Davis-Bacon Act and the respective state “mini Davis-Bacon Acts” impose a condition on construction projects. According to it, every federal and state public construction project that is subjected to prevailing wage laws requires certified payroll reports. Certified payroll reports are a collection of workers’ information, including their wages, working hours, classification, benefits, and any other deductions. The compliance statement will certify that the provided information is complete and accurate. Certified payrolls are much more complicated than they appear, and contractors need to be careful while dealing with them. Here are some common payroll mistakes that contractors should avoid.
Completing CPRS without Any Training
It can be challenging to prepare an accurate and on-time report of fringe benefits, classifications, and deductions. You may think you need to be a “Certified Payroll Professional” to prepare CPRs that involves an application process and exam. But it is not necessarily true, but you can manage things better if you have some training. As the project becomes larger, creating accurate reporting payrolls becomes more difficult. Using payroll software or hiring a well-trained person for making reports will be a good idea for such complex projects.
Workers Misclassified
The workers should be appropriately classified for getting the prevailing wage rate” of that type of work. You need to pay wage restitution for an incorrect classification. It is also necessary to notice if a worker is providing labor under two or more work classifications. Worker’s Misclassification may result in being failed to pay less than the minimum wage for their work. It can negatively affect the benefits and protections of workers.
Incorrect Time Record
Inaccurate time records can easily lead to fines and penalties. The most important thing is to be sure that all your workers clock in and clock out every day. Counting shift hours for paying proper wages is not a good idea because of lunch breaks and overtime. The best way of estimating their payment is to match reference sheets with timesheets.
Incorrect Regulations or Forms
Every state has its unique forms, regulations, and submission requirements for each project type. It is better to contact a local attorney or accountant to be compliant with the state’s requirements. You’ll be provided with a package containing a sample form and submission requirements. By doing this, you can avoid the mistake of submitting the wrong forms.
Failing To Keep Records
Contractors should keep payroll records for a specific period on both federal and state prevailing wage jobs. For federal jobs, contractors should keep payroll records even after three years of project completion. The period for retaining payroll records for state projects is around two to four years. If they can’t produce reports for any audit, some fines and potential penalties will be imposed.
Takeaway
Proper execution of certified payroll reports is challenging, and no one wants to deal with an audit. Contractors can avoid penalties by hiring trained professionals for keeping records and by proper classification of workers. Make sure that you’ve taken the right form. The proper record of time and information should be kept and be saved even after project completion.
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