Completing a Certified Payroll Report

[00:00:00] Speaker 1: Hello and welcome to a how-to guide on creating the certified payroll report for federal Davis Bacon prevailing wage projects. A certified payroll report certifies to a public agency that the appropriate prevailing wages were paid to each worker. It also facilitates the reporting of fringe benefit payments that are made to individuals and to approved bona fide benefit plans. It is a requirement on construction projects built under the federal Davis Bacon and DBRA or Davis-Bacon related acts. These certified payroll reports must be submitted on a weekly basis. Here's an example of a weekly certified payroll report form. And you'll note that there are several forms available out there for your use on most projects. Your labor compliance program may require a specific form and in that case you should comply. It should be noted however that most labor compliance programs and federal agencies included will accept printouts from your full job cost accounting software packages as long as they understand where all the information is. The form that we are going to be using today is a federal form that is optional as long as you submit your payrolls to them with all the information on them. They cannot mandate what form that comes in. Here's a public works payroll reporting form for the Department of Industrial Relations in the state of California and you'll see that it even has a different look. Regardless of what the form looks like all must be accompanied with a statement of compliance. This will be signed by the person paying or supervising the payment of employees working on a prevailing wage project. And again they have to accompany every weekly certified payroll report. Once you begin working on the project payroll reports must be filled out and submitted for every week thereafter even when you perform no work. So on weeks where you do not perform work create a no work statement. Something that is acceptable is to create a payroll report with all of the part of the important information and simply state on it that no work was performed that week. In this session we are going to work through the process of creating a certified payroll using a federal Davis-Bacon prevailing wage determination. So these are the wage classifications and the rates that we will be using in this example. We have building laborers group one. Their base rate of pay is $26.50 per hour plus an additional $14.92 in fringe benefits. We're going to be using iron workers. They're ornamental reinforcing and structural iron workers. Their base rate is $33 per hour. Their fringes are $24 per hour. Their fringes are $24.40 per hour. We're using heavy equipment operators from the heavy construction portion of the Davis-Bacon rate group one. Their base rate is $36.13. The fringe benefits are $20.77. We will be using the federal wage and hour division form for reporting the certified payroll. You can obtain this by simply going to their website. It's called form WH-347. You find it on the U.S. Department of Labor website. And I'm going to leave this on for just a moment in case you are writing. If you can't print this or maybe you can do a print screen of this right now. If you're listening it is www.dol.gov/whd/forms/wh347.pdf. It is an operational functional PDF file and interactive file that you can save and use over and over again if you wish. And you can save it each time in your computer with the saved data. Again, it is not a mandatory form. It is an optional form. We're going to begin working through this form to show you how we would fill it out. To begin with, in the upper left hand corner, you will click either that you are the contractor. That is, you are the prime contractor or GC or a subcontractor. In our example, we are the contractor and this is your construction company name right here. For our purposes today, we are simply your construction company. Over here, we will include the address and we have it at 123 any street, every city, all states in America. In addition to that, we will put the project name. This should be the project name from the contract. So, if you have subcontractors, you should let them know what the project, the acceptable project name for their certified payroll reports are and have them include that here. That is not a good idea for them to use whatever name they would use for the project. We all know how projects over time take on their own unique name within an organization. This should be the official name. And then a project number, not the subcontractor's project number, but the project number that has been assigned to it by the awarding agency. We will also, on the left hand side, put a payroll number. We will begin our payroll numbering with number one on the first week that we approach the project. And then we will number consecutively throughout, even on weeks that we do not perform work on the project. And we will do that until we complete work on the project, even as a subcontractor. The next column over, we will state the date that the payroll period ends. In this case, it's May 19, 2012. And then immediately under that, you'll notice that we are going to be asked for day and date. So we must fill out Sunday, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, and the corresponding dates, 13, 14, 15, 16, 17, 18, and 19. Here you'll see that we have populated the entire certified payroll report with wages and wage earners. We will take each of these as a specific example of how to create the correct prevailing wage certified reporting. In this example, we have straight time, there will be no overtime recorded, and the fringes will be paid to bona fide plans. And so in this case, we have Joe Laborer. You'll notice that we must have his name and an identifying number. That number should probably be his, the last four digits of his social security number. Column two is not a requirement, is for the employer's convenience only, it is the number of withholding exemptions. You may or may not populate that, that is your choice. Column three is the work classification from the wage determination. You need to use precise language. So if