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What Is Certified Payroll Administration? Here’s What You Need to Know

March 25, 2024

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Certified payroll is a unique kind of payroll report that may be important and even legally required for your business to function properly. It notably differs from standard payroll administration practices, so it is essential to understand the differences. Take a closer look at certified payroll administration, and discover why outsourcing this service could be an effective solution for your needs.

What is Certified Payroll?

Certified payroll administration is a process that involves carrying out weekly payroll reports specifically for contractors working on projects partly or fully supported by federal funds — and which total a minimum of $2000. This type of payroll reporting is carried out through Form WH-347, which must be submitted to the Department of Labor every week the contractor works on the relevant project. This differs from standard payroll administration in that certified payroll reporting must meet these extra requirements to remain legally compliant.

Form WH-347 includes information such as employee details, wages, benefits, the number of hours worked, and the nature of the work performed. Additionally, this form requires a statement of compliance in which you must claim that you are paying your employees the prevailing wage and that all information in the report is accurate.

PREVAILING WAGE

The prevailing wage is the legally considered fair wage for hourly workers as determined by a number of laws and acts, including the Davis-Bacon Act. Prevailing wage requirements vary depending on where your business and workers are located, as the Department of Labor conducts surveys of average pay for workers in a particular area who perform specific occupations. That means that a state with a higher average wage for construction workers, for example, will have higher prevailing wage requirements than states with lower average wages. The Department of Labor can provide the prevailing wage standard for your particular area.

The Certified Payroll Process

The majority of the certified payroll process lies within filling out Form WH-347. This form contains six primary sections for relevant information.

  • Business Name
  • Business Address
  • Payroll Number (The number of weeks worked under federal contract)
  • Week Ending (The last day of the reported work week)
  • Project and Location
  • Project or Contractor Number (Found in public works project contract)

In addition to those six sections, you will need to provide the following information about each employee working on the contract.

  • Name
  • Last Four Digits of SSN
  • Number of Withholding Exemptions (Leave blank if not applicable)
  • Job Classification
  • Number of Hours Worked
  • Pay Rate Including Fringe Benefits (Must be compliant with prevailing wage requirements)

Benefits of Certified Payroll Administration

Having certified payroll administration services take care of your requirements will leave you more time to focus on your business without having to worry about the consequences of failed compliance. The consequences can be serious and include some of the following penalties.

  • Withheld payments
  • Debarment from future contracts for up to three years
  • Criminal prosecution for fraud
  • Termination of your federal contract

Certified payroll administration services ensure that you avoid those penalties and can help avoid some of the most common mistakes often seen in certified payroll reports done directly by businesses. Some of these common mistakes include the following.

  • Filing late
  • Misclassifying workers
  • Misclassifying your business' occupational classification
  • Inaccurate reporting

Certified Payroll Administration from SPLI

At SPLI, we can offer certified payroll administration services that help your business remain compliant, leaving you time to focus on the actual running of your business. Our APA-accredited specialists have the experience necessary for your business to approach government contracts with confidence. Get in touch with our team today to get started.

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