What is Certified Payroll and Who Needs It?
- Cost Construction Accounting
- Apr 2
- 3 min read
If your construction company works on government-funded projects, you have almost certainly come across the term certified payroll. But what exactly does it mean, who is required to submit it, and what happens if you get it wrong?
At Construction Cost Accounting, we help contractors across Southern California navigate certified payroll compliance so they can focus on building, not paperwork.
What is Certified Payroll?
Certified payroll is a special weekly payroll report required by the U.S. Department of Labor for contractors and subcontractors working on federally funded or assisted construction projects. It documents that workers are being paid at least the prevailing wage rates set by the federal government for the project's location and trade classification.
The standard form used is Form WH-347, submitted weekly to the contracting agency. It lists every worker, their classification, hours worked, pay rate, deductions, and net wages.
Who Needs to Submit Certified Payroll?
Certified payroll requirements generally apply to:
General contractors on federal or federally assisted construction projects
Subcontractors working on those same projects
Projects covered under the Davis-Bacon Act or Davis-Bacon Related Acts
California public works projects covered under state prevailing wage laws
In California, state prevailing wage laws are administered by the Department of Industrial Relations (DIR) and apply to public works projects over certain dollar thresholds. Requirements can vary by project type and contract, so it is important to verify requirements before bidding.
What is Prevailing Wage?
Prevailing wage is the minimum hourly rate that must be paid to workers on covered projects. Rates are set by geography and job classification, a framing carpenter in Los Angeles County may have a different prevailing wage than one in Riverside County. Fringe benefits (health insurance, pension contributions) are also included in the calculation.
Paying below prevailing wage on a covered project can result in serious consequences including back pay orders, contract debarment, and loss of the ability to bid on future government projects.
What Information Goes on a Certified Payroll Report?
Each weekly certified payroll report must include:
Employee name, address, and Social Security number (last four digits on some forms)
Work classification (carpenter, laborer, electrician, etc.)
Hours worked each day and total for the week
Hourly rate of pay
Gross wages earned
Deductions (taxes, benefits, etc.)
Net wages paid
A signed Statement of Compliance confirming the information is accurate
Common Certified Payroll Mistakes to Avoid
Certified payroll errors are one of the most common compliance issues for construction contractors. Watch out for:
Misclassifying workers under the wrong trade classification
Failing to include all hours worked on the project
Missing the weekly submission deadline
Not including fringe benefits in the wage calculation
Forgetting to get the Statement of Compliance signed
A single error can trigger an audit or delay payment from the contracting agency. Consistent errors can put your contractor license at risk.
How Construction Cost Accounting Helps
Managing certified payroll in-house is time-consuming and error-prone, especially when you are running multiple projects simultaneously. Construction Cost Accounting (CCA) provides certified payroll support for contractors across Southern California, including:
Preparing and submitting weekly certified payroll reports
Verifying prevailing wage classifications by county and trade
Integrating certified payroll with your job costing system
Supporting DIR compliance and DIR eCPR submissions
Catching and correcting errors before they become penalties
Frequently Asked Questions
Q: Is certified payroll required on all construction projects?
A: No. It is required on federally funded projects covered by the Davis-Bacon Act and on California public works projects above certain dollar thresholds. Always verify requirements before starting a project.
Q: How often do certified payroll reports need to be submitted?
A: Certified payroll reports must be submitted weekly for every week work is performed on a covered project, even if no work was performed that week (a negative report may be required).
Q: What happens if we miss a certified payroll deadline?
A: Late submissions can delay your progress payments from the contracting agency and may trigger compliance reviews. Repeated failures can result in back pay assessments or debarment from future projects.
Q: Can we outsource our certified payroll reporting?
A: Yes. Construction Cost Accounting handles certified payroll for contractors so your team can stay focused on the job site rather than compliance paperwork.
Q: Does construction job costing work together with certified payroll?
A: Absolutely. Accurate job cost accounting and certified payroll go hand in hand. When labor is properly classified and tracked by job and trade, your certified payroll reports are more accurate and your job costing is more precise.
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