Certified payroll is a weekly payroll reporting process used to show that contractors and subcontractors are paying workers correctly on covered public construction projects. The report documents who worked, what they did, how many hours they worked, what rate they were paid, and whether fringe benefits were provided or paid in cash.
Under the Davis-Bacon and Related Acts, contractors and subcontractors working on federally funded or federally assisted contracts over $2,000 generally must comply when the work involves construction, alteration, or repair of public buildings or public works. This can include highways, bridges, schools, airports, water systems, municipal buildings, military facilities, and similar projects. Some state-funded projects may also have separate reporting rules, so contractors should review each contract carefully.
This is also why topics such as Financial Factors Construction Leaders Should Consider in 2026 often include labor tracking, job costing, payroll systems, and compliance documentation.
Prevailing Wage is the wage and fringe benefit rate the government requires for a particular type of work in a particular location. It is not simply the employee’s usual hourly rate.
The required rate may change based on the county or region, the trade classification, the project funding source, and the actual work performed. For example, one employee may work as a laborer on one task and perform work under a different classification later in the week. If the payroll system does not track that detail, the company may struggle to prove that the right rate was paid.
Regular pay is usually based on company policy or market compensation. Prevailing Wage pay is driven by contract and regulatory requirements.
Form WH-347 is the common federal certified payroll form used for Davis-Bacon reporting. Contractors use it to organize weekly payroll information and submit a statement of compliance.
The form generally includes the contractor or subcontractor name, project name, project number, payroll number, workweek ending date, employee name, identifying number, work classification, daily and weekly hours, overtime, rate of pay, gross wages, deductions, net wages, and fringe benefit treatment.
The most common mistakes are usually simple, but expensive. Contractors may use the wrong wage determination, assign the wrong work classification, fail to separate hours by project or trade, miss overtime requirements, mishandle fringe benefits, or submit reports late. Another common problem is treating the form as just paperwork, when it is really an audit trail.
Contractors should also make sure the statement of compliance is signed by the contractor, subcontractor, or authorized person who supervises payment. Prime contractors should confirm that subcontractor reports are submitted properly. Sales Tax Rules belong in a different compliance lane, but the same practical lesson applies: document the basis for the position before there is a problem.
Mistakes with certified payroll requirements can create serious consequences. Contractors may owe back wages, lose contract payments, face civil penalties, or be removed from eligibility for future public contracts. In more serious cases, incorrect reporting can contribute to broader legal exposure, especially when inaccurate submissions are treated as false certifications.
The risk is not limited to federal projects. State and local prevailing wage laws may add separate reporting obligations, penalties, and audit procedures. Contractors working across public and private jobs should make sure payroll, job costing, timekeeping, and accounting systems are aligned before the first report is due.
Yes. Subcontractors generally must prepare and submit their own payroll records for covered work. The prime contractor is typically responsible for ensuring subcontractor payrolls are collected and submitted properly, so both parties need a clear process before work begins.
Contractors should generally retain certified payroll records for at least three years after project completion, though some contracts or state rules may require longer retention. The safer approach is to confirm the requirement in the contract and applicable labor rules.
It can apply to both. Federal Davis-Bacon rules apply to covered federal or federally assisted projects, but many states and local governments have their own prevailing wage laws. Contractors should review the funding source and contract terms before assuming reporting is not required.
Yes, many agencies and project owners allow or require digital submission. The preferred system depends on the agency, contract, or funding source. Contractors should confirm the required portal, format, submission deadlines, and supporting documentation before filing their first payroll compliance submission.
For more than four decades, Bennett Thrasher has provided businesses and individuals with strategic business guidance and solutions through professional tax, audit, advisory, and business process outsourcing services. Contact Mike Reynolds, partner in charge of Bennett Thrasher’s Financial Reporting & Assurance practice, who has industry experience in Construction, or call us at 770.396.2200.
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