wage laws and labor standards are being met. This added layer of oversight sets certified payroll apart from regular payroll: the standard process of paying individuals for their work, which includes calculating wages, withholding taxes, and issuing payments.  

When and Why Certified Payroll Is Required

Under the Davis-Bacon Act, certified payroll is required for any construction contract valued at $2,000 or more involving federal funding or assistance.  

The construction can involve the building, alteration, upkeep, or repair of public buildings or public works projects.

Project types include:

• Building construction: New, remodeled, or repaired public buildings

• Heavy construction: Dredging, water and sewer lines, dams, bridges, and flood control

• Highway construction: Roads, highways, runways, parking areas, and other paving projects not tied to building or residential work

• Residential construction: Single or multi-family residences (four stories or fewer) and related site work such as sidewalks, utilities, streets, and parking

During these projects, certified payroll requirements can apply not only to construction and other public works trades but also to related sectors that support building activities, such as electrical and plumbing services, landscaping tied to the project, truck drivers hauling materials, and equipment operators.

The enforcement of the Davis-Bacon Act is primarily handled by the Wage and Hour Division (WHD) of the U.S. DOL.

Understanding the Certified Payroll Report (Form WH-347)

The certified payroll report is the document that contractors and subcontractors use to demonstrate compliance with the Davis-Bacon Act’s wage requirements. This report is typically submitted each week using the Wage Hour Form WH-347. However, contractors may submit an equivalent form, such as a payroll system report, if it contains all required details and includes a signed Statement of Compliance.

The WH-347 captures detailed information for each worker on the project, including:

• Name and identifying number (such as the last four digits of the Social Security number)

• Work classification

• Hours worked each day and total hours worked for the week

• Hourly rate of pay (including wages and fringe benefits, if applicable)

• Gross wages earned

• All deductions (taxes, insurance, etc.)

• Net wages paid

The second page of the form contains a Statement of Compliance, which must be signed by an owner or authorized officer of the business to certify that all information is accurate and that workers were paid the proper prevailing wage and benefits.

Form WH-347 and its instructions are available on the DOL website.  

When completing Form WH-347, list each worker separately with their corresponding information. Be sure totals are accurate, deductions are clearly shown, and the Statement of Compliance is signed before submission. Missing or incorrect details can delay payment or result in penalties.

How to Submit a Certified Payroll Report

Certified payroll reports must be submitted weekly to the federal agency overseeing your contract, not directly to the DOL.  

The due date and submission address are usually stated in your contract. If they’re not, contact the project administrator or contracting officer for instructions.

Some agencies still accept paper copies by mail, but some now require electronic submission. This can include secure portals, email, or specialized payroll software designed to generate and submit certified payroll reports. Always confirm the accepted format before sending your report.

Tips for ensuring accuracy:

• Complete all sections of Form WH-347 (or its equivalent) thoroughly and legibly.

• Ensure all wages and hours match the applicable wage determination for the project.

• Verify each worker’s labor classification is correct.

• Double-check all totals and deductions before submission.

• Review the Statement of Compliance to be sure it accurately reflects the information provided.

• Retain all payroll records in case of an audit.

• Use payroll software to reduce calculation errors.

Failing to submit timely or accurate certified payroll reports can lead to significant consequences, including:

• Withholding of project payments until discrepancies are resolved

• Substantial fines and penalties

• Liability for liquidated damages owed to workers for minimum wage or overtime violations

• Termination of existing federal contracts

• Debarment from bidding on future federally funded projects for up to three years

Common Mistakes to Avoid with Certified Payroll

Taking time to understand frequent certified payroll mistakes can help you avoid delays, penalties, and payment issues.

• Misinterpreting federal rules: The DOL has specific requirements for certified payroll under the Davis-Bacon Act, and other federal agencies may have additional rules for certain projects. Make sure you're familiar with them.

• Overlooking state-specific requirements: Many states have their own “Little Davis-Bacon” laws with prevailing wage rules and reporting procedures that differ from federal standards. These can also apply to projects funded partly at the state or local level. Always check the project documents and state labor department guidelines.

• Incorrect worker labor classification: Assigning the wrong worker labor classification, such as listing a laborer as an equipment operator, can trigger wage violations. Make sure each worker’s classification matches the duties they actually perform.

• Missing or incomplete disclosures: Certified payroll reports must clearly show all hours worked, wages paid, and deductions taken. Omitting or obscuring this information, even accidentally, can delay project payments and prompt further investigation.

• Ignoring worker choice rules: In some cases, workers must be allowed to choose how certain fringe benefits are provided (e.g., cash in lieu of benefits). Not offering these options when required can lead to restitution owed to the worker.

Final Thoughts: Getting Certified Payroll Right

Certified payroll is a safeguard that helps ensure workers on government-funded construction projects are paid fairly and that contractors meet their obligations under the law.

If certified payroll is required for any of your company's construction projects, submitting accurate reports on time can help you avoid delays, penalties, and the loss of future contracts.

By understanding the rules, avoiding common mistakes, and taking advantage of resources that streamline the process, you can handle certified payroll with confidence.  

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