Prevailing wage and certified payroll

Which law applies to your project

Coverage is decided by the funding source and the contract value, not by the type of contractor. Federal funds pull in Davis-Bacon and its related acts. State or local funds pull in the state's own prevailing wage act, where one exists, and the threshold can be as low as a few thousand dollars in some states and nonexistent in others.

A project can be covered by both. When federal and state determinations differ for the same classification, you pay the higher rate. The solicitation will attach the applicable determinations; if it does not and the funding suggests coverage, ask before you price the job.

Reading a wage determination

A wage determination is a table organized by county and construction type — building, residential, highway, or heavy — listing each classification with a base hourly rate and a fringe rate. The fringe can be paid as bona fide benefits, as cash added to the hourly wage, or as a mix.

Two details cause most of the mistakes. Classification is determined by the work actually performed, not by the job title on your payroll, so a worker who spends part of a day in a higher classification is owed that rate for those hours. And the determination in effect is the one attached to the solicitation, which may be superseded by a modification issued before bid opening.

Price the wage, not the wage rate

Prevailing wage changes your labor cost far more than the base rate suggests. Payroll taxes, workers' compensation premiums, and any percentage-based burden all scale with the higher wage. Overtime is calculated on the base rate, and apprentices may only be paid apprentice rates if they are registered in an approved program and kept within the allowed ratio.

The practical result is that a job priced at your private-work labor rate will lose money on a covered project. Build a separate prevailing wage labor rate for each classification and county you work in, and refresh it whenever a new determination is issued.

Certified payroll and the reporting burden

On a covered project you file a weekly certified payroll report — federally, Form WH-347 or an equivalent — for every week any work is performed, including weeks with no work if the agency requires it. It lists each worker, classification, daily and total hours, rate, gross pay, deductions, and net, with a signed statement of compliance.

• Reports are due weekly, usually within seven days of the pay date.
• Every subcontractor on the project files too, and the prime is generally responsible for collecting them.
• Apprentices require proof of registration and ratio compliance.
• Many states require submission through a specific electronic system rather than by email.
• Records are typically retained three years and are subject to audit and worker interviews.

What non-compliance costs

Enforcement is real: back wage payment with interest, liquidated damages, withheld progress payments, and in serious cases debarment from public work for a period of years. Most violations are not fraud — they are misclassification, missed fringe accounting, or late reports.

Treat compliance as a line item with an owner. Firms that win public work consistently either run payroll software that produces certified reports natively or assign one person to own the weekly filing for every active job.