Certified Payroll and Prevailing Wage: A General Contractor's Guide

TL;DR: Federally funded construction requires weekly certified payroll on Form WH-347 showing every worker's classification, hours, prevailing wage rate, and deductions, signed under penalty of perjury by a contractor officer. Miss a filing, misclassify a worker, or pay below the Davis-Bacon wage determination and the GC faces back-pay liability, contract termination, and potential debarment from public work for up to three years.

If your construction company is bidding federal or state public works projects, certified payroll reporting is non-negotiable. Miss a weekly filing, misclassify a worker, or underpay prevailing wages, and you face penalties ranging from fines to contract termination to debarment from public work. This guide covers what certified payroll is, how prevailing wage rates work, and the practical process every GC should follow on public projects.

What Is Certified Payroll?

Certified payroll is weekly payroll reporting required on federally funded construction projects and most state-funded public works. The contractor must submit a signed report showing, for every worker on the project, their:

• Name and address
• Social Security Number (or partial SSN in recent years for privacy)
• Work classification (electrician, carpenter, laborer, etc.)
• Hours worked per day and total for the week
• Hourly rate of pay
• Gross amount earned
• Deductions (taxes, benefits, other withholdings)
• Net amount paid
• Project allocation (which project the hours apply to)

The report is signed by the contractor under penalty of perjury, certifying that the payroll is accurate and all workers have been paid the required prevailing wages. That "penalty of perjury" language is not decorative. Submitting false certified payroll is a federal crime.

The Federal Form: WH-347

On federal projects, certified payroll is submitted on Form WH-347, "Payroll (For Contractor's Optional Use)." Despite the "optional use" language in the form title, the information WH-347 captures is mandatory; contractors can use WH-347 or an equivalent format as long as all required data is included.

WH-347 has two main sections:

Section 1: Payroll Detail

One row per worker per day, showing classification, hours, rate, gross pay, deductions, and net pay. Every worker who performed construction work on the project during the week appears here.

Section 2: Statement of Compliance

The signature block at the bottom. The contractor certifies that:

• The payroll is correct and complete
• Each person listed was paid the required prevailing wage
• No deductions were taken that aren't permitted by law
• Fringe benefits (if any) were paid properly

The Statement of Compliance must be signed by an officer or authorized representative of the contractor, not a bookkeeper or payroll clerk. The signer is personally liable for the accuracy of the statement.

Davis-Bacon Act and Prevailing Wage

Certified payroll requirements stem from the Davis-Bacon Act, a 1931 federal law requiring contractors on federal public works projects over $2,000 to pay laborers and mechanics at "prevailing wage" rates for the local area. Prevailing wages are set by the Department of Labor based on surveys of wages paid for similar work in the geographic area.

How Prevailing Wages Are Determined

The Department of Labor publishes wage determinations by county and by project type (residential, building, highway, heavy). Each determination lists prevailing hourly rates and fringe benefit rates for dozens of classifications (electrician, carpenter, plumber, laborer, cement mason, etc.).

On a federal project, the wage determination is attached to the contract documents. The contractor must pay every worker on the project at least the prevailing rate for their classification. Paying less is a violation.

Fringe Benefits

Prevailing wage rates have two components:

1. Basic hourly rate: paid in cash to the worker
2. Fringe benefits: paid either as cash or as bona fide benefits (health insurance, retirement contributions, vacation, training fund contributions)

A contractor can satisfy the fringe component by paying the fringe value in cash (simplest but creates a higher payroll tax base) or by providing qualifying benefits (reduces payroll tax but requires administrative tracking).

State Prevailing Wage Laws

In addition to Davis-Bacon, many states have their own prevailing wage laws ("little Davis-Bacon acts") that apply to state-funded public works:

• California: DIR prevailing wage law, applies to projects over $1,000 (with higher thresholds for certain work types)
• New York: State Labor Law Sections 220 and 230
• Washington: RCW 39.12 prevailing wage
• Illinois: Illinois Prevailing Wage Act
• Michigan: Various prevailing wage laws depending on project type

State prevailing wage rates are generally higher than federal Davis-Bacon rates for the same geography. On a state-funded project, contractors must pay the higher of the two. Eighteen states do not have their own prevailing wage laws, so only federal Davis-Bacon applies on federally funded projects in those states.

Certified Payroll Submission

On most federal projects, certified payroll is submitted weekly to the contracting agency (usually through the contract's project management system). The payroll period is typically the pay week ending Sunday or Friday, with the report due within 7 days after the end of the period.

Missing a weekly submission is a contract violation. Several missed or late submissions can lead to withheld payments, contract termination, or debarment from future federal work for up to three years.

Who Has to File Certified Payroll?

