What is Certified Payroll? Definition, Requirements, and How to File Form WH-347

Certified payroll is a weekly reporting requirement documenting wages paid to workers on federal construction projects exceeding $2,000, mandated by the Davis-Bacon Act. Contractors and subcontractors must submit Form WH-347 certifying under penalty of perjury that workers received proper prevailing wages and fringe benefits. This guide covers the filing requirements, calculation methods, common compliance pitfalls, and when to invest in specialized software.

What is certified payroll?

Certified payroll is a legally mandated weekly statement documenting wages paid to workers on federal construction projects. When contractors sign the Statement of Compliance on the weekly payroll report, they're certifying under penalty of perjury that workers received proper prevailing wages and fringe benefits as required by the Davis-Bacon Act. Federal law requires contractors to submit weekly statements showing wages paid to each employee, and this isn't optional guidance.

The core purpose is wage verification and worker protection on projects funded with taxpayer dollars. Without weekly reporting, the government has no systematic way to verify that workers receive required wages.

Who must file certified payroll

All contractors and subcontractors at every tier must submit weekly certified payroll reports when working on federal or federally-assisted construction projects exceeding $2,000 with workers performing on-site construction work. Prime contractors bear ultimate responsibility for ensuring all subcontractors comply. Violations three levels down the chain become the prime's financial problem through joint liability provisions.

The stakes are real. Violations trigger back wage repayment, contract termination, three-year debarment from federal contracting, and payment withholding that freezes cash flow. DOL enforcement actions have recovered over $1.5 million in back wages from 35 employers in single initiatives, with company debarment.

Should contractors handle this themselves?

If you have a single federal project with fewer than 10 workers and someone on staff who can dedicate the time, manual processing makes sense. Consider hiring help when you're managing multiple projects at once with more than 10 workers, when compliance worries are keeping you up at night, or when potential back wage exposure could hit $5,000 or more.

Professional help ranges from bookkeepers with Davis-Bacon experience at $500-1,500 monthly to certified payroll services at $50-150 per report. Missing weekly deadlines, uncertainty about worker classifications, or withheld project payments are clear signs you need support.

The Davis-Bacon Act and prevailing wage requirements

The 1931 Davis-Bacon Act established the framework requiring prevailing wage payments on federal construction projects. The Act requires all contractors and subcontractors performing construction, alteration, and repair work under federal or District of Columbia contracts exceeding $2,000 to pay laborers and mechanics not less than the prevailing wages and fringe benefits for the geographic location.

Understanding prevailing wage components

Prevailing wages consist of two components: a basic hourly rate paid in cash and a fringe benefit rate that can be satisfied through bona fide benefit plans or paid as additional cash wages. For example, if the wage determination specifies a base wage of $34.52 per hour and fringe benefits of $7.00 per hour, the total prevailing wage obligation is $41.52 per hour.

Contractors satisfy fringe benefit obligations by contributing to bona fide benefit plans like health insurance while paying the base wage in cash, paying the entire prevailing wage amount as cash wages called cash-in-lieu, or using a combination where part goes to qualified plans with the remainder paid in cash.

Finding the right wage determination

SAM.gov serves as the single location where federal contracting officers obtain wage determinations for each contract. To locate the correct wage determination for a project, search by geographic location, type of construction, and contract award date. For contracts with extended work periods, federal regulations require that the most recent revision of applicable wage determinations be incorporated when options are exercised.

Certified payroll vs. regular payroll

Regular payroll and certified payroll diverge in critical ways. When submitting certified payroll, contractors certify under penalty of perjury that the information is correct and complete, that workers received full wages earned, and that no rebates or improper deductions occurred. This formal legal certification doesn't exist in regular payroll processing, similar to how expense management requires different documentation standards for business purchases.

Certified payroll must be submitted weekly regardless of normal pay schedules, and requires paying specific prevailing wage rates determined by the Department of Labor for each worker classification rather than whatever wage rates were agreed to with employees.

Form WH-347 and required information

Form WH-347 is the Department of Labor's optional template for certified payroll submissions. While the specific form itself is optional, the information it captures is mandatory under federal law. Form WH-347 consists of two pages capturing worker-level wage and hour data along with certification statements. The person who completes and signs the form must have authority to bind the contractor, typically the company owner, corporate officer, or authorized manager.

