Prevailing wage tracking: Detailed guide for contractors

Prevailing wage requirements ensure workers receive a fair wage, but they make payroll more complicated. Applying the correct wage rates and generating certified payroll reports requires precision, and mistakes cost time and money.

Good prevailing wage tracking eases that burden, and the right software automates wage calculations and certified payroll reporting to catch errors before they snowball. In this guide, contractors and payroll managers will learn what prevailing wage tracking is, what to keep track of, and what features to consider when evaluating payroll software.

What is prevailing wage tracking?

Prevailing wage tracking is a verification process that ensures each team member on a public works project receives the wage rate set by federal or state wage determinations (i.e., the prevailing wage). It also involves sending certified payroll reports to the contracting agency, prime contractor, or labor compliance agency, depending on the project.

Why prevailing wage tracking matters

Careful prevailing wage tracking for public works projects prevents several costly risks, including the following.

Debarment from bidding on federal jobs

Contractors repeatedly or willfully violating prevailing wage tracking regulations can lose their right to bid on federally funded contracts for up to three years, locking them out of public work entirely.

Withheld payments or contract termination

If certified payroll submissions are incomplete or contain compliance mistakes, contracting authorities can withhold payments for estimated back wages. They may even terminate the contract if the problem persists. 

This also applies to subcontractors. Submitting erroneous certified payroll reports means the general contractor can (and often will) withhold progress payments until the sub fixes these issues. 

Compounding errors

Certified payroll reports are due every week, so a small mistake early in a project often compounds across every report that follows. For example, if a contractor misclassifies an ironworker as a general laborer, the ironworker will be underpaid each pay period until someone spots the error. Further, every report submitted based on the misclassification is invalid and must be corrected. Often, this means contractors will owe back wages and fines.

Prevailing wage tracking compliance: Key requirements

Prevailing wage compliance requires checking many boxes to avoid fines or bidding debarment. The most important include the following.

Davis-Bacon Act requirements

Contractors managing federally funded projects worth over $2,000 need to follow the Davis-Bacon Act, which requires them to submit WH-347 certified payroll report forms weekly. The Department of Labor (DOL) sets prevailing wage rates for each individual job classification, and contractors are required to pay these rates for the project duration.

State prevailing wage laws

Around 25 states have their own prevailing wage laws for state-funded projects. Wage rates in these states often align with federal guidelines, but not always. Sometimes, rules are more strict. Notably, California has the most complex state prevailing wage requirements. Additionally, contractors are required to use separate forms and submission portals for reporting purposes.

Certified payroll submission cadence

Contractors must submit weekly certified payroll reports to the contracting authority, prime contractor, or labor compliance agency, depending on the location and type of project.

Payroll record retention rules

Contractors are required to keep at least three years of payroll records, certified reports, and benefit statements on hand for audits. Maintaining sufficient records creates a paper trail contractors can lean on if worker disputes or inspections arise after project completion.

What to track for full prevailing wage compliance

Keep an eye on these critical data points to simplify certified payroll reporting and keep operations compliant.

Worker classifications and trade codes

Prevailing wage rates are broken down by trade. If a worker performs more than one classification of work on a project, each block of hours has to be paid at the rate for that specific work.

Say an employee on an Oregon job in Deschutes County spends 20 hours removing hazardous materials and another 20 fitting sprinklers. That works out to about $33 an hour for the hazmat work and $55 an hour for the sprinkler fitting. Their hourly pay for the week (before fringe benefits) should equal: 

20 x $33 = $660

20 x $55 = $1,100

$660 + $1,100 = $1,760

Paying this worker for the entire week at the hazardous materials rate underpays the sprinkler hours and breaks prevailing wage compliance. On a state job like this one, that triggers a BOLI violation that compounds week over week until corrected.

Fringe benefit rates

In addition to a base hourly wage, each job classification has an accompanying fringe benefit rate. Like hourly pay, fringe rates change based on job classification. 

There are three ways to satisfy the fringe benefit requirement: providing employer-paid benefits directly (which generate fringe credits), paying cash in lieu of benefits, or a combination of the two.

Once the contract is awarded, the mandatory fringe rate stays fixed for the project. A revised wage determination only applies if the contract changes to add substantial work outside the original scope or extends into a new work period.

