Public works jobs (those that require paying workers a prevailing wage) open the door to bigger revenue, but they come with a hidden cost: payroll complexity that can overwhelm small teams and expose large ones to serious risk.
Why? There are several requirements contractors must adhere to when awarded a government construction contract, including prevailing wage. Prevailing wage is a set determination of how workers on said contract must be paid as outlined by the Department of Labor Wage and Hour Division. The wage depends on where the work is being done (geographical area), and the type of job involved (worker classification). Prevailing wages, including fringe benefits, must be paid on all hours worked on the site, and employers must submit weekly certified payroll records to prove these standards are being met.
If adhering to prevailing wage and other government regulations seems like a headache, that’s because it can be, unless you have the right solutions, like a payroll system that automatically determines prevailing wage, minimizing manual work and reducing errors that can lead to penalties.
Prevailing Wage in the Real World
Prevailing wage, certified payroll, reports and compliance … it all seems like a lot. But taking on a public works project can provide some big benefits.
For example, smaller contractors get access to bigger jobs than they normally get. The higher wages attract better workers, and there’s less of a chance of getting crushed by competitors underpaying labor. For larger contractors, access to government contracts means multi-million or even billion-dollar jobs, predictable labor costs, and stronger workforce pipelines.
The downside of public works is that extra paperwork can drown an already small administrative staff and put larger companies at risk for non-compliance as one mistake across hundreds of workers can equal a big liability.
Let’s break the reality down.
Say a small contractor is awarded a job to build a new elementary school using state and federal funds. The project will employ general laborers and several subcontractors like electricians, carpenters, and plumbers. Each of these workers must be paid a prevailing wage for their specialty, which includes a base hourly wage and fringe benefits.
That small contractor must now determine the prevailing wage for each worker, the worker classification, and file weekly certified payroll reports. The amount of time can easily overwhelm a small staff, leading to late pay or mistakes that result in back pay penalties, withheld payments and compliance issues.
For a large contractor, the stakes could be even higher. If a large contractor is awarded a federal highway job funded by the Department of Transportation, the project could easily span multiple counties or even states. The prevailing wage could be different for each job classification-e.g., heavy equipment operators, concrete finishers and truck drivers – in multiple regions.
Automating prevailing wage determinations is the key to taking on public works jobs with less administrative burden and more protection from non-compliance.
That automation is built into Arcoro Payroll.
Built into Your Payroll
Some payroll systems treat prevailing wage as an add-on. Arcoro treats it as a core part of how construction payroll should work. Inside Arcoro Payroll, prevailing wage is already accounted for in how payroll runs.
Field employees clock into jobs and labor classes; that time flows into payroll, where the system automatically applies the correct prevailing wage rates and flags anything that needs your review Then, Certified Payroll data can be exported by job or location to be used for completing reports in WH-347 and LCP Tracker formats
The end result is less manual data handling, fewer errors, and greater confidence that your payroll is compliant before it ever goes out the door.
- For smaller contractors, this means you can confidently take on public works jobs without adding administrative overhead.
- For larger contractors, it means managing multi-state, multi-classification payroll without increasing compliance risk.
Still to Come in 2026
Arcoro is innovating to solve your most pressing construction workforce challenges.
- Additional AI enablement starting with an AI assistant and AI capabilities to help you hire better candidates faster, as well as an embedded AI support agent for Time users.
- A unified mobile experience starting with a modern employee self-service experience.
- A robust open API to give your team access to Arcoro data for custom reporting, integrations, and workflows, with self-service tools to manage and monitor it all.
Contact us to see how prevailing wage is handled inside Arcoro Payroll.
