Certified Payroll Software for construction companies handling public works

It’s a position many general contractors and subcontractors have been in: securing a lucrative government-funded public works project only to realize the complexity of prevailing wage payroll. Managing certified payroll and meeting federal and state regulations can be challenging and risky — failure to complete the process accurately can lead to penalties and lost growth opportunities. However, companies and contractors who can manage a streamlined certified payroll process can stay in compliance and make themselves available to potential new projects. 

In this article, we’ll dive into certified payroll for public works projects and how automated software like hh2 can streamline processes and reduce the risk of errors.  

What is Certified Payroll?

So, what is certified payroll? Certified payroll is a weekly report that contractors have to submit to the federal government to verify they are paying their employees prevailing local wages and benefits. It applies to all government contractors and subcontractors, including sending reports on any workers on government-funded construction and public work projects.

Prevailing wage is the minimum hourly rate paid to workers on public projects. It varies by area and type of work. At a federal level, the Davis-Bacon Act ensures that workers on construction projects are paid the prevailing wage. State-level prevailing wage laws can also dictate prevailing wage. 

To comply with certified payroll requirements, contractors and subcontractors must complete and turn in certified payroll, or Form WH-347, to the Department of Labor each week they pay hourly construction workers. As part of the form, contractors report on the type of work performed and the total hours for each crew member. Certified payroll ensures contractors pay laborers the local prevailing wage for their occupation and provide employee benefits like health insurance or retirement plans.

Certified payroll applies only to in-site workers performing physical labor, not salaried or office employees. It is a legal requirement for government-funded and public works construction projects. Failing to follow certified payroll rules can put your company at risk for earning future government project bids. 

Why Certified Payroll Compliance Is So Complex 

Payroll is always complicated, but especially when certified payroll is involved and a new group of considerations and regulations is added. Understanding the reasons behind the complexities and the nuances of certified payroll can help contractors and payroll teams approach it strategically. 

Here are four common challenges and reasons why Davis-Bacon certified payroll is so complex:

• Strict requirements. Certified payroll has to be reported weekly and follow strict formatting. It also requires specific details, such as the number of hours worked and the type of work performed. It isn’t something companies can do once and forget about it — it requires continual effort and attention. 
  
  
• Multiple wage determinations. Calculating the same hourly wage for every employee is relatively simple. Unfortunately, there isn’t one single prevailing wage. Instead, the minimum hourly rate varies based on location, type of work, and job coding. Payroll teams have to know the determinations for every employee. Even on one project, different types of workers may have different prevailing wages, which essentially means a unique payroll calculation for every employee. 

• Rates and benefits. Aside from wage determinations, prevailing wage also has variables, such as union rates (which can differ from prevailing wage rates) and job classifications. Contractors can pay prevailing wage in an hourly rate or as fringe benefits, but adding benefits to the equation adds another layer of complexity. Benefits like health insurance, paid time off, or tuition reimbursements must also be considered, calculated, and reported alongside hourly payroll. 

• Non-compliance risk. Certified payroll comes with real consequences. If companies don’t submit certified payroll on time or complete it properly, they risk fines, project delays, and disqualification from future government-funding project bids — all of which can have significant long-term effects on a company.
  
  

Difficulties of Manual Certified Payroll Reporting 

Clearly, certified payroll reporting is complex. Many contractors aim to process payroll manually, which can create a ripple effect of negative outcomes. 

First, manual certified payroll reporting requires re-keying timecard data from paper to PDF or spreadsheets. For every employee on the project, a member of the payroll team has to track down the physical timecard and manually move it to a new system. That process can easily lead to errors if the time is hard to read or a number is transposed. And because of the strict formatting of WH-347 construction payroll reporting, a single error can cause significant compliance challenges. 

Disconnected time tracking and payroll systems can also lead to errors. Even if a company uses a digital time tracking system and a digital payroll system, information still must be moved manually between the two systems. Disconnected systems often don't sync well, which can cause headaches and additional manual work. 