Hours worked per classification and jobsite

Contractors track hours at both the classification and jobsite levels.If workers split a week between public and private jobs, contractors must report the hours separately so prevailing wage rates apply only to the covered work.

Certified payroll report data

Weekly WH-347 forms contain the following fields:

• Project name
• Project or contract number
• Certified payroll number
• Prime contractor’s/subcontractor’s business name and address
• Project location
• Wage determination number
• Week ending date

For each worker, they include:

• Worker entry number
• Worker last name, first name, and middle initial
• Worker identifying number
• Worker type (journeyworker or registered apprentice)
• Labor classification
• Hours worked each day
• Total hours worked for the week
• Hourly wage rates for straight time and overtime
• Total fringe benefit credit
• Payment in lieu of fringe benefits
• Gross amount earned
• Gross amount earned for all work
• Deductions for all work
• Net pay for all work

Each certified payroll report comes with a statement of compliance, which includes:

• The same project information (like name, number, and certified payroll number)
• Compliance acknowledgement checkboxes for accuracy and record maintenance
• Apprenticeship program details
• Fringe benefit plan details for each worker
• Signature, date, telephone number, and email address

If errors occur, contractors must correct and resubmit the documentation as soon as possible.

Subcontractor compliance documentation

The prime contractor is responsible for every subcontractor’s certified payroll reports. If a subcontractor pays workers below the prevailing wage, for example, the prime contractor is liable for back pay and fines.

Prime contractors can cut down on subcontractor errors with a pre-kickoff compliance review that sets expectations with every sub before work starts. This involves confirming the applicable prevailing wages and worker classifications together and explaining exactly how and when to submit reports.

What to look for in prevailing wage tracking software

Keeping up with prevailing wage rates is one thing, and applying them correctly is another. Dedicated construction payroll software handles that second part, running the calculations and applying the right rate by classification and jobsite. The strongest platforms typically include the following.

Automated wage rate application

Most prevailing wage tracking software automatically applies the correct wage rate by classification and jobsite. This automation prevents a manual error like a typo from leading to a compliance mistake. A full-featured system offers classification-level rate assignment and automated application of fringe benefits. Top systems also pay out the higher rate when a worker’s default pay exceeds the prevailing wage, avoiding underpayment in the event that a misclassification isn’t spotted right away.

Certified payroll report generation and submission

The repetitive weekly cadence of certified payroll reports is one of the biggest hurdles that trips contractors up. Prevailing wage tracking software makes it easy by pre-populating both federal WH-347 and state-level certified reporting forms with saved data. Contractors should look for software that supports every state they build in and consider a platform that allows for third-party integrations with compliance management systems like LCPtracker, eMars, eComply, and Elation.

Time tracking integration

Accurate prevailing wage tracking starts with accurate time tracking. Smart software precisely tracks time by classification and jobsite, using GPS and geofencing to create location-stamped records and automatically linking hours to the relevant jobsite. Each time block includes the worker’s trade classification so the correct wage rate is applied during report generation.

Audit-ready record storage

Platforms should store all compliance-related documents in a secure, centralized location for a minimum of three years for easy reporting and ongoing audit-readiness. They should also include versioning capabilities to document corrections as they’re made.

Keep every prevailing wage project compliant with Miter.

Getting prevailing wage compliance right means accurately classifying workers and documenting fringe benefits to keep payments and reporting accurate week after week. It also requires a structured subcontractor review process to keep their mistakes from turning into prime contractor penalties.

Contractors need dedicated software to manage these complexities effectively. Miter is a construction-focused platform with purpose-built prevailing wage tracking functionality. With it, busy contractors stay compliant without time-consuming manual legwork.

In particular, Miter makes one of the most error-prone aspects of prevailing wage compliance, certified payroll reporting, as easy as a few clicks. Contractors can generate clean certified payroll forms and submit them directly to the relevant contracting agency and 11 state portals. Payroll teams can also export records compatible with leading compliance management platforms like LCPtracker, eComply, Elation Systems, and eMars.

Miter Payroll pays attention to the details, too. If a worker’s default pay rate exceeds the prevailing wage rate for their classification, Miter automatically applies the higher rate to ensure underpayment is never a problem. The platform simplifies time tracking with GPS and geofencing integrations, and records are stored indefinitely with an active account. These detailed records and automations allow for more time spent on the jobsite and less time spent on paperwork.