The DOL requires specific data points on every worker, every week:

• Employee identification: This includes the worker's full name, last four digits of Social Security Number, and current mailing address.
• Job classification details: This covers the specific labor classification from the applicable wage determination, designation as journeyworker or registered apprentice, basic hourly wage rate, and overtime hourly rate.
• Hours worked: This requires a daily breakdown showing each day of the workweek, separate rows for straight time and overtime hours, dates for each day worked, and total hours for the entire week.
• Financial information: This includes gross wages earned before deductions, itemized deductions for federal tax, state tax, FICA, and other categories, net wages paid after all deductions, and actual payment date.

Contractors complete Form WH-347 for direct employees only, but if serving as prime contractor, companies are also responsible for collecting every subcontractor's certified payroll and submitting the complete package to the contracting agency.

How to calculate certified payroll

Getting the math wrong costs twice, once in back wages and again in penalties. Accurate calculation starts with proper worker classification and wage rate application.

1. Calculate straight time and overtime wages

Calculate straight time wages by multiplying straight time hours by the straight time rate. For example, if a carpenter works 40 hours at $35.00 per hour, that equals $1,400.00. Calculate overtime wages separately by multiplying overtime hours by the overtime rate of 1.5 times the basic rate. If the same worker works 8 overtime hours, that's 8 hours times $52.50, equaling $420.00. Fringe benefits are paid at straight time rate for all hours worked.

2. Handle deductions and fringe benefits properly

Deductions must be itemized by category with separate columns for federal income tax, state income tax, FICA, and other deductions. Contractors cannot deduct tool purchases or rentals, damage to equipment or materials, lost or stolen items, uniforms required for the job, or any deduction that reduces wages below the prevailing wage requirement.

Much like proper bookkeeping practices that prevent costly errors, accurate certified payroll calculations require attention to detail and proper categorization. When satisfying fringe benefit requirements through bona fide plans, contractors claim credit by entering the hourly credit rate in the fringe benefits column and documenting actual contributions on Page 2.

Submission and record-keeping requirements

Contractors must submit certified payrolls within seven days after paying employees. Submit directly to the federal agency if they're a party to the contract, or to the applicant or owner who maintains records for transmission to the federal agency. Federal regulations require retaining all certified payroll records and supporting documentation for at least three years after completing all work.

Common challenges in certified payroll

Several compliance pitfalls appear repeatedly in DOL enforcement actions against construction contractors:

• Worker misclassification: This occurs when contractors assign workers to incorrect job classifications, resulting in underpayment of required prevailing wages. Misclassifying a carpenter as a laborer might cost $8-12 per hour in underpayments that accumulate quickly across hundreds of hours.
• Outdated wage rates: Companies frequently fail to update prevailing wage rates when new determinations are issued mid-project. For multi-year contracts, updated rates must be incorporated when options are exercised and on contract anniversary dates.
• Inadequate time documentation: Daily records that don't break out straight time versus overtime or clearly identify which classification the worker performed each day create enforcement vulnerabilities. Field supervisors who don't document classification changes in real-time force payroll staff to guess at proper wage rates.
• Improper deductions: These become Davis-Bacon violations when deductions for tools, uniforms, or damaged equipment reduce take-home pay below the prevailing wage, even when such deductions are standard practice on private work.

These challenges create enforcement vulnerabilities that can result in significant back wage liability and other penalties.

Special situations in certified payroll

Certain project scenarios create complications beyond standard weekly reporting:

• Multi-state or multi-county projects: These require tracking which wage determination applies to work performed in each jurisdiction. Contractors must maintain daily tracking of worker locations and apply the correct county's wage determination to hours worked in each area.
• Apprentices and trainees: Workers in these roles must be registered in bona fide apprenticeship programs approved by the U.S. Department of Labor and receive a percentage of the journeyworker wage rate based on their progression. Hiring workers as helpers or trainees without formal apprenticeship registration doesn't satisfy Davis-Bacon requirements.
• Material suppliers versus on-site workers: The distinction turns on where work is performed. Material suppliers, fabricators, and manufacturers working at off-site locations are not covered by Davis-Bacon prevailing wage requirements.