Certified payroll obligations flow through the contract chain. On a federal project:

• The general contractor files certified payroll weekly for all direct-hire workers
• Every subcontractor at every tier files certified payroll weekly for their own workers
• The general contractor is responsible for collecting sub certified payrolls and maintaining them on file

If a sub is late with their certified payroll, the GC is on the hook. Owners and contracting agencies enforce this by withholding payment from the GC until all required certified payrolls are submitted, even if the issue is a sub's failure.

Practical Playbook for GCs

Here's what experienced public works GCs do to stay compliant.

Before the Project Starts

1. Read the wage determination. Know exactly what classifications apply and what the prevailing rates are. Print a copy and distribute to the project manager and the payroll person.
2. Classify your workforce. Match every planned position on the project to a classification in the wage determination. Disputes about classification are one of the biggest prevailing wage risks.
3. Train your PMs. Project managers need to understand prevailing wage rules, especially around misclassification and fringe benefits.
4. Communicate requirements to subs. At the subcontract kickoff, confirm that subs understand they must pay prevailing wages and file weekly certified payroll. Put it in the subcontract.

During the Project

1. Track hours by classification. Every labor hour needs to be coded to a classification. Time tracking systems that default to "laborer" for every hour create audit problems.
2. Verify sub submissions. Every week, collect certified payrolls from every active sub and verify they're complete and signed. Don't wait for the owner to flag a missing filing.
3. Audit randomly. Periodically verify that sub payroll matches the hours their crews actually worked on site. Field supervisors can flag hours that don't match up.
4. Handle apprentices properly. Apprentices can be paid at reduced rates, but only if they're registered in a bona fide apprenticeship program. Unregistered "apprentices" must be paid at the journeyman rate.

At Project Close

1. Reconcile certified payrolls. Make sure you have a complete weekly record from every sub for every week of work.
2. File the final payroll. The last certified payroll should be marked as final, with a statement that no further work is being performed.
3. Retain records. Federal rules require retention of certified payroll records for at least three years after project completion.

Common Certified Payroll Mistakes

1. Misclassifying workers. Paying a carpenter's helper at the laborer rate when they should be a carpenter is a violation, even if the worker consented.
2. Not paying fringe correctly. If you don't provide qualifying benefits, the fringe amount must be paid in cash. Many contractors skip this and get hit during audits.
3. Assuming a project isn't covered. If a project receives any federal funding, even as a minority share, Davis-Bacon may apply. Ask before assuming.
4. Using an incorrect wage determination. Wage determinations change. Using an outdated one can result in underpayment.
5. Missing sub submissions. The GC is responsible for sub compliance. If a sub doesn't file, you're the one the owner withholds payment from.

The Compliance Connection

Certified payroll is just one of many compliance requirements on public works projects. At the same time you're managing weekly certified payroll, you also need to track:

• Current COIs from every sub (including Additional Insured endorsements)
• W-9s on file for every sub
• WC coverage verification
• Contractor licensing (including classifications that match the work)
• OSHA training records for workers on federal projects

Managing all of this in separate systems creates gaps. A sub can be current on certified payroll but expired on COI, and you find out only when the project manager runs an audit before final payment.

PaperBoss handles the non-payroll side of sub compliance documentation, tracking COIs, W-9s, licenses, and custom document types per sub per project. It doesn't generate certified payroll itself. That's typically done inside your payroll system, but it keeps the rest of the compliance picture organized so your closeout process isn't a scramble.

Frequently Asked Questions

Do certified payroll rules apply to salaried employees?

Executive, administrative, and professional employees are generally exempt from Davis-Bacon, but anyone performing construction labor on the project site must be paid prevailing wage regardless of whether their overall compensation is a salary.

What's the penalty for underpaying prevailing wages?

Penalties include back wages owed to affected workers, liquidated damages, debarment from federal contracting for up to three years, and in serious cases, criminal prosecution. Repeated or willful violations can end a company's public works career.

Can I offer workers their own bona fide fringe benefits instead of cash?

Yes, if the benefits meet DOL requirements for being "bona fide" (funded through an irrevocable contribution, not contingent on continued employment, etc.). Many contractors use union benefit funds or third-party-administered plans to satisfy fringe requirements.

Are certified payroll submissions public record?

Yes, generally. Many agencies publish certified payroll data online, and workers can request copies of payrolls they appear on. Treat certified payroll as public information even during the project.

What if the prevailing wage rate changes mid-project?

On Davis-Bacon projects, the wage determination in effect at the start of the project typically applies for the duration, even if the rates change. State laws vary. Check the contract and the applicable wage determination for effective date rules.

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This article is for educational purposes only and does not constitute legal or payroll advice. Consult a construction attorney or qualified payroll specialist for specific Davis-Bacon and prevailing wage compliance questions.