The American Recovery and Reinvestment Act of 2009 (ARRA), provides the State Departments of Transportation and Federal Lands Agencies with $27.5 billion for highway infrastructure investment.
With this money there also comes an increased level of reporting, which we will be adding to Certified Payroll Solution to better and more fully serve the needs of our customers who may be working on these types of construction projects.
ARRA Reports include:
- Monthly Employment Report – Form FHWA-1589
- Monthly Recipient Project Status Report – Form FHWA-1585 (a summary report in addition to FHWA-1589)
- Initial ARRA Project Plan – Form FHWA-1586 (a summary report in addition to FHWA-1589)
- Monthly Summary Employment Report – Form FHWA-1587 (a summary report in addition to FHWA-1589)
- Periodic Grouped Project Report – Form FHWA-1588 (a summary report in addition to FHWA-1589)
Watch for further updates in the next couple of weeks regarding the release of an update to Certified Payroll Solution which will provide these forms.
In the meantime, download a copy of the reporting requirements.
Also be sure to visit the Federal Highway Administration’s Question & Answer page (looks like it’s updated frequently) for Questions & Answers on American Recovery and Reinvestment Act of 2009 that have been raised by State DOT’s, by clicking here.
{from the American City Business Journals/Denver on 4/27/09}
Federal contractors will now have until June 30 before they have to use the E-Verify system to check the eligibility of their employees to work in the U.S.
The Obama administration postponed the date the electronic verification rule would apply to government contractors and subcontractors in order to have more time to review it, according to U.S. Citizenship and Immigration Services. The rule was issued by the Bush administration in November.
Business groups have filed a lawsuit challenging the rule, contending the government doesn’t have the authority to make use of E-Verify mandatory. Congress created the E-Verify system as a voluntary program, they noted. More than 117,000 employers now use the Web-based system, which compares information supplied by employees with government records.
“We applaud the administration’s decision to take more time to re-evaluate its questionable policy mandating E-Verify use for federal contractors,” said Robin Conrad, executive vice president of the National Chamber Litigation Center. “We are hopeful that they will agree that E-Verify is the wrong solution at the wrong time.”
Effective January 18, 2009 Prime/General contractors and subcontractors who perform work on federally funded construction projects are no longer required to display the home address and social security numbers of employees on the certified payroll report form WH-347 that they submit; instead you are now required to display the employees full name and the last 4-digits of his/her social security number as follows XXX-XX-1234. This revision was established to better protect worker privacy and identity theft.
Given the new reporting requirements it would not be in violation of 29 CFR 5.5 (a)(3)(i) for a prime/general contractor to require a subcontractor to proved employee addresses and social security numbers for the prime/general contractors own records, without including this information in weekly submissions.
The U.S. Department of Labor – Wage and Hour Division in conjunction with the Office of Management and Budget (OMB) released a new Federal WH-347 to be used effective January 18, 2009 through December 31, 2011.
All projects funded by President Obama’s Economic Stimulus Package (the American Recovery & Reinvestment Act) will require the payment of prevailing wages and the submission of certified payroll reports; even weatherization projects which are federally funded which have historically been exempt from prevailing wage laws and certified payroll reports.
The Davis-Bacon Act of 1931 established into law the requirement for paying “prevailing wages”; a specific rate of pay plus fringe benefits for each trade/work classification that has been set by the Department of Labor – Wage and Hour Division, on federal or federally-assisted construction projects exceeding a value of $2,000.00. Construction includes the alteration and/or repair, including painting, decorating, plumbing, electrical, etc., of public buildings or public works – including roads and bridges.
The Copeland Act (Anti-Kickback Act) makes it a crime for any employer to require any employee working on a Federal or Federally-Assisted project to “kickback” any part of his or her wages. It also requires every prime/general and subcontractor to submit weekly certified payroll reports beginning with the first week that a contractor performs work on a project and for every week thereafter, until the work is completed. When there is a temporary break in work, a “No Work Performed” payroll must be submitted.
The weekly WH-347 certified payroll form is a 2 part form, is not a complex form and does not ask for any information that you as a business owner do not already need to keep for wage payment, tax purposes, and information about the project. You’ll need to know:
- Information about your business (your company name and address and are you the prime/general contractor or a subcontractor)
- The project name, its location, and any identifying project numbers (the project location).
- Each employee’s name and the last 4-digits of their social security number (who is working for you).
- Each employee’s Trade or Work Classification (what they do).
- The number of hours worked each day during the week on individual projects by each employee (where they worked during the week and how many hours they worked).
- The employees prevailing rate of pay for the trade/work classification (how much you pay them for the work they perform).
- Gross amount earned for each employee (how much did you pay each employee that week for each job and for all jobs they worked on).
- How much and what was deducted for taxes, etc. from their paycheck.
- The net amount paid to each employee (how much was their paycheck that they actually took home).
Then a company official must sign the second page, or Statement of Compliance. This signature is the “certification” because the person signing the report is guaranteeing that the information being reported is accurate and correct.
