If you have ever worked on a project funded by the government as a contractor or subcontractor, you should already know that a certified payroll is the special type of payroll you have to submit. If you’re looking to bid on a new construction, renovation, or any sort of repair project for public property, certified payroll is something you’ll most certainly want to study up on–along with the Davis Bacon Act. If you fail to comply, you could face significant penalties.
What Is It?
The Davis Bacon Act, also simply called Davis Bacon or DBA, was passed during the Great Depression. By passing it, Congress was attempting to protect workers from low-paying work due to the intense competition to work on public works projects. Today, it’s often seen as just another hoop to jump through, but it’s one you most certainly don’t want to play around with.
Any contractor who has a federally-funded construction contract worth more than $2,000 has to pay their laborers the local prevailing wage in order to be in compliance with the Davis Bacon Act. It also requires these construction companies to offer fringe benefits for any work their contractors and subcontractors complete during the project period.
What To Remember
There are some certain things you’ll want to remember when considering a certified payroll job or anything that falls under the Davis Bacon Act’s requirements.
First and foremost, when using Federal Form WH-347, all certified payroll reports absolutely have to contain accurate information. This information includes knowledge about your company, your employees, your contracts, and your projects.
Moreover, every state in the USA has county-based wage rates under the Davis Bacon Act. You can find these wage rates listed online. They can also be found by filling in a few files and proving a WD (Wage Determination) Number. A Wage Determination number is what will be used as reference when finding a prevailing wage based on location and the contract action, or type of job that’s going to be completed.
Another thing: Certified payroll reporting requirements can most certainly get complicated and overwhelming. If you are taking on a federal job, you need to beware. If you end up violating the Davis Bacon act in any way, whether intentional or accidental, there are some stringent penalties.
How It Works
Any employee working with you on a certified payroll or Davis Bacon job has to receive the same fringe benefits and prevailing wage that are being provided to other similarly employed laborers within your region. This helps keep the pay-rate equal and fair across the board, and ensures that employees in the area are receiving fair compensation without a huge pay gap.
When it comes to complying with the Davis Bacon Act, you’ll also need to meet a few other requirements. For example, your certified payroll employees need to be paid their rate on a weekly basis. You also need to include certain details within a clearly document payroll file, such as each employee’s name and address along with the correct classification for their job. The file also needs to contain their pay rate, the daily and weekly hours work, and the amount they are actually being paid for the given project.
Once the contractor or business owner signs a statement of compliance, which is included with the WH-347 form, that is when a payroll submission officially becomes “certified”.
Follow The Instructions
When working a Davis Bacon job, it’s important that you do everything by the book. Fortunately, the Department of Labor provides through instructions about completing the certified payroll form. When it comes to filling out your paperwork, contractors need to pay special attention to ensure that they select the correct job classification.
They also need to ensure that they make the right wage determination for each employee on the product. This is critical to being in compliance with the Davis Bacon Act. Some categories of work are much easier than others, like bricklayers, plumbers, and painters. Others, however, are more general and harder to properly estimate, like that of a laborer. This can lead to confusion and an incorrect WD.
If you have a federal contract totaling over $2,000, beware about your payroll because the Davis Bacon Act most certainly applies. Reaching out to an expert for guidance may be the right step to ensure you are in compliance. Between 2009 and 2016 alone, the Wage & Hours Division collected more than $1.2 billion in back wages and hired another 350 investigators to continue tackling non-compliance cases.
Enforced payment of back wages is really just the beginning, however. Penalties for not complying with the Davis Bacon Act can go all the way into withholding funds for federal contracts, terminating contracts early, and even being preventing from signing on to a federal contract for an entire three years–all of which can bring serious harm to your company.
The Davis Bacon Act also applies in more situations than you may realize. More than 60 federal statues can invoke the provisions set forth by the DBA, so always be up-to-date on the rules and requirements, and ensure that you are in compliance.