It’s Thursday afternoon. Your certified payroll report is due tomorrow. You’re staring at scattered paper timesheets from three job sites, trying to reconstruct who worked how many hours on Monday. One foreman hasn’t turned in his crew’s time yet. Another site has conflicting numbers between the sign-in sheet and the written timecard. You need to certify – under penalty of perjury – that these hours are accurate.
This is what certified payroll actually looks like for contractors and subcontractors: gathering accurate time data across multiple sites to meet weekly federal deadlines. Miss the deadline or submit inaccurate certified payroll records, and you’re facing payment delays, federal penalties, and potential debarment from future public works projects.
The problem isn’t the WH-347 certified payroll form itself. The problem is what you’re certifying: that every hour reported is real, accurate, and properly documented. When your time tracking system is paper clipboards and foremen estimating hours from memory, that signature carries serious risk.
What Is Certified Payroll in Construction?
Certified payroll is a weekly report that contractors and subcontractors submit on prevailing wage projects, proving they paid covered workers legally required wages and benefits. Filed on federal form WH-347 (or approved state equivalents), certified payroll reports document every worker’s hours, wage rates, classifications, and deductions – then require an authorized company representative to sign under penalty of perjury that the payroll information is accurate.
The Davis-Bacon Act of 1931 established federal certified payroll requirements for federally funded construction projects exceeding $2,000. According to the U.S. Department of Labor’s Davis-Bacon and Related Acts guidance, weekly reporting is mandatory for wage compliance on federal construction projects.
Here’s what makes certified payroll different from regular payroll: you’re creating a legal record federal or state agencies can audit anytime. That signature means you’re legally swearing the data is accurate.
If an audit reveals buddy punching, rounded hours, or workers clocked in when they weren’t on site, you’re liable – regardless of whether it was intentional fraud or inaccurate timekeeping.
When Do Construction Contracts Require Certified Payroll?
Certified payroll is required on any construction project subject to prevailing wage laws – federal, state, or both.
What Is Prevailing Wage?
The Department of Labor (DOL) defines the prevailing wage as the average or majority rate of wages and fringe benefits paid to similarly employed workers in a specific occupation within the intended area of employment. It is used in federal contracts requiring employers to pay at least this rate to ensure local wage standards are not undercut.
Federal Davis-Bacon and Related Acts Requirements:
- Construction contracts exceeding $2,000 funded by the federal government
- Includes construction, alteration, or repair of public buildings and public works
- Applies to prime contractors and all subcontractors performing work on covered projects
- Related Acts extend prevailing wage requirements to federally assisted projects (HUD, DOT, DOE)
Contractors working on federally funded projects must verify that their government contract requires certified payroll submissions before project mobilization.
State Requirements Vary:
- California: Projects over $1,000
- Texas: No state prevailing wage law (federal rules apply on federal jobs)
- Florida: Limited requirements; federal rules apply to federal work
- Arizona: No state prevailing wage law for most projects
- North Carolina: No broad state requirement
Both Prime Contractors and Subcontractors Must Comply: Specialty contractors working as subs on prevailing wage projects must submit their own certified payroll – even if the GC also reports. Each tier bears independent responsibility for wage compliance and accurate reporting.
Why Certified Payroll Compliance Matters
Certified payroll isn’t just a box to check. It’s the foundation of every Davis-Bacon Act project in the construction industry – and the difference between smooth operations and serious consequences.
Worker Protection
Certified payroll ensures covered workers get paid what they’re legally owed. The Davis-Bacon Act exists because without it, contractors could undercut local prevailing wage rates by paying substandard rates on federal construction projects. Certified payroll is the enforcement mechanism that makes the law work.
When contractors cut corners on certified payroll, workers employed on these projects pay the price – literally. They lose wages, benefits, and the protections that prevailing wage laws were designed to guarantee. The Fair Labor Standards Act and Davis-Bacon and Related Acts work together to ensure workers on federally funded construction projects receive fair compensation.
Legal Compliance and Business Continuity
Here’s what most contractors miss: certified payroll compliance isn’t just about the current project. It’s about your ability to bid on future federal work.
Non-compliance can trigger:
- Contract payment withholding
- Debarment from federal contracts (up to 3 years)
- Back wage liability that compounds across projects
- Criminal penalties for falsification
The 2023 Davis-Bacon rule updates expanded cross-withholding provisions, allowing agencies to withhold funds across multiple contracts and even across different federal agencies. One compliance failure on a single project can now impact your entire federal portfolio.