The most common certified payroll report form used is the U.S. Department of Labor Form WH-347 and Form WH-348 Statement of Compliance, which is used and followed by 25 of the 50 states. Of the other 25 States, 14 will have a single state agency that will monitor State Prevailing Wage Laws and 11 states have multiple State Agencies that will monitor Agency Specific Prevailing Wage Laws and require electronic filing of certified payroll reports.
The problem that most contractors’ experience, especially contractors using popular accounting software such as QuickBooks, is that while QuickBooks has the ability to track most of the information required; it does not have the ability to track all of the required information and generate the forms in their specific format. This is often the barrier that keeps some contractors from bidding on these types of projects.
Some QuickBooks users and accounting professionals feel that Intuit should include the ability to produce certified payroll reports and statements of compliance in the Premier Contractor Edition, and are very upset that this ability is not already built in. This would be a good idea and a legitimate request IF there was only a single certified payroll format that was used in all states and administered by a single prevailing wage agency, regardless of if the project was funded with federal or state dollars, and if every contractor who purchased the Premier Contractor Edition was required to submit these forms. However, this is not the case and is probably the reason that Intuit does not include this type of functionality.
QuickBooks users, and the accounting professionals who support clients using QuickBooks, should, however, be aware that there are QuickBooks integrated applications available that will utilize existing QuickBooks data to generate not only the certified payroll report and statement of compliance; but other reports as well, all of which are ready for “signature” and submission.
There are four QuickBooks integrated applications that produce certified payroll reports, statement of compliance, “No Work” performed payrolls, EEOC/Workforce/Manning Reports and Union/bona-fide plan fringe benefit reports, two of these add-on programs can be found by visiting the Intuit Marketplace at http://marketplace.intuit.com/v2/i-construction-contractors/f-payroll/software-solutions.aspx
Each of these programs utilizes QuickBooks data differently; some require you enter the same data in both programs, and that’s no good; while others will have you enter just the information that QuickBooks on its own cannot track while reading the rest of the information directly from you QuickBooks company file so that copying or entering the same data multiple times is not required. Each program will have a different pricing structure (remember cheaper isn’t always better) and will offer different capabilities, such as meeting electronic filing requirements, the ability to generate custom Union/bona-fide plan fringe benefit reports, and the ability to generate Federal, State, and Local EEOC/workforce/Manning Reports.
Make sure that you investigate each program thoroughly, take advantage of free trials (if available), and make sure that you understand how you obtain updates when form revisions or reporting mandates change, is there a fee involved, do you need to purchase additional licenses for each user, are their annual fees involved to keep your software up-to-date, can the system handle multiple trade/work classification for each employee, can the system handle multiple pay rates (straight time, overtime, double time, triple time) for each work classification, can the program generate state forms and automate electronic filing in addition to the federal form? Make sure before you buy.
Accounting for payroll is often complex and is always critical to the success of your business. The additional requirement of producing certified payroll reports makes accurate record-keeping essential. If you use QuickBooks, purchasing a QuickBooks integrated application will save you time, improve accuracy, eliminate duplicate data entry, eliminates transposition errors, and quite possibly save you from having to hire someone whose only job is to produce these reports manually. All of these things affect your cash flow and the overall success of your company.
Download a .PDF version of this article for future reference, by clicking here.
Feel free to request our Free Self-Paced Certified Payroll Training Guide, which has been recently updated, at http://www.sunburstsoftwaresolutions.com/component/option,com_performs/formid,5/
And contractors will be required to complete and submit certified payroll reports.
{From an article in the Washington Independent written by Jefferson Morley on 3/31/09}
Though stymied on the Employee Free Choice Act, which would make it easier for workers to form unions, organized labor is about to claim a big consolation prize: the massive application of a law guaranteeing “prevailing wages” for hundreds of thousands of construction workers hired under President Obama’s economic stimulus program.
Secretary of Transportation Ray LaHood is now preparing guidelines that will expand the scope of the 1931 Davis-Bacon Act, according to a department spokesperson.
“In some cases, the Davis-Bacon prevailing wage provisions will apply to federal construction contracts in the same manner as they currently apply,” said spokesperson Dolline Hatchett in an email. “In other instances, the prevailing wage provisions will apply to certain projects that may not have been subject to the Davis-Bacon provisions in the past.”
LaHood’s action will put a floor under wages paid for the more than 678,000 construction jobs (pdf) that the White House estimates will be created by the end of 2010. It also marks a sharp reversal of U.S. policy on public works projects under President Bush, who in September 2005 suspended Davis-Bacon in the Gulf States after Hurricane Katrina.
“This is good news for American workers,” said Tom Owens, director of communications for the Building Construction Trades Department of the AFL-CIO . “Everything in the stimulus program is covered. Congress was very clear about prevailing wages.”
Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce, calls the Davis-Bacon standards “complicated and counterproductive” but conceded opponents have limited means to fight the measure because the stimulus legislation is so explicit.
