Prevailing Wage & Certified Payroll
Public construction usually requires paying prevailing wages — set wage and benefit rates for each trade.
The rules
- Davis-Bacon Act sets prevailing wages on federal (and federally funded) construction; many states have their own "Little Davis-Bacon" laws.
- You must pay workers the prevailing wage for their classification.
- You must submit certified payroll reports documenting each worker's hours, classification, and pay.
Why it matters
Prevailing wage raises your labor cost (build it into your bid), and mistakes in certified payroll bring penalties and withheld payment. Take it seriously and keep accurate records.
Going Deeper (Intermediate)
Public work requires paying prevailing wages — Davis-Bacon (federal) and state "little Davis-Bacon" laws set a base wage + fringe by trade and locality — and filing certified payroll (form WH-347) weekly proving you paid them.
Advanced / Pro-Level
Compliance details that must be priced into the bid:
- Wage determinations specify the rate per classification — pay the right trade rate for the work performed.
- Fringe can be paid as cash or into a bona-fide benefit plan; apprentice ratios apply.
- Weekly certified payroll and recordkeeping are mandatory and audited.
- Penalties for violations are severe — back wages, fines, and debarment (banned from public work).
- The added administrative cost of compliance is real — price it in or your "low bid" loses money.
Practice Challenge
On a federal job you pay your usual private-market wages and skip certified payroll to save admin time. What's the exposure? (Answer: you've violated Davis-Bacon — owing back wages + fringe, fines, and risking debarment from public work; prevailing wage and weekly certified payroll are mandatory and audited, and their cost must be in your bid.)
In Practice
A contractor bids a public job at their normal wage rates, forgetting prevailing wage — and loses money on every hour. Build the higher labor cost into the bid.
Common Mistakes to Avoid
- Bidding without prevailing wage in the cost
- Errors in certified payroll
- Misclassifying workers
Takeaway: Public jobs require prevailing wages and certified payroll — build the higher labor cost into your bid and keep precise records.
Educational overview — not legal advice. Public-contracting rules, wage requirements, and bond thresholds vary by agency and jurisdiction and change; verify the current rules for each project.