If you’re a contractor and reading this article, you’re likely finding yourself at a crossroads with three possible scenarios: 1) you are considering the idea of taking on public works projects for the first time; 2) you are experienced in the public sector, but finally looking to alleviate the administrative headaches that come with the territory; or 3) you are already leveraging technology to lessen these burdens, but are wondering if there are better options out there.
No matter what the case may be, you are all probably grappling with one of construction’s biggest stumbling blocks: prevailing wage laws. Yes, they come attached at the hip with virtually any publicly-funded project. And if you are hoping they will “go away” sometime soon or are holding out and passing up job opportunities in the meantime, we’ve got some rough news for you, my friend: you’re waiting for a train that will probably never come. But even so, that’s not what this article is about. This is for the contractors with skin in the game – or those looking to play. This is for the contractors that are willing to get a grasp on the laws and are hoping that it’s not as hard it looks. And if that is you, we have good news.
As scary and convoluted as it might seem on the surface, prevailing wage compliance isn’t the nightmare it once was prior to the digital revolution. There are now tools available to simplify and streamline the entire process. And if you’re a contractor looking for an electronic certified payroll solution, there are a few things you should understand.
You Get What You Pay For
As is the case with any technological investment, if you buy a cheap product, you run the risk of getting cheap results. And cheap results can be costly when fines and other hefty consequences are on the line. Federal Davis-Bacon, state, and local prevailing wage violations are not a joke. It’s for this reason that it is so widely recommended that you don’t rely on your payroll provider to apply a universal certified payroll report (CPR) form. Twenty-six states and many local agencies have their own separate requirements, and plenty of projects have more than one requesting body with specific forms. Bottom line: it’s better to invest in a solution that is dedicated to prevailing wage compliance than expose yourself to the risk of inaccurate filings due to an inadequate product.
Check Your Work
So, you’ve checked off criteria #1 on your list and decided to move forward with a dedicated solution. But now you’ll want to see what the platform brings to the table. Quite a few solutions are out there to expedite the process, but they don’t all include the necessary insurances. You’re going to want the peace of mind that the electronic system is double checking your work. Mistakes happen all the time, and even one seemingly small error can have dire consequences on a larger scale. We’re not just talking restitution here; additional fines can be levied for violations on each record. If you have tens, hundreds, or thousands of employees working on a job, one single error repeated on multiple workers’ payments can add up fast.
And don’t be fooled into thinking that math is the only area of concern. Beyond petty miscalculations, there’s a variety of potential issues that can arise: missing fields on the payroll record, using the incorrect wage determination because the bid advertisement date is wrong, failing to use two wage determinations in the case of a dual-funded project, incorrectly calculating cash in lieu of fringe benefits, not supplying complete data for workforce programs…the list goes on. To cover all bases, you’ll want a solution that not only checks that you calculated payroll correctly and appropriately, but also validates many other areas of concern that can result in a failed audit.
Have a Solid Benchmark
Make sure to also look for a solution that helps make the process of entering and maintaining wage determinations easier. Unfamiliar with this industry vernacular? Wage determinations are the current prevailing wage rates for every construction classification, and they periodically get updated. If you want to ensure you are paying your workers the correct rates, you will need to provide a benchmark to compare the wages against – and these wage determinations are used as this benchmark. This means that these determinations, specific to the appropriate jurisdiction(s), need to reside within the application. And the right software solution will provide options in terms of both resources and tools to manage this often complex task.
If your state has very stringent compliance laws and frequently publishes new wage determinations, like California, it can relieve you of a huge burden if the application already updates your states’ determinations in the software automatically. But if your state isn’t covered, the right solution should provide the option to add a bespoke service that will manage this task for you. At a bare minimum, they should be well-equipped with the support necessary to train you so that you can successfully manage them yourself. Which brings us to the next bit of advice…
Everyone Needs Some Help
Another aspect to fully vet out before deciding on a solution is whether the provider you are selecting offers adequate customer support. This cannot be emphasized enough. Let’s face it: the compliance industry isn’t a fun one. It’s convoluted and sometimes a bit messy. Users of a new application will need help, especially for novices of prevailing wage. It’s unavoidable. So, remember to look for a provider that takes training and support seriously and provides a substantial effort in staffing a competent and sizable team dedicated to training users and helping them navigate the software. Some companies might appear great on the surface; however, the level of service they provide behind the scenes is severely lacking. This is especially important for prime contractors, because if your subs can’t get their questions answered by customer support, guess who they’re going to hound down next for help?
Access to a Vast Library
If you are a prime contractor looking for more than just a certified payroll application, an additional item you’ll want to check off your list of “must-haves” is a solution with great reporting capability. With all the data being captured though CPRs and other compliance documents, you should be able to obtain high-level overviews of categorical data. Creating dashboards, graphs, and dynamic reports can be a powerful tool to monitor and measure compliance analytics at a higher level. Not every solution on the market has this, so make sure to select a provider that has a vast library of standard reports and offers it to its users at no additional cost.
Not a “One-Size-Fits-All”
Another thing to keep in mind when it comes to labor compliance applications is that there are two main categories of compliance solutions that will help with certified payroll: multi-tiered and single-contractor. Each one is catered to a specific type of user base and priced accordingly, so it’s important to make sure you are looking at the right solution to fit your needs. A multi-tiered system allows the entity that purchases the software to set up multiple tiered user roles and have contractors use the application under their license. One of the primary functions of a multi-tiered system is to allow every contractor on a project to streamline the process of creating and submitting CPRs. However, the application is catered more towards the entities collecting those reports. Therefore, this solution is ideal for requesting bodies higher up on the chain that need to manage and monitor all aspects of labor compliance, like government agencies or general/prime contractors.
The second kind of certified payroll solution is a single-contractor application, and they are designed specifically for the contractor. The contractor owns the account, has full control, and does not need to bother with tiered user roles. The main purpose of the tool is to help streamline the creation of complete and accurate certified payroll reports. This means that this application is better suited for subcontractors, or more specifically, contractors that do not need to monitor the compliance of other sub-tiers to mitigate risk, like primes.
Now that you have your checklist squared away, you’re all set to start evaluating your options. You can find more information about the applications discussed in this article, by visiting https://lcptracker.com.