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Certified payroll is crucial for contractors or subcontractors working on government-funded projects. Employee compensation records are the exact details of how much each worker is paid for their work on a project.
The purpose of certified payroll is to ensure workers are paid fairly and in compliance with wage laws. Failure to comply with this requirement can result in severe consequences, including legal actions and penalties.
What is a Certified Payroll?
Certified Payroll is a weekly salary report that includes detailed information on how much each employee was paid to work on a specific project. This report must be completed and submitted by the contractor or subcontractor so everything stays under the wage laws.
The information included in the certified payroll report includes
- The name and address of the business
- Job Classification
- Applicable wage rate
- The employee’s name
- Hours worked
- Gross wages earned per week
- Hourly and other deductions from gross wages
- Net pay rate
All these details help the government to track worker wages and ensure that they are being paid properly. It is also used to monitor compliance with the applicable wage laws, underpayment, and unfair wages.
When Employers are Required to Use Certified Payroll
Certified payrolls are mostly used by contractors and subcontractors who work on projects that are over $2000.
This includes public works projects, state and federal highway construction, water resource development projects, and any other project that the government funds.
Contractors must submit certified payrolls each week to show how much they paid their employees and to make sure everyone is abiding by the wage laws. Form number WH-370 must be used for the weekly report.
Penalties For Not Using Certified Payroll
Employers who fail to submit certified payrolls when required can face severe penalties. This could include withholding of payments or disqualification from bidding on government projects in the future.
In some cases, employers may have to pay back wages and interest which would increase their costs considerably. Employers need to make sure that they comply with the certified payroll regulations at all times to avoid any kind of penalties or legal action.
Employers may lose their contracts if they violate any wage laws or regulations. Therefore, employers need to be aware of their obligations and take all necessary steps to make sure that the work they do is compliant with relevant wage laws.
How to Fill The Certified Payroll
The certified payroll report must be completed every week and submitted to the agency or department that is funding the project. As stated earlier, Form WH-370 must be used for this purpose.
Employers must keep track of their employee’s wages and deductions during the week and enter all the information in the form.
It is always a good idea to hire a payroll specialist who can help with filling out the form properly. It can be confusing and making mistakes can cause delays and penalties.
Certified payroll is an important part of government-funded projects and it should not be taken lightly. Employers need to stay compliant with the wage laws at all times to ensure that their workers are being paid fairly – failing to do so can result in severe consequences.
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