Project Construction and Contract Administration

Contract Administration

Contractor Payroll Submittals and Statements of Compliance

Companion Guide to Video August 2012

www.fhwa.dot.gov www.fhwa.dot.gov/federal /federal--aidessentials aidessentials

The Federal-aid

Highway Program is 

subject to Federal 

laws that regulate 

fair labor practices 

and workers pay.

The local public agency, or LPA, that uses 

Federal-aid funds is responsible for verifying that 

its contractors comply with these labor laws and 

all other Federal requirements.

Contractors are required to submit employee 

payrolls on all federally funded projects. 

Submitted payrolls are used to verify that the 

requirements of four labor related laws are 

complied with. These laws are the Copeland 

Act, the Davis Bacon Act, the Fair Labor 

Standards Act, and the Civil Rights Act.

These laws are important because they free 

employees from coercion, ensure payment of 

prevailing wages and benefits, provide for 

nondiscrimination of workers, and often require 

actions by Federal funding recipients.

First, let’s look at The Copeland Act of 1934. 

This act was enacted to stop the common 

practice of contractors and subcontractors from 

forcing employees to give up part of their pay in 

order to continue working on a federally funded 

project. For this reason, the act is sometimes 

referred to as the “anti-kickback act."

As a first step, Federal-aid contracts must 

include the requirements of the act for 

contractors.

All contractors on federally funded projects are 

required by the U.S. Department of Labor to 

submit weekly payroll records that contain the 

employee’s full name and employee number, 

classification code, hourly wage, hours worked, 

gross wages, itemized deductions, and net 

wages. Form FHWA-1273 - “Required Contract 

Provisions Federal-Aid Construction Contracts” -

includes this requirement and other provisions 

mandated for federally assisted construction 

contracts.

In addition, a Statement of Compliance must 

accompany each contractor payroll.

The Statement of Compliance is attached to a 

payroll submittal and certifies that the payrolls 

are correct and complete, that the wage rates 

paid are not below those required by the wage 

decision in the contract, and that each laborer or 

mechanic’s classification conforms to the work 

performed. The statement must be signed by an 

authorized agent of the contractor, indicating 

that the facts represented in the payroll are true.

Contractors are required to submit weekly employee payrolls 

on all federally funded projects
Federal-aid Essentials for Local Public Agencies

Violation of the act is a crime that can result in 

severe penalties, including fines and 

imprisonment.

Another law that deals with contractor payrolls 

that applies to Federal-aid contracts is the 

Davis-Bacon Act of 1931. This law requires that 

contractors and subcontractors pay on-site 

workers no less than the locally prevailing 

wages and benefits. The U.S. Department of 

Labor tracks this data and develops wage 

decisions that are incorporated into every 

Federal-aid contract.

The act applies to contractors and 

subcontractors who perform work on Federal or 

federally assisted construction contracts in 

excess of $2,000. Therefore, the Davis-Bacon 

requirements are relevant for Federal-aid 

contracts.

The contractor may choose to use a U.S.

Department of Labor Payroll WH-347 form to 

submit payroll information and the statement. 

While use of the form is optional, the information 

it provides is mandatory.

The weekly payrolls should be checked to verify 

that each laborer or mechanic has been paid an 

appropriate wage and has not been subjected to 

coercion by the employer.

Other laws and regulations, such as the Fair 

Labor Standards Act and the Civil Rights Act, 

have additional provisions for nondiscrimination 

in personnel practices, paying minimum wage 

rates, and ensuring job-site safety.

Let’s now look at how an LPA complies with 

these requirements by using a fictional Johnson 

County project as an example.

Johnson County is in the process of awarding a 

construction contract. First, the county makes 

sure to include the Form FHWA-1273 into the 

construction contract. By signing the contract, 

the contractor agrees to comply with the 

requirements of nondiscrimination and nonsegregated facilities; payment of minimum and 

prevailing wages; submission of payrolls and 

statements; and implementation of appropriate 

safety and accident prevention measures. 

Then during the construction phase, the county 

verifies that the contractor is submitting weekly 

payrolls with a signed Statement of Compliance 

attached by using the form WH-347.

Johnson County has an operating policy to 

“trust, but verify” by reviewing all forms that the 

contractor submits.

The county performs spot-checks of the payrolls 

submitted and conduct brief interviews of 

contractor employees. This verifies that workers 

are being paid weekly and their benefits are in 

alignment with the information submitted in the 

payrolls.

Johnson County also maintains a project file to 

store each weekly submittal for quick and easy 

access to the payroll records and verification 

documents.

In summary, checking contractor payrolls and 

statements of compliance is essential in order 

for LPAs to verify that the contractor is following 

the requirements of the Copeland Act, the Davis 

Bacon Act, the Civil Rights Act, and the Fair 

Labor Standards Act.

LPAs have a stewardship responsibility to verify 

contractor compliance to ensure workers are 

paid appropriate labor wages and that projects 

will continue to have Federal funding 

participation.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number

DTFH63-11-D-00026 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Additional Resources

• Link to and instructions on how to use the U.S. Dept. of Labor Form 

WH-347 

http://www.dol.gov/whd/forms/wh347instr.htm

• Policies covering Parts IV and V of form FHWA-1273 covering labor wages

http://www.fhwa.dot.gov/programadmin/contracts/1273.cfm

• Additional information regarding implementation of the Copeland Act

http://www.dol.gov/whd/regs/statutes/copeland.htm

• Additional information regarding Davis Bacon wages

http://www.dol.gov/whd/regs/statutes/dbra.htm