What's a certified payroll report and when is it required?
A certified payroll report is a weekly document that contractors and subcontractors submit on federally funded construction projects. The standard form is the WH-347, published by the U.S. Department of Labor. It records every worker’s name, trade classification, daily and weekly hours, hourly rate, gross pay, deductions, net pay, and fringe benefits.
The requirement comes from the Davis-Bacon Act. When a construction project receives federal funding, all contractors and subcontractors on the job must pay prevailing wages and submit certified payroll weekly. The “certified” part means someone at the company signs a Statement of Compliance affirming that the wages paid meet or exceed the prevailing wage rates for each trade classification on that project. Reports go to the prime contractor, who submits them to the contracting agency.
Virginia also has its own prevailing wage law, effective since 2021, that applies to certain public works projects valued at $250,000 or more. If you’re bidding on state-funded work in Northern Virginia or anywhere in the commonwealth, check the project specifications carefully. State-level requirements may come with their own wage and reporting obligations on top of any federal rules.
Getting worker classifications right is critical. Every person on the WH-347 must be listed under their correct trade, whether that’s electrician, plumber, carpenter, or general laborer. The prevailing wage rate is tied to the classification, not the person. If a worker performs carpenter duties but is classified and paid as a laborer, that’s a violation even if the total pay seems reasonable. Misclassification is one of the most common triggers for labor compliance investigations.
Fringe benefits also need to appear on the report. If you pay fringe in cash instead of through benefit plans like health insurance or retirement, the report must break that out clearly. The base hourly rate plus fringe must meet the prevailing wage determination for that classification and geographic area.
The part that trips up most contractors is reconciliation. Your certified payroll reports must match your general ledger payroll records exactly. If the WH-347 shows one set of numbers and your QuickBooks payroll shows another, that gap will surface during an audit. Reconciling the two every single week is the only reliable way to catch errors before they become problems. Waiting until the end of the project or the end of the quarter creates a mess that’s expensive to clean up.
Falsifying certified payroll is a federal offense. Penalties range from fines and back-pay obligations to contract debarment, which means you lose the ability to bid on future federal work. Even unintentional errors that go uncorrected can lead to withheld contract payments and enforcement action.
If you’re taking on government projects, get your payroll tracking set up before the first worker hits the site. Your accounting software needs to handle prevailing wage rates by project and classification, and someone needs to review those numbers against your books weekly. Working with bookkeepers in Fairfax who understand prevailing wage requirements takes that burden off your plate and keeps your certified payroll filings accurate from day one.
Northern Virginia's Bookkeeping & Advisory Firm
First Step:
Tell Us About Your Business
Every engagement starts with a conversation. Tell us what's going on with your books and we'll give you our honest assessment.
More Questions
What's the difference between cash and accrual accounting for a professional services firm?
Cash accounting records revenue when you get paid and expenses when you pay them. Accrual records revenue when you invoice and expenses when you incur them. Most professional services firms can use either for taxes, but accrual gives a much clearer picture of how the business is actually performing.
Read answerHow should a healthcare practice owner pay themselves — salary, distribution, or both?
If your practice is structured as an S-Corp or PC, the answer is both. The IRS requires you to take a reasonable W-2 salary before taking any distributions, and getting that salary number wrong creates real audit risk.
Read answerHow do contractors handle change orders in their books?
Approved change orders increase the total contract value and should be updated in the WIP schedule immediately. Unapproved change orders are riskier and need to be booked as unbilled receivables with a reserve if collection is uncertain.
Read answerWhat are typical overhead rates for small construction companies?
Small residential contractors typically run 10-20% of revenue in overhead, while commercial general contractors land closer to 8-15%. Knowing your actual number is what separates accurate bids from ones that slowly bleed money.
Read answerHow do dental and medical practices account for supplies and inventory?
Most small practices expense supplies when purchased under the cash method. Larger practices, especially dental offices with high-value materials like crowns and implants, may need perpetual inventory tracking to manage costs accurately.
Read answerWhat is IFTA and how do I track fuel purchases for it?
IFTA is a fuel tax agreement that lets interstate motor carriers file one quarterly return instead of separate returns in every state. Tracking requires recording every fuel purchase with date, state, gallons, and cost, plus total miles driven per state for each vehicle.
Read answer
