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Certified payroll and prevailing wage

Getting prevailing wage right: wage determinations, classifications, fringe benefits and apprentices

Updated · 4 min read

Certified payroll is the report. Prevailing wage is what it reports on: paying the right rate, for the right classification, with the right fringe benefits, for every hour. Most back-wage findings on Davis-Bacon jobs come from a handful of decisions made early: which wage determination applies, how workers are classified, how fringe benefits are credited, and whether apprentices are properly registered.

This guide covers the federal Davis-Bacon rules. It is general information, not legal advice. Parts of the 2023 rule changes are still being challenged in court, as noted below, so confirm the current position with the contracting agency or counsel.

Wage determinations

A wage determination lists the minimum hourly rate and fringe benefit for each classification of worker in a county or area, by type of construction (building, heavy, highway or residential). General wage determinations are published on SAM.gov.

The contracting agency picks the wage determination and puts it in the contract. Your job is to use the one in your contract and know which revision applies:

  • Sealed bids: a revision published at least 10 days before bid opening applies. One published after bid opening does not, unless the contract is not awarded within 90 days of bid opening.
  • Other contracts: a revision issued before award applies; one issued after award generally does not.
  • Once incorporated, the wage determination usually stays the same for the life of the contract. Long-term contracts with annual options are an exception.

Post the wage determination and the Davis-Bacon poster on site where workers can see them.

Classifying workers

Workers are paid by the work they actually do, not by their job title or union card. A carpenter who spends a day hanging drywall where the determination lists a separate drywall classification is paid the drywall rate for those hours, and vice versa.

  • Split days: a worker can be paid different rates for time in different classifications only if your records accurately show the hours in each. Without those records, expect to owe the higher rate for all of them.
  • Missing classification: if you need a classification that is not on the wage determination, ask the contracting officer for a conformance. The new classification and rate must be for work not done by a listed classification, used in the area, and reasonably related to the listed rates. You cannot use a conformance to split a listed classification into cheaper parts. Give the affected workers a copy of the decision.

Misclassification, especially paying skilled work at laborer rates, is the most common finding in investigations.

Fringe benefits

The wage determination gives a basic rate and a fringe amount. You can meet the total in three ways:

  • contributions to bona fide benefit plans (health, pension, vacation and similar) worth at least the fringe amount;
  • paying the fringe amount in cash on top of the basic rate;
  • a mix of the two.

Payments the law already requires, such as Social Security, unemployment insurance and workers' compensation, do not count toward fringe.

Annualization. If you contribute to a plan for a worker who does both prevailing wage and private work, the credit per hour on the prevailing wage job is the plan's cost divided by all the hours the worker worked in the period, not just the Davis-Bacon hours. A $6,000 health plan for a worker with 2,000 hours a year is worth $3.00 an hour, even if all the contributions were made during the federal job. The main exception is a defined-contribution pension plan with immediate participation and vesting. The 2023 rule wrote annualization into the regulations, and it is one of the provisions challenged in a pending case.

Overtime

On contracts over $100,000, the Contract Work Hours and Safety Standards Act requires time and a half for hours over 40 in a workweek. Overtime is calculated on the basic rate, not on the fringe, and the fringe amount is still owed for every hour. Count hours worked on other jobs in the same week when working out the 40.

Apprentices

You can pay an apprentice less than the journeyworker rate only if:

  • the apprentice is individually registered in a program registered with the Department of Labor's Office of Apprenticeship or a recognized state apprenticeship agency (or is in their first 90 days of probation in such a program);
  • you do not exceed the program's ratio of apprentices to journeyworkers on the job;
  • you pay the percentage of the journeyworker rate the program sets for their level, and fringe as the program specifies (the full fringe if it is silent).

An apprentice who is not registered, or who is over the ratio, must be paid the full rate for the classification. Keep a copy of each apprentice's registration and the program's ratio and wage schedule in your records. Unregistered "apprentices" are a frequent finding.

Recent changes and open questions

The Department of Labor's 2023 rule, which applies to contracts entered into from October 23, 2023, changed several things: a new way of setting prevailing rates (the "30 percent rule"), prime contractor liability for subcontractors' wages, interest on back wages, and stronger anti-retaliation protections. Three provisions were blocked by a federal court in 2024 and vacated in June 2026, including the rule that contract clauses apply "by operation of law" when missing from a contract. Other provisions, including the 30 percent rule and annualization, are being challenged in a separate case that was awaiting a ruling at the time of writing.

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