Reputation and Competitive Advantage
Contractors with clean certified payroll records build trust with federal agencies. That trust translates into:
- Faster contract awards
- Fewer audits and investigations
- Stronger relationships with contracting officers
- Competitive advantage in future bids
Federal agencies track compliance history. Covered contractors with documented violations face increased scrutiny on future projects – even if they weren’t formally debarred.
Operational Efficiency
Done right, certified payroll streamlines your payroll process rather than complicating it. Automated time tracking eliminates manual errors, reduces administrative burden, and ensures real-time compliance across all your construction projects.
Contractors using modern construction time tracking tools with built-in certified payroll compliance spend 800+ fewer hours per year on manual data entry and payroll administration.
Workers check in biometrically. Hours flow automatically to your dashboard with cost codes pre-assigned. Your team verifies and submits – no reconstruction, no disputes, reduced liability.
Penalties for Davis-Bacon Act Non-Compliance
The Department of Labor doesn’t mess around with Davis-Bacon violations in the construction industry. The penalties are real, they’re severe, and they can hinder your ability to work on federal jobs.
Back Wages: Full Restitution Required
When underpayments are discovered, contractor or subcontractor entities must pay 100% of wage restitution to affected workers. This isn’t negotiable.
The DOL’s Wage and Hour Division recovered over $460 million in back wages during fiscal years 2024 and 2025. Construction industry violations consistently account for a substantial share of enforcement actions, and penalties have increased significantly under the 2023 Davis-Bacon rule updates.
Back wage liability compounds quickly:
- Multiple workers × multiple pay periods × wage differential = substantial liability
- Interest may accrue on unpaid amounts
- Liability extends to all workers affected, not just those who complained
Civil Penalties: Up to $10,000 Per Violation
Under the Copeland Anti-Kickback Act, contractors face civil penalties of up to $10,000 for each violation.
A single project with systematic payroll violations can generate multiple penalty assessments. Each falsified payroll submission, each affected worker classification, and each pay period can constitute a separate violation.
Criminal Penalties: Fines and Imprisonment
Willful falsification of certified payroll records or kickback schemes can result in criminal prosecution under 18 U.S.C. § 1001 and the Copeland Act:
- Fines up to $10,000 per violation
- Imprisonment up to 1 year per violation
- Federal criminal record
These aren’t theoretical penalties. The DOL actively refers cases for criminal prosecution when evidence supports willful violations on projects that receive federal funding.
Debarment: 3-Year Ban from Federal Contracts
Debarment means you cannot bid on or work on any federal or federally-assisted contracts for up to 3 years. The 2023 Davis-Bacon rule updates strengthened debarment provisions:
- Debarment now applies for “disregarding obligations” (not just “aggravated or willful” violations)
- Responsible officers can be personally debarred
- Related entities under common control can be included in debarment actions
- Debarment lists are public and checked by all federal agencies
Debarment is one of the most serious penalties. For most contractors, a 3-year debarment could mean the end of their business. New contracts and opportunities move on to other active industry players while you’re waiting out the three years.
Contract Termination
Federal agencies can immediately terminate contracts where certified payroll violations are discovered. This triggers:
- Loss of all remaining contract revenue
- Potential liability for government contract costs to re-procure the work
- Damage to the contractor’s reputation
- Difficulty bonding with future projects
Withholding and Cross-Withholding of Contract Funds
When violations are found, agencies must withhold sufficient funds from contract payments to cover back wage liability. The 2023 Davis-Bacon updates expanded cross-withholding authority:
- Agencies can withhold from any other covered federal contract held by the same contractor
- Withholding can occur across different federal agencies (not just the agency that awarded the original contract)
- Funds can be withheld from contracts held by related entities under common control
This means one project’s violations can freeze cash flow across your entire federal portfolio – potentially putting you out of business even before formal debarment proceedings.
And don’t forget the indirect costs:
- DOL investigation and audit expenses
- Legal fees for defense and appeals
- Administrative time defending violations
- Increased audit scrutiny on all future projects
- Higher bonding costs or inability to obtain bonds
Audit-ready documentation prevents these scenarios. Time data captured with biometric verification, jobsite geo-fencing, and timestamps creates a highly defensible, audit-ready record that supports contractors during investigations.
See how to protect your federal contracting eligibility with accurate time tracking data – schedule a demo.
What Must Be Included in Certified Payroll Form WH-347
The WH-347 certified payroll form requires specific information for every worker, every week. Missing or inaccurate information triggers audit flags and jeopardizes accurate reporting.
