Tag: Labor Laws

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Alteration & Repair Under the Inflation Reduction Act: The Compliance Distinction Project Owners Can’t Afford to Ignore

Title graphic reading Alteration and Repair Under the IRA, with two panels contrasting Operations and Maintenance against Alteration and Repair.

As taxpayers continue to pursue enhanced clean energy tax credits under the Inflation Reduction Act (IRA), many have become familiar with the prevailing wage and apprenticeship requirements that apply during project construction. What remains less understood is how prevailing wage obligations apply after a facility has been placed in service.

The IRA expressly requires prevailing wage compliance not only during construction, but also during certain post-construction activities. Specifically, taxpayers seeking enhanced credit amounts must ensure that laborers and mechanics performing “the alteration or repair of such facility” are paid prevailing wages during the applicable compliance period. (Federal Register, TD 9998)

For owners, developers, EPC contractors, and operations teams, the challenge is determining when routine operations and maintenance (O&M) activities cross the line into alteration or repair work that may trigger prevailing wage obligations.

Why This Distinction Matters

The financial consequences of getting this classification wrong can be significant. For many IRA incentives, taxpayers that satisfy the applicable prevailing wage and apprenticeship requirements can receive a credit amount that is up to five times greater than the otherwise applicable base credit.

At the same time, taxpayers that fail to satisfy prevailing wage requirements may be required to make correction payments, pay penalties, and work through statutory cure procedures to preserve eligibility for enhanced credit values.

As a result, understanding whether post-construction work constitutes routine maintenance or a covered alteration or repair is an important compliance consideration.

Some Interpretation Background Between the IRS and DBA

One of the most important observations from Treasury’s final regulations is that the agencies acknowledged the challenges of applying Davis-Bacon concepts traditionally used in federal contracting to a tax-credit framework.

In the preamble to the final regulations, Treasury and the IRS explained that they would incorporate only those Davis-Bacon requirements that are:

relevant for the purposes of section 45(b)(7)(A) and the intent of the IRA, and necessary for, and consistent with, sound tax administration.

Federal Register, TD 9998

The agencies further noted that they must:

take a reasonable approach to interpret a Code provision that references a Federal law applicable to Federal contracts.

For taxpayers and contractors, this language demonstrates that prevailing wage compliance under the IRA often requires a fact-specific analysis grounded in both IRS and Davis-Bacon principles.

What Does the IRS Mean by “Construction, Alteration, or Repair”?

The IRS has specifically addressed the question of what constitutes “construction, alteration, or repair” for purposes of the IRA prevailing wage requirements through its published guidance and FAQs.

Notably, the statute references “the construction of such facility” and “the alteration or repair of such facility.”

What the statute does not specifically reference is routine operations and maintenance. That omission is where much of the compliance analysis begins.

Operations & Maintenance vs. Alteration & Repair

Neither the IRA statute nor the IRS’s prevailing wage regulations provide an exhaustive list of activities that automatically qualify as operations and maintenance (O&M) or alteration and repair (A&R). As a result, taxpayers often look to Davis-Bacon authorities and Department of Labor guidance for interpretive context.

Importantly, the examples below are not definitive legal determinations and should not be interpreted as IRS-approved classifications. Rather, they reflect factors discussed in Department of Labor guidance that may help inform a project-specific analysis.

Activities Often Associated with Routine Maintenance

The Department of Labor has stated that:

Maintenance work that is routinely and regularly performed to keep the building or work functioning in the same condition is not considered construction.

Consistent with that principle, activities such as the following may be indicative of routine maintenance when performed to preserve existing operating conditions:

  • Routine inspections and monitoring of equipment performance
  • Preventive maintenance programs performed on a recurring schedule
  • Cleaning and servicing activities intended to maintain existing functionality
  • Minor upkeep work completed repeatedly over time as part of normal facility operations

The Department of Labor has further indicated that maintenance work is often characterized by activities that are “performed continuously/repetitively over time,” “completed comparatively quickly,” and intended to maintain a facility “in its existing condition.”

Activities That May Suggest Alteration or Repair

By contrast, Department of Labor guidance explains that:

Restoration or improvement of a facility by modifications to the facility’s components, systems, or materials is considered to be alteration or repair.

