- Prevailing wage = a government-set minimum wage plus fringe for each trade, on government-funded jobs.
- You must pay the published rate for each worker's classification — usually more than your normal rate.
- You must file certified payroll proving it (federally, Form WH-347), usually every week.
- Get these first: the wage determination, your worker classifications, and any required registration.
- Getting it wrong means back wages and fines — so it's worth setting up right from week one.
What "prevailing wage" actually means
When a construction project is paid for with public money — a school, a road, a municipal building, public housing — the government requires that the workers be paid a set minimum for their trade. That minimum is the prevailing wage, and it has two pieces: a base hourly rate and a fringe benefit amount. It's set per trade, per locality, and it's usually meaningfully higher than what you'd pay on a private job. The point is to keep public contracts from being won by underpaying labor.
On federal jobs this comes from the Davis-Bacon Act. Many states (California, New York, Illinois, Washington and others) have their own prevailing wage laws on top, with their own forms and rates. A single job can be covered by federal rules, state rules, or both.
The words you'll keep hearing
The official document listing the required base + fringe rate for every trade classification on your project's location. Your rates come from here — you don't guess them.
The trade category for each worker (electrician, laborer, operator…). You pay based on the work performed, not someone's job title. If a worker does two trades in a week, each gets its own rate.
The benefit portion of the prevailing wage. You can pay it into bona fide plans (health, pension, training) or as extra cash wages — but base + fringe together must hit the required total.
The weekly report proving you paid everyone correctly. On federal jobs it's Form WH-347, and it ends with a signed Statement of Compliance.
If you use apprentices at apprentice rates, they must be in a registered program, and you can only use so many per journeyworker. Exceed the ratio and the extra apprentices must be paid full rate.
What you're now responsible for
- Pay the right rate — the published base + fringe for each worker's classification, for every hour on the job.
- File certified payroll — usually weekly on federal jobs (within 7 days of payday), monthly or weekly on state jobs depending on the state.
- Sign the Statement of Compliance — certifying your payroll is accurate. Unsigned means invalid.
- Keep records — typically for three years, in case of an audit.
- Report "no work" weeks — if the job's active but your crew didn't work, you still file.
The first five things to do
- Get the wage determination for the project from the GC or awarding agency, and find the classifications your crew falls under.
- Check if you need to register. Some states (like California) require contractor registration before you do any work — confirm before you start.
- Map each worker to a classification and write down the base + fringe rate for each.
- Decide how you'll pay fringe — into plans, as cash, or a mix — and make sure the totals clear the required wage.
- Set a filing routine so the certified payroll goes out on time, every period, from week one.
Why first-timers get burned (and how not to)
The two classic traps: finding out a job was prevailing wage after you already bid it at your normal labor rate (now your margin is gone), and misclassifying a worker so you underpay without realizing it. Both are avoidable with one habit — confirm the wage determination and classifications before you bid and before the first payroll, not after. When you're not sure whether a job is covered, ask the awarding agency directly; "nobody told me" is not a defense that holds up.
Start with the checklist
Get the free WH-347 compliance checklist — the one-page-at-a-time walkthrough of everything above, so your first certified payroll goes out right. We'll also send plain-English tips as you get going.
Where to go next
When you're ready to file, the free WH-347 generator builds your federal report with the math done. And read the step-by-step WH-347 guide. If your job is in a specific state, start with California, New York, or Illinois. Already on accounting software? See whether QuickBooks does certified payroll (short version: only partly), or review the prevailing wage software workflow PrevailComply is building for small subs.
This guide is general educational information for small subcontractors, not legal advice. Prevailing wage rules vary by jurisdiction and change over time — always confirm against your project's wage determination, the awarding agency, and the applicable federal or state law.