Required Information
Worker Identification:
- Full name, business address, last four of SSN
- Worker classification matching the labor category (electrician, apprentice, laborer)
Hours and Wages:
- Daily hours worked for each workweek day
- Total weekly hours and overtime hours (separately documented)
- Hourly wage rate meeting or exceeding prevailing wage rates
- Gross wages earned for the pay period
Deductions: All deductions must be itemized: federal/state/local tax withholdings, FICA, fringe benefits, union dues, garnishments, and other authorized deductions. Each payroll number must include complete withholding exemptions documentation.
Fringe Benefits:
Two compliance methods exist for contractors to pay fringe benefits:
- Paid Directly: Document type, amount, recipient, payment dates
- Credited as Cash: Add fringe amount to base wage and document combined rate
Auditors verify bona fide benefit plans were actually established and benefits paid. “We offer health insurance,” without enrollment records and premium payments won’t satisfy specific certified payroll requirements.
Statement of Compliance:
Every report requires a signed statement of compliance from an authorized representative (owner, officer, or compliance manager). This signature certifies that the payroll information is correct, that covered workers received required wages, and that the signer examined and verified the data.
That signature isn’t administrative – it’s a legal oath under penalty of perjury. A certified payroll professional typically reviews reports before executives sign.
How to Prepare Certified Payroll Reports
The Certified Payroll Checklist
Before the Week:
- Verify worker classifications match actual work performed
- Confirm that jobsite-specific classifications and prevailing wage rates are configured correctly for each project where workers may rotate during the same pay period.
- Confirm current prevailing wage rates on SAM.gov’s wage determination database
- Structure job costing to separate prevailing wage from commercial work
- Verify apprentice ratios comply with requirements
During the Week:
- Capture accurate daily hours contemporaneously – not reconstructed later
- Document overtime separately (Davis-Bacon Act requires 1.5x after 40 hours)
- Track fringe benefits paid or credited
- Note all deductions, worker addresses, and SSN updates
End of Week:
- Verify time entries against schedules and delivery records
- Calculate gross wages using the correct prevailing wage rates
- Complete WH-347 with all required fields, including the week ending date
- Obtain authorized signature on the statement of compliance
- Submit certified payroll by deadline (track separately for each project)
- Maintain backup documentation for audits through the project completion date plus the retention period
The checklist reveals the challenge: certified payroll isn’t about form literacy – it’s about data management. If your time tracking produces questionable hours, every downstream step inherits that uncertainty.
Contractors managing 10+ prevailing wage projects need automated data flows. When time data is captured biometrically and flows to job costing automatically, the certified payroll process becomes verification rather than reconstruction. This is where accurate reporting begins.
Common Certified Payroll Mistakes
Incorrect Worker Classifications
A worker doing electrician duties classified as a helper creates immediate underpayment against prevailing wage requirements. This happens when workers move between jobsites, but the job classification doesn’t update. Classification errors compound over time – weeks of underpayment become a significant liability.
In SmartBarrel, classifications are assigned at the worker and jobsite level rather than just at the employee level. A worker can be classified differently at each jobsite, with pay rates tied to the specific work location. Time captured at each site flows to payroll with the correct classification applied, reducing misclassification risk on certified payroll reports.
Missing Fringe Benefit Documentation
Contractors claiming fringe benefit credit must prove benefits were paid through bona fide benefit plans. You need enrollment records, premium payments, and worker acknowledgments. The U.S Department of Labor’s official Prevailing Wage Resource Book provides detailed documentation guidance.
Late Submissions
When certified payroll is due on Wednesday, and you’re tracking down timesheets from remote jobsites, you miss deadlines. Chronic late submissions signal poor controls and can affect bid eligibility on future federally funded projects.
Rounding Errors
Rounding 7.75 to 8 hours might match payroll system convenience, but prevailing wage laws require actual hours worked. The variance between reported and actual hours makes certification inaccurate and violates Davis-Bacon and Related Acts requirements.
Inadequate Backup
Auditors want contemporaneous time records – proof that workers actually worked certified hours. Paper timecards with foreman signatures weeks later don’t satisfy this standard. The gold standard is timestamped, worker-verified, jobsite-captured data that ensures accurate reporting.
Multi-Jobsite Tracking Failures
If your tracking system doesn’t capture workers moving between Project A (prevailing wage) and Project B (commercial) mid-week, payroll reports miss workers entirely or report wrong hours for the payroll period. Geo-fencing technology helps prevent this error by detecting which jobsite a worker is at when they check in, ensuring hours are allocated to the correct project and prevailing wage rates are applied accurately
Most mistakes stem from time-tracking limitations. Biometric time tracking prevents buddy punching. Timestamped check-ins eliminate rounding disputes. Real-time dashboards show which workers are at which job sites. The administrative burden shifts from reconstruction to verification.