Certified payroll reporting has strict requirements, including completing state forms, Form WH-347, and using the right submission forms. Completing the forms properly involves a steep learning curve — and lots of time to ensure every box is filled correctly. Those details are challenging for manual payroll processing.

How Certified Payroll Software Solves the Problem 

Manual certified payroll processing can be cumbersome and challenging, but certified payroll and prevailing wage software simplifies and improves certified payroll processing. Instead of working through numerous details and risking manual errors, contractors and payroll teams can easily organize, calculate, and submit certified payroll forms. Contractors know they can trust hh2 Remote Payroll for certified payroll. 

Here are just a few benefits of certified payroll software:

• Automates WH-347 and state form generation. Payroll software is designed around the nuances of form creation. Instead of manually moving information between systems and populating forms, hh2 creates automated forms so contractors can easily submit reports to state portals or via PDF.  

• Syncs time data directly from the jobsite. Instead of operating with two different systems for time tracking and payroll (often using manual time cards), certified payroll software connects the data and automatically syncs time data. hh2 allows for mobile time tracking options that feed directly into certified payroll. 

• Maps classifications, wage rates, and deductions automatically. Certified payroll software makes it easy to code projects based on job type and prevailing wage. That means payroll teams aren't left alone in their complex payroll calculations. With hh2, contractors can be audit-ready with documentation stored securely in the cloud. 

• Supports union rules and multi-job workers. An integrated, automated system makes it easier to know and understand the unique situation for each worker. With integrated systems, payroll teams don’t have to manually move data. hh2 is built for ERP integration with Sage, Vista, Spectrum, Foundation, and other leading platforms, so payroll teams can seamlessly pull in union wages for a smooth payroll experience. 
  
  

Processes to Ensure Compliance 

Many of the challenges of certified payroll center around compliance. Any errors in manual processing or incorrect forms ultimately cause a construction company or contractor to fall out of compliance, which can lead to costly fines and penalties. 

Certified payroll software is a powerful tool for staying in compliance. But it works best when paired with other processes. For best results, adopt compliance-focused workflows in addition to the payroll software. 

Here are four best practices for staying in construction payroll compliance:  

• Automate time collection and approval workflows. Manual processes lead to errors, slowdowns, and missed steps. The best payroll and compliance results come from automated, integrated systems. Contractors can automate time collection using certified payroll software like hh2 (no matter where the jobsite is located) and create custom approval workflows. That means no step is skipped and no roadblocks slow things down. Plus, payroll software keeps a record of timecards and the approval process, so it’s easy to check compliance and demonstrate compliance in an audit.
  
  
• Map wage rates by job and classification upfront. Compliant payroll processes start with accurate information. Instead of changing job classifications down the line, start with accurate wage rates and classifications. With a clear understanding of each worker’s job and wage, moving through the rest of the certified payroll process is much simpler. 

• Validate data before report submission. Similarly, confirming data before generating certified payroll reports is incredibly useful. Once the reports are processed, it’s more difficult to make changes. By double-checking the data before creating the report, contractors can avoid potential errors and lost time from having to make changes. Certified payroll software can automatically validate the data to ensure everything is accurate and complete. 

• Use hh2’s reporting engine to generate and export on demand. hh2 simplifies data extraction, making it easy to create reports as needed. Contractors can pull reports to ensure accurate data and generate certified payroll forms as needed.  
  
  

hh2: Your Certified Payroll Platform 

Certified payroll is a critical requirement of every public works project. It brings challenges, but creating a smooth certified payroll process and staying compliant with prevailing wage can open contractors and construction companies to additional public works projects.

The problem is that many contractors process certified payroll, which is time-consuming and can lead to costly errors. Successful contractors lean into software to automate the process and reduce errors.

hh2 is the streamlined solution for certified payroll, making it easy to stay compliant and accurate. With hh2, contractors can leverage public works projects without the headaches of manual certified payroll processing.

Learn more or request a demo.