The legislation, approved by Congress and signed by President Obama last month, mandates that all “laborers and mechanics” on projects “funded directly by or assisted in whole or in part” by the stimulus program have to be paid at least as much workers on similar projects in the same area, as determined by the Department of Labor. (pdf)
With $49.3 billion for transportation construction, $5 billion for home weatherization projects, and billions for other building projects, the application of Davis-Bacon standards will have rare historical impact.
“This is huge,” said Ross Eisenbray, vice president of the Economic Policy Institute, a pro-labor think tank in Washington. “The only uses of Davis-Bacon comparable to the stimulus bill are the Defense Highway Act of 1956 which created the interstate highway system and the New Deal programs of the 1930s.”
The stimulus “is the perfect example of why you need Davis-Bacon,” Eisenbray said. “If you didn’t have it, the contractors bidding for all this federal money could undercut prevailing wages in any given area by 20-30 percent, and they could get the contract and bring down wages in that area.”
The 1931 law, written by Sen. James Davis (R-Pa.), who had served as secretary of labor in the 1920s, and Rep. Robert Bacon (R-N.Y.), guaranteed “prevailing wages” as a way of protecting workers in a time of rapidly growing unemployment and government involvement in the economy. It was signed into law by President Herbert Hoover and has rankled free-market conservatives ever since.
Davis-Bacon relies on government-issued tables (available here) that tells employers in each of the 50 states, plus Washington, exactly what they must pay workers in four categories of federally funded construction-”building,” “heavy,” “highway” and “residential”-that are also carefully defined. The Wage and Hour Division of the Labor Department, determines who gets what.
The standards also include benefits in its definition of “prevailing wages,” giving local unions indirect influence over non-union pay. In Washington, for example, residential electricians on federal projects must be paid at least $16.10 per hour plus $3.10 an hour in benefits, according to the law. In Los Angeles, a residential electrician need only be paid $7.73 an hour under Davis-Bacon, and no benefits.
Contrary to popular belief, and a recent Fox News report, Davis-Bacon does not require the payment of union wages.
Conservative critics say the law will hinder the goals of the stimulus program.
“By inflating the cost of labor, Davis-Bacon means that less work will get done and less energy gets saveed” says James Sherk, a labor analyst at the conservative think tank, Heritage Foundation.
Despite efforts to repeal the law over the years through legislation introduced by Rep. Ron Paul (R-Tex.) or lawsuits brought by conservative-leaning groups, the law has remained politically popular. In November 2005 pro-labor Republicans, including LaHood, pressured President Bush into reinstating Davis-Bacon wages for Katrina reconstruction projects.
The Davis-Bacon standards are not controversial in the transportation construction business, according to Jack Basso, director of program finance management for the American Association of State Highway and Transportation Officials. “It has been pretty much factored into the cost of doing business,” he said. Basso said the law’s provisions will cover virtually all workers paid by the $49.3 billion stimulus money allocated to highway, aviation and public transportation projects.
More novel is the expected application of Davis-Bacon to the the Department of Energy’s Weatherization Assistance Program, which pays non-profits and local government to implement energy efficiency measures in low-income households. The $5 billion for weatherization stimulus spending is expected to create 87,000 jobs nationwide, according to the energy department.
In 2004, the Bush administration rejected the idea of paying Davis-Bacon wages for work done under the weatherization program. In a Powerpoint presentation found on the agency’s Web site, two Bush officials declared the weatherization program was “exempt from all provisions ” of Davis-Bacon. Earlier this month, director of the weatherization program, Gil Sperling, reversed that decision with a provisional memo that is subject to LaHood’s guidance.
“The last thing we want to see is weatherization jobs turning into a dead-end occupation where somebody caulks windows for nine bucks an hour and then is out of work,” said the AFL-CIO’s Owens. “We want green jobs to be good jobs, and prevailing wages help.”
Freedman of the Chamber of Commerce predicts administrative waste, saying the administration is “expecting organizations that have never administered Davis-Bacon to enforce it.”
One issue that LaHood will have to clarify, said EPI’s Eisenbray, is how the law applies to educational spending in the stimulus bill.
“There is stimulus money going to local education agencies that doesn’t really have any strings attached to it,” he said. “If those agencies use that money for school repairs or school construction, Davis-Bacon will be an issue. I would expect the secretary to say if the money comes from the Recovery and Reinvestment Act, you have to pay prevailing wages.”
In an interview with Roll Call last month, LaHood spoke positively of the law, saying “These are very skilled people that are going to be building roads and bridges, and Davis-Bacon provides an opportunity for them to be compensated in a way that reflects the kind of professionalism they bring to the job.”
Critics of Davis-Bacon have low expectations of LaHood. “[LaHood's] not a conservative on labor issues,” Sherk said.
Freedman said, “If the department issues a proposed regulation, not just a guidance, then we will be involved in commenting. But the law is pretty clear about ‘This is what thou shalt do.’ It remains to be seen if there’s any flexibility.”
The only consolation for labor’s opponents is that LaHood has delayed his decision. Last week, a spokesperson said he would issue the guidance within the week. On Thursday his office withdrew that schedule in favor of a statement that said he is still preparing the guidance.