What Happens During a Certified Payroll Audit
Certified payroll audits occur when agencies investigate potential wage violations. Triggers include worker complaints, random selection, or red flags in payroll reports (late certified payroll submissions, incorrect classification patterns, wage calculation mismatches).
The Department of Energy’s Davis-Bacon compliance guide outlines audit expectations on federally funded infrastructure projects.
What Auditors Examine:
- Original timecards and sign-in sheets
- Payroll registers showing actual wages paid
- Fringe benefit documentation and bona fide benefit plans
- Worker classification justifications matching labor category designations
- Apprentice registration and ratios
- Project contracts and wage determinations
- Tax withholdings and withholding exemptions
The Verification Process: Auditors compare certified hours against backup documentation. They may interview independent contractors and workers employed on the project, examining patterns. Does everyone work exactly 8.00 total hours? That suggests rounding rather than accurate reporting.
Contemporaneous Records Matter: Timestamped digital records with worker verification carry more weight than paper timecards signed weeks later. Certified payroll reports confirm worker attendance only when backup documentation is solid.
The Critical Point: The WH-347 is the summary. Auditors want source records proving those numbers are correct. If source records are foreman-completed crew timecards, you’re defending estimates rather than verified data.
Technology-based time tracking strengthens audit defense because the data trail is documented and structured. Biometric verification proves identity. Timestamps eliminate disputes. Integration flows show how field data became certified payroll numbers – the foundation of accurate reporting on construction contracts.
Frequently Asked Questions About Certified Payroll in Construction
Why is certified payroll mandatory for public works projects?
Certified payroll is required on many public works projects to help ensure workers are paid the prevailing wages and fringe benefits required by law. Weekly reporting provides ongoing accountability and allows contracting agencies to monitor compliance while work is in progress, rather than discovering underpayments only after a project is complete. The Davis-Bacon Act established these protections as a key part of federal labor standards on taxpayer-funded construction.
How often must contractors submit certified payroll records?
Contractors must submit certified payroll records weekly on most federal Davis-Bacon projects. State prevailing wage requirements vary by jurisdiction and may follow different reporting schedules. Exact due dates depend on the contracting agency and project-specific contract terms. Late or missing submissions can lead to withheld payments, compliance issues, and increased audit scrutiny.
Can certified payroll be submitted electronically?
Yes. Most agencies accept electronic certified payroll submissions, and the Department of Labor confirms that legally valid electronic signatures are acceptable on the WH-347 Statement of Compliance. Scanned or photocopied signatures do not meet the requirement. Verify submission requirements with each contracting agency before the first payroll period.
What documentation should contractors retain?
Retain all time records, payroll registers, fringe benefit documentation, worker classification records, wage determinations, apprentice certificates, and agency correspondence. Federal regulations require contractors to retain these records for at least three years after completion of work. Digital records should be detailed, traceable, and created at the time work is performed to support accurate reporting.
Do subcontractors submit their own certified payroll?
Yes. Subcontractors working on Davis-Bacon and Related Acts or state prevailing wage projects must submit certified payroll directly to the contracting agency or through the prime contractor. The GC’s submission doesn’t satisfy the sub’s independent obligation for wage compliance and payroll information accuracy.
Conclusion: Certified Payroll Compliance Starts at Clock In
If hours are self reported or entered manually, you are already at risk. The forms are straightforward. The calculations are mechanical. The real challenge is trusting the data you’re certifying. When you sign that WH-347 under penalty of perjury, you’re legally swearing hours are accurate. If your time tracking is paper clipboards and foreman estimates, you’re certifying approximations – not verified data.
Multi-state contractors managing 10+ prevailing wage projects can’t afford approximations. Compliance exposure from buddy punching, rounding errors, or missing entries compounds across projects and weeks. A 2% variance across 200 workers over 26 weeks represents thousands of hours you can’t defend in audits.
Technology addresses the data accuracy problem at its source. Biometric verification proves who worked. Timestamps prove when. Geofencing proves where. The administrative burden shifts from weekly reconstruction to continuous verification – a fundamental improvement in accuracy and efficiency for accurate reporting in the construction industry.
Certified payroll compliance isn’t about learning forms. It’s about building systems that capture accurate data in real-time under field conditions. Contractors who solve the data problem find compliance becomes routine rather than a weekly crisis, protecting their ability to bid on federal funding opportunities for years to come.
See how SmartBarrel captures audit-ready time data automatically from the field.
Request a demo to discuss your certified payroll requirements.