the wage determination call these building laborers group one, you should do the same. Don't call them labor helpers or whatever you might call them within your organization. In column four, we enter all the daily straight time hours because again, this example is for straight time, no overtime. We total those hours and in this case, we have given him eight hours each day. So Joe Laborer is working eight hours each day Monday through Friday for a total of $40 or 40 hours in the week. In column six, we put the rate of pay. On the left hand side of this column, we put the base rate of pay, which is $26.50. On the right side of this column, we place the fringes that are paid in cash, or that is with this paycheck. Well, in our situation, because we are paying the fringes to a bona fide plan, in this situation, Joe Laborer only gets the base wage of $26.50 times 40, which is $1,060. And in column seven, we are going to place the gross earnings for this project on the top and the gross earnings for all projects on the bottom. We have an example of how this works later in this same certified payroll. But because this laborer, Joe Laborer, only worked on this project, we will only enter his gross amount earned for this project. In column eight, we have five columns for deductions. We have FICA and withholding tax that has been populated by the WHD. These columns right here that I have termed state income tax and city tax should be specific. So, you type in the appropriate deduction types for these two. And any other deductions that cannot be clearly stated in these four columns should then be placed in this other deduction column. There are other deductions that are not shown in the four columns to the left. We will describe these in the statement of compliance on the next page. And so, then, we have our total deductions of $50 and the net wages to be paid for the week of $1,010. Now, you'll notice that on our previous example, we have, or in this example, we have $10 that is shown in the other deductions column. We have to describe what that means. And so, in our statement of compliance, which you see in the lower right-hand corner, that form has a place where we are to describe any deductions that are not articulated. And in this case, we have Joe Laborer, under other deductions, we have $10 per hour for a tool loan payback. So, our company loaned Joe $100 for tools, and we're going to take it $10 each week, and we have to show that. Now, one thing to remember on this is that Joe must have signed a statement saying that it's okay for us to take this $10 each week. Now, we're just showing our public agency why we're taking this $10. Our next example will be straight time and overtime, where the fringes are paid to a bonafide plan. And in this case, we'll be using Mac Laborer, perhaps Joe Laborer's brother. We'll enter our daily straight time hours again. And now, we will enter our overtime hours. Now, you'll notice that we are only entering overtime hours on Davis Bacon Projects when we arrive at 40 hours in any given work week. So, on Davis Bacon Projects, overtime is anything over 40 hours in a work week. And so, in this case, we worked four 10-hour days, Monday through Thursday. And on Friday, we worked 10 hours, or eight hours, excuse me, eight hours. And all of those eight hours go in the overtime column. Remember, in column six, we put our base rate of pay on the left and any fringes that we're paying in cash on the right. And above that, we enter our overtime rate of pay. Now, the overtime rate of pay on a prevailing wage project is the base rate times one and a half. And then, the note here says that we should always refer to the wage determination for additional overtime, holiday, shift differentials, and travel pay requirements as well. We're going to keep it simple today. And just remember that Mac Laborer gets a base wage plus one and a half times that rate for anything over 40 hours worked in a week. Then, we put his gross earnings for this project on the top. And if he had worked on another project, we would put the gross earnings for all projects on the bottom of column seven. In our next example, we will be dealing with straight time where the fringes are paid in cash or with this paycheck, in other words. And we'll be using Jeff Iron as our example here. And Jeff Iron is an iron worker. So, we enter his daily time again. We enter his base rate of pay on the left of column six. And the fringes paid in cash, or that is with this paycheck, on the right side of column six. And so, for our example, we have $33 in base pay and $24.40 that we will be paying in addition to that base pay. Our next example is straight time and over time with fringes being paid in cash, or with this paycheck. And in our example here, we'll be using Jerry Iron. Perhaps he's Jeff Iron's brother. Again, we enter the time works for the week. We give him his overtime hours. We show the rates for the base rate on the left and the fringes paid in cash, or with this check, on the right. We show the overtime rate of pay. Again, you'll notice that the overtime rate of pay is based on one and a half times the base rate. So, $33 an hour base rate times one and a half equals $49.50 for Jeff for these 10 hours of overtime that he worked. We will do the math and simply bring the gross earnings for this project over to the top. And since this was the only project he worked on this week, there will be nothing for the gross earnings for all projects on the bottom. In this example, this will be straight time, where part of the fringes are paid in cash with the paycheck, and part of the fringes are paid to bona fide plans. We'll be using Franco Operator for our example here, and he is a Heavy Equipment Operator, Group 1. Again, we enter his daily time. We enter his base rate on the left and his fringes that we're paying in cash on the right, and you'll notice that we're paying $10 in fringe benefits along with the paycheck. Now, we're going to be using Section 4C of the Certificate of Compliance to show how the difference between $20 and $77, that would be the fringes from the wage determination, and the $10 that we're paying in this paycheck