Prevailing Wage Certified Payroll: Contractor Guide
— WH347.io Team
Prevailing wage certified payroll is the system that keeps federal construction contracts honest. Here's exactly how prevailing wages work, how to report them on the WH-347, and what happens if you get it wrong.
Prevailing wage certified payroll is the combination of two federal requirements that every contractor on a government-funded construction project must meet: paying workers at least the prevailing wage rate for their trade and locality, and documenting that payment each week on a certified payroll report. Miss either piece — the right wage or the proper documentation — and you're out of compliance.
Most contractors understand prevailing wage in the abstract but struggle with the specifics: how exactly do wage rates apply to different work classifications, how do fringe benefits factor in, and what does the WH-347 certified payroll form actually require you to report? This guide answers all of it.
What Is Prevailing Wage Under the Davis-Bacon Act?
The Davis-Bacon Act, originally passed in 1931, requires that laborers and mechanics employed on federal construction contracts over $2,000 be paid no less than the locally prevailing wage for their type of work. The Department of Labor's Wage and Hour Division (WHD) determines prevailing wages through wage surveys and publishes them in wage determinations that are incorporated into each contract.
Prevailing wage is not a single national number. It varies by trade and by geography — a journeyman electrician in Dallas has a different prevailing wage than a journeyman electrician in Boston. It also varies by classification: a laborer rate is different from a carpenter rate, which is different from an operating engineer rate. You must apply the correct rate for the work each employee actually performs each day.
How Prevailing Wage Rates Are Structured
Every wage determination contains two components for each classification: a basic hourly rate and a fringe benefit rate. The basic hourly rate is the minimum cash wage that must be paid directly to the worker. The fringe benefit rate is an additional amount that must be provided either as bona fide fringe benefits (health insurance, pension, vacation, etc.) or as additional cash wages.
For example, if the wage determination shows Carpenter: $32.00 basic + $14.50 fringe, you must pay at least $32.00 per hour in cash wages and provide at least $14.50 per hour in bona fide fringe benefits. If you don't offer fringe benefits, you must pay the full $46.50 per hour in cash. You cannot substitute a less expensive benefit package and pocket the difference.
- Basic hourly rate: the minimum cash wage paid directly to the worker for each hour worked.
- Fringe benefit rate: must be provided as bona fide benefits (health, pension, vacation) or additional cash.
- Total prevailing wage: basic rate + fringe rate — the floor for all-in compensation.
- Overtime: Davis-Bacon requires overtime pay at 1.5x the basic rate for hours over 40 in a week, per the Contract Work Hours and Safety Standards Act (CWHSSA).
How to Report Prevailing Wages on the WH-347
Frequently Asked Questions
What is prevailing wage certified payroll?
Prevailing wage certified payroll is the combination of two federal requirements: paying workers at least the locally prevailing wage rate for their trade (set by the Davis-Bacon Act), and reporting that payment weekly on a certified payroll form (WH-347). Both requirements apply to contractors and subcontractors on federally funded construction projects.
Who sets prevailing wage rates for federal construction projects?
The U.S. Department of Labor's Wage and Hour Division (WHD) sets prevailing wage rates through wage surveys. Rates vary by trade, work classification, and geographic area. The DOL publishes them in wage determinations that are incorporated into each federal construction contract. You can find current wage determinations at sam.gov.
How do I report prevailing wages on the WH-347 form?
For each worker, enter their work classification (matching the wage determination exactly), hours worked each day, hourly rate paid, fringe benefit contributions, and gross/net wages. The classification must reflect the work actually performed — not the employee's job title. Workers performing two different trades in the same week are listed on two separate rows at two different rates.
Do fringe benefits count toward prevailing wage?
Yes. The prevailing wage consists of a basic hourly rate plus a fringe benefit rate. You can satisfy the fringe portion by contributing to bona fide benefit plans (health insurance, pension, vacation, etc.) or by paying the fringe amount as additional cash wages. You cannot use a cheaper benefit package and keep the difference — the full fringe rate must be accounted for.
What are the penalties for prevailing wage violations on certified payroll?
Penalties include back wage restitution for all affected workers, contract termination, and debarment from federal contracting for up to three years. Knowingly falsifying a WH-347 to hide underpayment is a federal crime under 18 U.S.C. § 1001, punishable by fines and up to five years in prison.