Construction Time Tracking Compliance: Prevailing Wage and Certified Payroll Guide

For contractors working on public construction projects, time tracking isn’t just about productivity, it’s a legal requirement that can make or break your business. With federal penalties now reaching up to $13,508 per violation and the risk of debarment from future government contracts, construction time tracking compliance has never been more critical.

Understanding Prevailing Wage Requirements

Prevailing wage laws require contractors on public projects to pay workers at least the local prevailing rate for their job classification. At the federal level, the Davis-Bacon Act applies to contracts over $2,000 on federally funded construction projects.

Currently, 32 states have enacted their own prevailing wage laws, while the remaining 18 states still fall under federal Davis-Bacon requirements for federally funded projects. This patchwork of regulations makes accurate time tracking essential for multi-state contractors.

What Time Tracking Records Are Required?

According to IRS guidelines, contractors must maintain payroll records that include:

• Hours worked in each job classification
• Actual wages and fringe benefits paid
• Employee names, addresses, and Social Security numbers
• Regular hours and overtime hours separately documented
• Gross pay and all deductions

In states like New York, employers must keep accurate payroll records for at least six years and have them available for Department of Labor inspections at the job site.

The Real Cost of Non-Compliance

The financial consequences of prevailing wage violations are severe and growing:

• Federal penalties: Up to $13,508 per violation under Davis-Bacon
• Back wages: Full repayment of wage differences owed to workers
• State penalties: In Illinois, a 20% penalty on underpayments, increasing to 50% for repeat violations
• Interest charges: New York assesses up to 16% annual interest on owed wages
• Debarment: Loss of eligibility to bid on future government contracts

One mid-sized contractor recently faced $180,000 in back wages and penalties for Davis-Bacon violations on a single federal highway project. Another company lost a $2.3 million government contract opportunity due to prior compliance failures.

Certified Payroll Requirements

For public projects, contractors must submit weekly certified payroll reports using Form WH-347 or equivalent documentation. The Department of Labor released an updated WH-347 form effective January 2025, featuring enhanced fringe benefit reporting and clearer apprenticeship documentation requirements.

Starting December 31, 2025, New York requires all contractors to electronically submit certified payroll records through a dedicated state portal—a trend likely to spread to other states.

Common Compliance Violations to Avoid

According to enforcement agencies, the most frequent violations include:

• Worker misclassification: Assigning workers to lower-paying job classifications than their actual duties warrant
• Inaccurate time records: Using preset ratios instead of tracking actual hours by classification
• Missing overtime calculations: Failing to include all compensable hours regardless of classification changes
• False certifications: Certifying compliance without accurate supporting records
• Cash payments: Making secret cash supplements instead of properly documented prevailing wages

How Certified Payroll Software Ensures Compliance

Modern certified payroll software eliminates many compliance risks by:

• Automatic rate application: Applying correct prevailing wage rates based on job code and location
• Real-time error detection: Flagging missing classifications or rate discrepancies before submission
• Audit trail creation: Maintaining comprehensive records that satisfy inspection requirements
• WH-347 generation: Producing compliant certified payroll forms automatically
• Mobile time collection: Capturing accurate hours at the job site with GPS verification

Solutions like eMars can cross-check every payroll against wage determinations and 30 factors linked to Davis-Bacon compliance, allowing instant error reporting and corrections before violations occur.

Best Practices for Prevailing Wage Tracking

To maintain compliance across all public projects:

1. Track time by classification: Record hours separately for each job classification performed, even if a worker switches roles during a shift
2. Verify rates regularly: Prevailing wage rates change—ensure your system uses current determinations
3. Document everything: Keep daily logs of employees, job titles, and employers on site for projects over $500,000
4. Require subcontractor compliance: Include prevailing wage requirements in all subcontracts and verify their certified payrolls
5. Conduct internal audits: Review payroll records regularly before external inspections occur

The Bottom Line

Construction time tracking compliance isn’t optional on public projects, it’s a fundamental requirement that protects both workers and contractors. With penalties increasing and enforcement tightening across federal and state levels, investing in proper prevailing wage tracking systems is far less costly than the alternative.

The contractors who thrive on government projects are those who treat compliance as a competitive advantage, not a burden. Accurate time tracking, certified payroll software, and consistent record-keeping turn regulatory requirements into streamlined business processes.

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Sources

• Employment Law Guide – Prevailing Wages in Construction – Davis-Bacon Act requirements
• IRS Prevailing Wage FAQ – Record-keeping requirements
• New York State Prevailing Wage Guide – Six-year record retention requirement
• Illinois Prevailing Wage FAQ – 20% penalty on underpayments
• Certified Payroll Reporting – Davis-Bacon Act – WH-347 form requirements
• NY Bureau of Public Work and Prevailing Wage Enforcement – Electronic submission requirements
• LCPtracker – Construction Certified Payroll Software – Certified payroll software features
• eMars Certified Payroll Software – Davis-Bacon compliance checking