The guidance also notes that alteration or repair work will generally “improve the building or work, either by fixing something that is broken or by improving upon the building or work’s existing condition.”

Based on those principles, activities such as the following may warrant closer review:

  • Major component replacement projects
  • Equipment refurbishments or overhauls that restore or improve facility functionality
  • Modifications to facility systems or materials intended to improve efficiency, capacity, usefulness, or performance
  • Corrective work addressing specific failures, defects, or broken equipment
  • Work requiring skills commonly associated with construction trades

The Department of Labor identifies additional factors suggesting alteration or repair, including whether the work:

  • Corrects “individual problems or defects as separate and segregable incidents,”
  • Improves a facility’s “structural strength, stability, safety, capacity, efficiency, or usefulness,” or
  • Involves skills “typical of one or more construction trades.”

Important Caveat

Ultimately, neither the IRA nor current IRS guidance establishes a simple checklist for determining whether a particular activity constitutes maintenance or alteration and repair. Classification is often highly dependent on the scope, purpose, frequency, and technical nature of the work being performed. Taxpayers should evaluate significant post-construction activities based on the specific facts and circumstances of the project and should consult qualified legal, tax, and prevailing wage advisors when uncertainty exists.

Conclusion

As guidance continues to develop, taxpayers should carefully evaluate significant post-construction activities and document the basis for their classifications to help mitigate compliance risk and preserve enhanced credit eligibility. If questions arise regarding the application of prevailing wage requirements to your project, our team is available to provide experienced guidance and support. Access expert help and reach out today.

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California SB 35: What Contractors Need to Know About Prevailing Wage & Compliance

Multifamily housing under construction with a tower crane, alongside a completed apartment building.

California Senate Bill 35 (SB 35) reshaped the approval process for multifamily housing developments by introducing a streamlined, ministerial approval pathway for qualifying projects. While the bill is primarily viewed through a housing development lens, it carries significant compliance implications for contractors, especially those operating in the prevailing wage space.

Below is a practical guide to SB 35 focused on what contractors, subcontractors, and compliance teams need to know to stay compliant and audit ready.

Important Update: SB 35 Was Extended and Amended by SB 423

Before diving into compliance details, it’s worth flagging a development that changes how this law should be understood today: SB 35 is no longer a standalone statute operating on its original 2017 terms.

In October 2023, Governor Newsom signed SB 423 (Wiener), which took effect January 1, 2024, and substantially amended the streamlined ministerial approval process originally created by SB 35 (codified at Government Code § 65913.4). Some jurisdictions and planning departments now refer to the process as “SB 423 (formerly known as SB-35).”

Key changes contractors should know about:

  • The sunset date was extended a decade. SB 35 was originally set to expire on January 1, 2026. SB 423 pushed that expiration to January 1, 2036.
  • The old blanket labor standard was replaced with a tiered structure. Previously, SB 35 applied a single objective standard requiring prevailing wage and use of a skilled and trained workforce across covered projects. SB 423 restructured this into size- and height-based tiers (detailed in the Skilled and Trained Workforce section below), rather than a one-size-fits-all requirement.
  • A small-project exemption was added. Projects of 10 units or fewer that are not otherwise a public work are exempt from the prevailing wage, apprenticeship, and healthcare expenditure requirements entirely.
  • The coastal zone exclusion was removed, expanding the geographic reach of projects eligible for streamlined approval.

For contractors and compliance teams, the practical takeaway is this: prevailing wage still applies broadly, but which additional labor standards apply (skilled and trained workforce, apprenticeship utilization, healthcare expenditures) now depends on specific project size and building height thresholds rather than a blanket rule. The sections below reflect the current SB 423-amended framework.

What Is SB 35?

SB 35 allows qualifying multifamily housing projects to bypass discretionary approvals and move through a streamlined, by-right approval process if they meet objective zoning and affordability requirements.

Key features include:

  • Ministerial (non-discretionary) approvals
  • Strict timelines for local agency review (60–90 days depending on project size)
  • Requirements tied to affordability thresholds and housing production goals
  • Applicability to jurisdictions that fall behind on regional housing needs (RHNA)

Prevailing Wage Requirements Under SB 35

SB 35 explicitly ties streamlined approval eligibility to prevailing wage compliance.