is being paid. So, in our example, there will be $14.40 paid directly to a bona fide prevailing wage plan. And on our certification of compliance, you will see that we have under where the fringe benefits are paid in cash. If there is an exception to all of them being paid in cash, we must explain it. So, here we have articulated it, Power Equipment Operator's Group 1, $10.40 per hour is paid directly to XYZ pension. And $4.40 is paid directly to a health plan. In our next example, this employee worked on a different job in addition to this one during this pay period. We'll be using Hernando Operator for this example. Again, he is an Equipment Operator, Group 1. We enter his daily work time. We earn, or we give him his gross earnings for this project on top, and the gross earnings for all projects on the bottom. So, if we did the math, we'd realize he worked 20 hours on this project, $922.60, and he worked 20 hours somewhere else for the same rate, let's say, just to keep it simple. So, his gross earnings for all projects is $1,845.20. And then the deductions that we see on the right would be from all projects upon which he worked for the week. In our next example, this employee performed duties within two separate labor classifications during this week. It's actually okay, also, to separate hours within a work day, as you can see that we have done here for Sam, laborer. And in our example, Sam worked as a laborer, Group 1, and as an Equipment Operator, Group 1, on the same day. So, we'll enter his daily hours for each classification and total those hours, just as we have done for every other example. We will enter the appropriate wage rates per the wage determinations. So, in the case of the laborer, he earns $26.50 per hour base rate. In the case of the operator, he earns $36.13 per hour. Now, the way this is going to work is that we will stack each of his labor classifications on top of each other. So, in this case, we have two. But if he worked in three different classifications, we would put them all together so that our labor compliance people will be able to understand what we're doing in the next column. So, in our next column, where we would normally place the gross amount for this project and the gross amount for an additional project, we are simply going to show the gross amount of work as a laborer in the top part. We will show the gross amount for work as an operator in the bottom portion or the top portion of this line. And then we will show the gross earnings for all classifications at the bottom. Now, if he happened to work on more than one project, we would have to subdivide this again. And that is an acceptable practice within most certified payroll arenas. Now, you'll notice that we only have the deductions on one line because the total check deduction is really all we're interested in here. And then, finally, the last thing that we have to do is to fill out the certified or the certificate of compliance. And this is the last page. It's actually page two of the two-page report that you can download that I explained to you earlier. And the way this works is you'll simply put a date, the name of the person filling this out, and the title. Your construction company actually populates when you fill out the certified payroll report, but you will have to fill in the name of the project again. This is the first and main ammunitions complex. And so, what it says is that we're certifying that the persons employed by our construction company at the first and main ammunitions complex, that during the payroll period commencing on the 13th day of the fifth month of 2012 and ending the 19th day of the fifth month in 2012, that all persons employed on this project have been paid the full weekly wages earned and that nothing has been taken away from that person. So, here's our company name again. Again, we've already explained where this comes from. And there was one other that we didn't see, but Jeff Iron had other deductions of $400. And this would be a court-mandated child support. So, a while ago, I mentioned that Joe Laborer had to sign a statement saying that it was okay for us to deduct his $10 a week for the tool loan payback. Jeff doesn't have to sign anything for this court-mandated child support. Many labor compliance officials will want us to do that, but if it's a court mandate, they may ask us to see that. We will click where fringe benefits are paid to the approved plans or funds or programs because, remember, some of our fringes are being paid to a fringe benefit program or plan. Now, we don't have to explain any more than that on this weekly certified payroll report because, at the beginning of the project, we created what is known as a fringe benefit statement. A fringe benefit statement is simply something that is generated on our company letterhead or on any form that we would choose for federal Davis-Bacon to show our labor compliance or our agency where the fringe benefits are being paid. And we will probably have to furnish numbers and addresses and so on, telephone numbers, contact information, and so on in those. In 4B, where the fringe benefits are paid in cash, we would also have to check this because we know that some of these fringe benefits have been paid in cash. And then, of course, we've already explained how that in this area, when we are paying part of the fringes in cash and part to a bona fide fringe benefit plan, we have to show where the additional is going because the fact that we paid $10 out of this $24.40 in cash and we didn't explain it somewhere would raise a red flag. And so, this lowers the red flag immediately and then they can go to our fringe benefit statement and simply find out where those plans are and how we are funding them. And then, finally, on the bottom, the name and the title of the person filling out the report. And this is being signed then over here under penalty of the law and it carries quite a lot of weight. So, that is how you fill out the certified payroll report and its accompanying certification of compliance. I hope that this how-to guide was helpful. It was how a certified payroll report is created for prevailing wage projects.