Understanding these special situations helps contractors avoid common compliance mistakes.

Best practices for certified payroll management

Strong compliance systems prevent problems before they occur in construction operations.

Establish standardized daily timekeeping

Track daily hours and specific labor classifications from day one using standardized daily timekeeping forms that break out straight time and overtime by classification. Train field supervisors to record actual work performed, not just hours worked. When electricians spend half a day as laborers, the timecard must reflect both classifications with separate hour totals.

Implement pre-submission review process

Create a review checklist that catches common errors before submission. Verify that worker classifications match actual work performed, wage rates match the applicable wage determination, and the Statement of Compliance is signed by someone with authority to bind the company. Have a second person review all certified payrolls before submission, because catching errors internally is vastly cheaper than DOL enforcement actions.

Maintain organized project files

Create project-specific files containing the applicable wage determination, all certified payroll submissions, supporting time cards and daily logs, fringe benefit plan documentation, and correspondence with the contracting officer. Physical or electronic, filing systems must allow instant retrieval of any worker's records for any week during a DOL audit, similar to how professional service firms maintain organized financial records for client projects.

Monitor subcontractor compliance

Prime contractors carry downstream liability for subcontractor violations. Put weekly subcontractor certified payroll collection and review processes in place. Don't just collect the forms but actually review them for proper classifications, correct wage rates, and complete documentation.

When to invest in certified payroll software

For the first 1-2 federal projects with under 10 workers, save the money and use Form WH-347 in Excel or PDF format. Manual process understanding is necessary before automating it. The inflection point hits when managing 3 or more concurrent projects or 10 or more workers on prevailing wage work, where certified payroll software pays for itself in 2-3 months.

Specialized certified payroll platforms offer cloud-based solutions designed for prevailing wage projects with educational resources, quick guides, and automated compliance checks. Many integrate with existing payroll and accounting systems to streamline the reporting process without requiring you to change your core financial tools.

Penalties and consequences of non-compliance

When violations occur, contractors face significant financial and operational consequences:

• Withholding of progress payments: This continues until certified payrolls are submitted or deficiencies are cured, effectively freezing cash flow across entire projects.
• Back wage repayment: Contractors must pay the full difference between required prevailing wages and actual wages paid, with interest.
• Contract termination: This results in immediate loss of the federal project.
• Three-year debarment: This penalty eliminates access to all federal government work.
• Civil fines and criminal prosecution: These apply for willful violations, including submitting falsified certified payrolls or intentionally misclassifying workers.
• Joint liability: Prime contractors pay for subcontractor violations, demonstrating massive financial exposure through downstream non-compliance.

Maintaining proper oversight of all subcontractor certified payroll submissions isn't just good practice but financial necessity.

Frequently asked questions

What happens if no work occurs during a specific week?

When no work occurs during a workweek, contractors must still submit a statement indicating no work performed for that week. This maintains the weekly reporting chain and documents project inactivity. Simply skipping weeks without submission creates compliance gaps that raise flags during DOL audits.

Can we use our own payroll form instead of WH-347?

Form WH-347 itself is optional, but the information it captures is mandatory under federal law. You can use your own payroll forms if they contain all required data elements including worker identification, classifications, hours worked, wage rates, gross wages, deductions, net pay, and the signed Statement of Compliance. Most contractors use WH-347 because it's specifically designed to capture everything the DOL expects.

Who has authority to sign the certified payroll form?

The person signing the Statement of Compliance must have authority to bind the contractor, typically the company owner, corporate officer, or authorized manager. Payroll clerks without signatory authority cannot certify the payroll because the signature certifies under penalty of perjury that the information is correct and complete.

How do we fix errors discovered after submitting certified payroll?

When you discover errors in previously submitted certified payrolls, immediately submit corrected payrolls and notify the contracting officer. The corrected submission should clearly indicate which previous payroll it's correcting and explain the nature of the error. If the error resulted in underpayment, pay workers the difference plus any interest due before submitting the correction.