When Prevailing Wage Applies

Under SB 35, developers must certify one of the following:

  • The project is a public work, OR
  • All construction workers will be paid at least the general prevailing wage for the applicable trade and location

This applies even when the project is privately funded.

Contractor Responsibilities

For contractors and subcontractors, this means:

  • Paying DIR-determined prevailing wage rates
  • Ensuring apprentices are paid the correct apprentice wage rates
  • Flowing prevailing wage requirements down to all subcontractor tiers
  • Including prevailing wage clauses in all contracts
  • Skilled and Trained Workforce requirements (if applicable)

Failure to comply can lead to:

  • Civil wage and penalty assessments
  • Liquidated damages
  • Enforcement actions by the California Labor Commissioner

Certified Payroll & Recordkeeping Requirements

SB 35 reinforces standard California Labor Code §1776 recordkeeping requirements.

Contractors must maintain and verify certified payroll records, make records available for inspection upon request, and retain documentation sufficient to support reported wages and classifications.

Best Practice: Go Beyond CPRs

As seen in similar compliance frameworks, certified payroll alone is not sufficient for audit protection. Contractors should also maintain:

  • Timecards and daily job logs
  • Worker classification documentation
  • Fringe benefit contribution records
  • Fringe benefit annualization calculations
  • Apprenticeship agreements and ratios
  • Subcontractor compliance documentation

Without these, contractors risk exposure during Labor Commissioner investigations, worker complaints, and potential audits.

Skilled and Trained Workforce (STW) Requirements

Under the pre-2024 version of SB 35, a single objective standard applied broadly across covered projects. SB 423 replaced that with a tiered labor standard based on project size and building height:

  • Projects of 50 or more housing units must meet apprenticeship-utilization and healthcare expenditure requirements for construction craft employees, either directly, or by being signatory to a collective bargaining agreement that already requires both. Each construction contractor must also maintain and verify payroll records pursuant to Section 1776 of the Labor Code, and submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code.
  • Buildings taller than 85 feet must utilize a skilled and trained workforce and hit certain percentage goals, or face penalties for non-compliance.
  • Projects of 10 units or fewer where the project is not otherwise a public work are exempt from the prevailing wage, apprenticeship, and healthcare expenditure requirements entirely.

What This Means

Rather than assuming a flat STW threshold applies, contractors need to check a given project against its unit count and building height to determine which labor standards apply. A 12-unit, 3-story project and a 200-unit high-rise can trigger very different obligations under the same law. All subcontractors on a covered project are still required to comply with whichever standards apply.

Reporting Obligations

Developers (and often contractors supporting them) must submit monthly compliance reports to the local jurisdiction and demonstrate adherence to STW requirements.

Failure to comply may result in:

  • $10,000/month penalties for missing reports
  • $200/day per non-compliant worker penalties

Subcontractor Compliance: Flow-Down Liability

As with other public works frameworks, SB 35 places responsibility on prime contractors to enforce compliance across all tiers. This includes collecting certified payroll from subcontractors, verifying wage rates and classifications, and ensuring proper contract language is in place.

If a subcontractor fails to comply, liability may flow upstream, particularly where oversight procedures are lacking.

Apprenticeship Requirements

SB 35 aligns with broader California apprenticeship requirements:

  • Proper apprentice-to-journeyman ratios must be maintained
  • Apprentices must be registered in approved programs
  • Wage rates must match applicable prevailing apprentice rates
  • Payment of training amount to applicable program or CAC

Noncompliance in this area is a frequent audit trigger and often overlaps with STW requirements.

Interaction with Other Regulations

SB 35 projects may also intersect with:

California Prevailing Wage (DIR)

Core requirement for all covered work. Includes:

  • Use of wage determinations
  • Public works enforcement framework
  • CPR and recordkeeping obligations

Davis-Bacon (Federally Funded Projects)

If federal funding is involved:

  • Federal prevailing wage requirements may apply concurrently
  • Dual compliance (state + federal) may be required

Section 3 (HUD-Funded Projects)

If HUD funding is used:

  • Hiring and contracting goals for low-income workers
  • Additional reporting and documentation requirements

Project Labor Agreements (PLAs)

If a PLA is in place, some enforcement mechanisms (e.g., payroll record provisions) shift to arbitration frameworks instead of statutory enforcement.

