Prevailing Wage Pitfalls: Top 6 Common Compliance Mistakes Contractors Make and How to Avoid Them
Whether it’s a federal Davis-Bacon project or a state-funded public works job, most contractors begin with the right intentions. The real challenge is navigating complex compliance rules that vary by agency and location. Even small missteps, like misclassifying a worker or miscalculating fringe, can trigger fines, payment delays, or loss of eligibility for future work. The upside? Most common mistakes are preventable with the right knowledge and systems.
Here are six of the most common compliance pitfalls contractors face—and some straightforward ways to steer clear of them.
1. Misclassifying Workers
One of the biggest traps is assigning the wrong classification to a worker. For example, you might pay someone as a “laborer” when their actual duties fall under “carpenter” or “electrician.” Even if the pay seems fair, the Department of Labor won’t see it that way.
How to avoid it: Review job descriptions carefully and compare them with the wage determination for your project. If tasks cross multiple classifications, split the hours accordingly instead of lumping everything under one title.
2. Not Paying the Correct Fringe Benefits
Some contractors assume that if wages are competitive, they’re covered. But prevailing wage includes both the hourly base rate and the fringe benefit portion. Missing the benefit side is a red flag.
How to avoid it: Document whether you’re meeting the fringe benefit obligation through health insurance, retirement contributions, or additional cash in lieu. Just make sure the numbers add up to the required total.
3. Incomplete or Inaccurate Certified Payroll Reports
Certified payroll reports are more than just paperwork, they’re a legal requirement. Even minor mistakes, such as missing signatures or mismatched classifications, can result in violations and investigations. Consistency and accuracy matter with every submission.
How to avoid it: Treat certified payroll reports as more than just paperwork. Double-check hours, classifications, and signatures before submission. A quick internal audit each week can save major headaches later.
4. Failing to Meet Apprentice Requirements
Some contractors bring on apprentices but don’t register them properly or meet ratio requirements. Even if the apprentice is qualified, failure to comply with state or federal registration standards is still considered a violation.
How to avoid it: Verify that every apprentice is enrolled in a recognized program and that your journeyman-to-apprentice ratios match the rules for your project. Keep documentation on file in case of an audit.
5. Ignoring Overtime Rules
Prevailing wage doesn’t replace overtime laws. If someone works more than 40 hours a week, they’re still entitled to time-and-a-half, even if you’ve already met the base and fringe wage requirements.
How to avoid it: Track overtime carefully and make sure rates are calculated from the prevailing wage base—not a lower figure.
6. Assuming “Close Enough” Is Good Enough
Some contractors assume small errors won’t raise flags, but compliance audits are built to uncover even minor violations. “Close enough” doesn’t cut it when it comes to certified payroll and wage determinations
How to avoid it: Build compliance into your process, not as an afterthought. Train your payroll team, keep thorough records, and perform periodic self-checks.
Final Thoughts
Prevailing wage compliance doesn’t have to feel like a burden. Once you understand the common traps, it becomes much easier to stay ahead. Think of compliance as part of your project management system: get it right early, and everything else runs smoother.
Mistakes don’t just cost money—they can cost future opportunities. With the right systems in place, you protect your business, your workers, and your reputation.
Partnering with a trusted partner like Public Works Consultant not only simplifies compliance but also positions your business for long-term success by safeguarding your reputation, protecting your eligibility for government contracts, and ensuring fair treatment for your workforce.
