How to Do Certified Payroll: A Step-by-Step Guide for Contractors (2026)

If you've just won a government construction contract, congratulations. Now you need to handle certified payroll — and if you've never done it before, it can feel overwhelming. This guide walks you through the entire process, step by step.

Step 1: Determine if Your Project Requires Certified Payroll

Certified payroll is required when:

• The project is federally funded or federally assisted (grants, loans, loan guarantees)
• The contract is for construction, alteration, or repair
• The contract value exceeds $2,000

Many state and local projects also require certified payroll under state prevailing wage laws (California, New York, Illinois, and about 30 other states).

When in doubt: Check your contract. Look for references to "Davis-Bacon," "prevailing wages," or "certified payroll." If any of those terms appear, you need to file.

Step 2: Find Your Wage Determination

Before you can pay workers correctly, you need to know the prevailing wage rates for your project's location and type of construction.

1. Go to SAM.gov (or use our free wage lookup tool)
2. Search by state, county, and construction type (building, heavy, highway, residential)
3. Find the wage determination that matches your project
4. Note the base hourly rate AND fringe benefit rate for each classification

The wage determination tells you the minimum you must pay for each trade (Carpenter, Electrician, Laborer, etc.). You can pay more, but never less.

Step 3: Classify Your Workers Correctly

Every worker on the project must be assigned a classification that matches the wage determination. This is one of the most common sources of violations.

• Match the work, not the title. If a "Laborer" is doing carpentry work, they must be classified (and paid) as a Carpenter.
• Dual classifications are allowed. A worker can be classified as a Carpenter for 4 hours and a Laborer for 4 hours in the same day — but you must track the hours separately and pay the correct rate for each.
• Apprentices can be paid less than journeyworker rates, but only if they're registered in an approved apprenticeship program.

Step 4: Track Hours Daily

The WH-347 requires daily hours for each worker, broken down by day of the week (Saturday through Friday). You need to track:

• Straight-time hours (first 40 per week)
• Overtime hours (over 40 per week, paid at 1.5x)
• Which project the hours were worked on (important if workers split time between projects)

Pro tip: Track hours daily, not weekly. Reconstructing daily hours from a weekly total is a common audit finding.

Step 5: Calculate Pay Correctly

For each worker, calculate:

1. Gross pay: (ST hours × ST rate) + (OT hours × OT rate)
2. Fringe benefits: Can be paid to a bona fide benefit plan OR as cash in lieu of fringe (added to hourly rate)
3. Deductions: Federal tax withholding, FICA (7.65%), state tax, union dues, etc.
4. Net pay: Gross pay minus deductions

Step 6: Fill Out the WH-347

The WH-347 has two pages:

Page 1: Payroll Data

For each worker, fill in:

• Column 1: Name, address, last 4 of SSN
• Column 2: Withholding exemptions (or J/A for Journeyworker/Apprentice)
• Column 3: Work classification
• Column 4: Daily hours (Sat through Fri)
• Column 5: Total hours
• Column 6: Rate of pay (base + fringe)
• Column 7: Gross earned (this project + all federal work)
• Column 8: Deductions (itemized)
• Column 9: Net wages paid

Page 2: Statement of Compliance

The project's principal officer signs under penalty of perjury that:

• All workers have been paid the full prevailing wages
• All required fringe benefits have been provided or paid in cash
• All apprentices are registered in approved programs
• The payroll is correct and complete

This is a legal certification. Submitting false information can result in fines, contract termination, or debarment from future federal work.

Step 7: Submit on Time

Certified payroll must be submitted weekly — within 7 days after the pay period ends. Late submissions can trigger:

• Contract payment withholding
• Compliance investigations
• Liquidated damages ($10-50 per worker per day)

Set a recurring reminder. Every Friday (or whatever your week-ending day is), generate and submit the report.

Step 8: Keep Records for 3 Years

Federal regulations require you to maintain certified payroll records for at least 3 years after project completion. Keep:

• All WH-347 forms submitted
• Time cards / daily logs
• Pay stubs
• Fringe benefit payment records
• Wage determinations used

The Easy Way: Use Software

Everything above can be done manually, but most contractors find it takes 4-6 hours per week per project. Mistakes are common and penalties are harsh.

CertifiedPayrollPro automates the entire process:

• Import data from your payroll provider (ADP, Gusto, QuickBooks, and 9 more)
• Lydia, our AI assistant, flags errors before you submit
• Generate WH-347 PDFs in one click
• Track deadlines and send reminders
• $49/month with $0 setup fee

Start your free trial →

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This guide is for informational purposes. Always consult with a compliance professional for project-specific questions. Last updated: March 2026.