Are you confident every worker on every job is getting the right wage — and that your reports prove it?
Construction payroll is complicated, but one of the most challenging areas is prevailing wage for government-funded projects. When it comes to prevailing wage, compliance is mandatory, and mistakes are expensive and time-consuming. Most construction companies understand the frustration of an error-prone spreadsheet or rejected certified payroll reports.
The good news is that you aren’t alone in processing prevailing wage payroll and keeping records. Technology can help streamline processes and ensure you stay compliant without the headache. It’s time to lean into automation for accuracy and peace of mind.
To start, what is prevailing wage?Prevailing wage is the average hourly rate paid to similarly employed workers in the same job and geographic region. Prevailing wage can apply at the state and federal level. It applies to government-funded projects, with compensation levels set by local policymakers. Prevailing wage is meant to protect workers and create fair bidding for projects. However, it also creates complexity for contractors and adds another challenge to payroll processing.
Federally funded construction projects are governed by the Davis-Bacon Act. Companies and contractors on federally funded construction projects that cost more than $2,000 must follow prevailing wage laws. That means companies must pay their workers the prevailing wage in either cash or a combination of cash and fringe benefits.
Prevailing wage is notoriously difficult, especially around compliance. Here are five common challenges for prevailing wage:
There isn’t one prevailing wage for all projects. Instead, the wage determination and rate vary by state, region, and project type. That means that contractors with employees working on different types of projects at the same time or on different job sites may have different prevailing wages that they need to understand and calculate properly.
Prevailing wage varies depending on how a job is coded for the project and work. Companies can pay employees a prevailing wage in cash or a combination of cash and fringe benefits, such as health benefits, paid time off, and other perks. The benefits and value depend on the job classification. Tracking and allocating fringe benefits, especially understanding the value of those benefits, can be challenging. Paying part of the wage in cash and the rest in health benefits, but miscalculating the benefit value can lead to underpayment or overpayment, plus compliance risks.
Any manual reporting and tracking invites human error, but especially calculations as complex as those with prevailing wage. Even a small error, such as missing a single digit in a job classification or hours worked, can have ripple effects on the accuracy of payroll and the records. Manually tracking is also time-consuming and doesn't have the same checks and safeguards as software.
Contractors can use formWH-347 to submit certified weekly payrolls for prevailing wage projects. Similar forms often exist at the state level. The problem is when these forms are rejected, often for wage miscalculations, misclassification, or missing fringe benefits. Any mistake in the process can cause a form to be rejected. That slowdown leads to delays or penalties for the construction company or contractor.
Labor codes and regulations are continually changing. You can’t assume that just because a job was coded a certain way before that it will always be coded that way. Payroll teams and contractors need to stay on top of regulations to ensure they process and comply with prevailing wage.
After learning about the many challenges and nuances of prevailing wage, the idea of processing payroll and staying in compliance can feel daunting — or impossible. The good news is that it’s possible with the help of prevailing wage software.
Prevailing wage software is essential for every general contractor for these five reasons:
Certified payroll report generation. Prevailing wage payroll requires more paperwork than just the checks. Certified payroll software can generate forms for WH-347 reporting and state-specific reports, plus keep an audit trail of calculations and reports.
With many payroll software options on the market, one stands out as the clear winner for prevailing wage compliance: hh2’s Remote Payroll. Here are just a few of hh2's Remote Payroll's robust features:
Construction companies and general contractors across the country have benefited from Remote Payroll. One company reported that before hh2, the team spent hours each week changing wages manually, which was draining and created opportunities for mistakes. Now, using hh2’s Remote Payroll, the system flags issues and auto-generates compliant reports, saving time and removing the headache of compliance issues.
Managing prevailing wage compliance doesn’t have to drain your team’s time — or keep you up at night. Prevailing wage goes hand in hand with construction payroll, even with all its complexities. The cost of noncompliance is too high. Automating wage tracking is your best defense.
Simplify compliance and reduce risk. Learn how hh2’s Remote Payroll automates prevailing wage reporting and helps you stay audit-ready. Reclaim time, accuracy, and peace of mind. Explore Remote Payroll.