Contractors Should Prepare for MnDOT Electronic Certified Payroll Submission Requirements
Contractors employed on Minnesota Department of Transportation (MnDOT) construction projects will have to update their certified payroll submission process to accommodate a new payroll tracking system being implemented by the state.
Contractors are required to submit certified payrolls to comply with the contract provisions of the Davis-Bacon Act. Many use construction-specific accounting software that produces a certified payroll report. In the past, MnDOT accepted these reports in a paper format if they followed certain requirements.
Going forward though, companies must comply with MnDOT’s electronic submission requirement. Most contractors will need to create a custom process to generate the data file in the required format.
"To be clear, the issue here is that if MnDOT does not receive your payroll information in the required format, your progress payments will be delayed ... Software vendors may not be aware of this change. So finding other contractors using the same software and banding together might result in a more cost effective solution when you approach a vendor to do custom programming. The strength of numbers will convey a sense of urgency to vendors." Bob Sniegowski
MnDOT system changes
For all MnDOT construction contracts advertised after July 1, 2013, MnDOT has used the Civil Rights and Labor Management System (CRLMS) to submit certified payrolls. This system provides a uniform method for contractors to meet government reporting requirements. After February 2014, this system will be rebranded as Civil Rights and Labor (CRL).
The CRL online submission requirement provides two options for compliance:
- Enter the certified payroll report data from a printed report that your current information system produces.
- Extract the data from the payroll module, convert the data to an Extensible Markup Language (XML) file in the required CRL schema, and import the XML file into the software.
For most, the XML option will require custom programming and technological skills that most construction contractors don’t have in-house. The accounting system’s software provider is probably the best resource to tap for the necessary programming work.
Preparing for new system requirements
For a contractor with infrequent MnDOT projects and small numbers of transactions, inputting the information by hand is feasible, but not particularly efficient. Contractors with multiple projects that have a large number of employees should seriously consider automating the process through the XML option.
The check is not in the mail
To maintain cash flow, contractors should take steps now to avoid payment delays when the construction season begins this spring. They can do this by:
- Attending a training session offered by MnDOT in February for payroll preparers.
- Contacting their payroll module support provider as soon as possible, since they may not be aware of the MnDOT electronic file submission requirement. Converting payroll information to the required XML import file schema may require custom programming, re-configuration of files, or data mapping. If custom programming is required, some lead time will be necessary to be ready for spring startup.
How we can help
- CLA can be your advocate with the software providers. Our professionals can leverage our working relationships with most major software providers and our significant construction client base to help identify other users, work with vendors to define your needs, and seek a cost-effective solution.
- Depending on your particular situation and the number of MnDOT projects you have lined up, the data entry requirements could put significant stress on your back office. Our outsourcing team can provide temporary staffing to relieve the work load during a transition and avoid delays in payroll submission.
- Submitting payroll data must be done in a secure way that minimizes the risk of access to your systems. Our information security professionals can assess and test the security of your current systems as well as the upgrades required for MnDOT work.
- Any time you alter systems or processes, it is an opportunity to examine industry best practices. CLA can advise you on internal controls, process improvement, change order management, and cash flow, particularly when working with public agencies. Although this winter does not feel like it will ever end, spring construction season is only about six weeks away. The time to address your payroll systems capabilities is now — before paychecks depend on it.