Construction Accounting
Prevailing Wage and Certified Payroll: How Construction Accounting Software Keeps You Out of Trouble
Why Construction Payroll Is So Much Harder Than “Run Checks”
Contractors working on public jobs, union projects or in multiple jurisdictions face a maze of rules: prevailing wage, fringe benefits, union scales, overtime laws and certified payroll reporting. Mistakes don’t just upset employees—they can trigger penalties, debarment and reputational damage.
Specialized construction payroll software built into accounting systems handles this complexity while feeding accurate costs into job and WIP reports.
Handling Multiple Pay Rates and Classifications
On one job, a worker might be a laborer, then an operator, then a foreman—all at different rates. Your system must:
- Support multiple pay classes per employee.
- Apply correct rates by job, work classification and location.
- Handle shift differentials, per diems and zone pay.
Time entry from the field should capture classification and job, so payroll can apply rules automatically.
Prevailing Wage and Fringe Tracking
For prevailing wage work (e.g., Davis-Bacon), you must ensure total compensation meets required levels. Construction accounting systems:
- Store required wage and fringe rates per job and classification.
- Track cash wages and fringe benefits (e.g., health, pension) per employee.
- Alert you if a worker’s total package falls short of the requirement.
This helps you avoid underpayment claims and makes bidding more accurate by showing the true labor cost.
Union Payroll and Reporting
Union jobs add another layer: dues, working assessments, union fringes and multiple locals. Construction payroll modules can:
- Apply union contracts by trade and local.
- Calculate and allocate fringes and deductions.
- Generate union reports and remittance files automatically.
Accurate union reporting builds trust with locals and keeps crews on your side.
Certified Payroll Reports Without the Spreadsheet Grind
Public works often require certified payroll reports in specific formats or portals. Good software:
- Captures all required fields during time entry (address, SSN or IDs, work classification, hours, rates, deductions).
- Generates government-compliant reports (e.g., WH-347 or state forms) each period.
- Supports electronic submission formats for online portals.
This cuts hours of manual manipulation and reduces the chance of missing or inconsistent data.
Feeding Payroll Costs into Job Cost and WIP
Payroll isn’t just about compliance; it’s a major piece of job cost. Construction accounting platforms:
- Post total labor and burden to the correct job and cost code.
- Support burden rates that include payroll taxes and fringes.
- Provide PMs with up-to-date labor cost in job cost reports and WIP.
This keeps your financial picture accurate while you stay compliant.
Final Thoughts
Prevailing wage, union rules and certified payroll make construction payroll uniquely complex. When you put a construction-focused payroll engine at the center of your accounting system, you can pay people correctly, meet regulatory obligations and still get clean, timely job cost and WIP data out the other side.
- Top Expert
Nathan Rowan
Program Research, Editor, Expert in ERP, Cloud, Financial Automation