Audit & Enforcement Risk

Scrutiny under SB 35 enforcement can come through the following forms:

  • Public reporting requirements
  • Streamlined approvals tied to compliance certifications
  • Monthly workforce reporting (STW)

Common audit triggers include:

  • Payroll discrepancies
  • Worker complaints
  • Missing documentation
  • Misclassification issues

Penalties can include:

  • Back wages
  • Interest and fines
  • Debarment from future public works

Key Takeaways for Contractors

Contractors should approach these projects with a compliance-first strategy:

  1. Treat all SB 35 projects as high-compliance work. Even if privately funded, prevailing wage can apply.
  2. Strengthen recordkeeping systems. Certified payroll is not enough. Maintain full supporting documentation.
  3. Audit subcontractors proactively. Do not assume compliance. Verify it through every party.
  4. Prepare for Skilled & Trained Workforce tracking. Ensure workforce eligibility and reporting systems are in place.
  5. Align contracts with compliance requirements. Include all mandated language and obligations upfront.

Final Thoughts

Compliance under SB 35 requirements layers prevailing wage, workforce requirements, and reporting obligations. Contractors who succeed under SB 35 will be those who build compliance into project workflows early, maintain a well-documented paper trail of proof of compliance, and actively manage subcontractor risk.

As enforcement continues to evolve, partnering with experienced prevailing wage consultants can help ensure your projects stay compliant from bid to closeout. Connect with us to learn how you can get assistance in the compliance process.

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The AI Data Center Boom Meets Prevailing Wage: A State-by-State Look

Rows of black server racks in a modern data center, with a lit corridor running between them.

As the power of AI exponentially scales, data centers go up across the country to house the infrastructure needed for this technology. States have taken notice, and a growing number are attaching strings to that growth: incentives to attract developers, labor standards to protect the workforce doing the building, or both. In a handful of states, those labor standards now include prevailing wage, and in some cases, apprenticeship requirements.

If your firm works in data center construction, or is considering it, here’s what’s already law, what’s moving through statehouses right now, and how to think about compliance in a sector that didn’t traditionally think of itself as “public works.”

Why Data Centers, and Why Now

Data centers are not new, but the scale of what’s being built is. A single large-scale AI training facility can draw as much electricity as a mid-sized city, and utilities, grid operators, and state legislatures are all racing to catch up. That’s created two distinct regulation types in state legislatures:

  1. Incentive-driven bills, aimed at attracting data center investment (tax exemptions, streamlined permitting, dedicated electricity rate structures).
  2. Labor-standards bills, aimed at ensuring that the construction workforce building these facilities (often on an accelerated, high-dollar timeline) is paid fairly and trained properly.

Some legislation does both at once: offering a tax benefit or rate structure in exchange for labor commitments on the construction side. That pairing is exactly what’s driving the prevailing wage trend below.

If you’re already tracking clean energy prevailing wage triggers under the Inflation Reduction Act, this will feel familiar. Data centers are becoming the AI-era version of the same policy pattern: big federal or state incentive, paired with a labor standards string attached.

States That Have Passed Data Center Prevailing Wage Requirements

California — SB 978

California’s SB 978 takes a “rate structure plus labor standards” approach. The bill requires the California Public Utilities Commission (PUC) to create a special electricity rate structure for large data centers, defined as facilities primarily processing digital information with a peak demand of at least 75 megawatts. This ensures these facilities pay for the infrastructure upgrades their power demand requires rather than shifting those costs onto other ratepayers. In exchange, large data centers must also contribute to funding new zero-carbon energy resources, and their construction projects must meet specific labor requirements, including paying prevailing wages and using a skilled and trained workforce — effectively treating qualifying data center construction as a public works project. The bill also folds data centers’ impact into the state’s existing tracking toward its 100% clean electricity goal by 2045.

For firms already managing California prevailing wage compliance on public works or renewable energy projects, this extends a familiar framework: skilled and trained workforce documentation, certified payroll, and DIR-aligned prevailing wage rates into a new project type.

Minnesota — SSHF16

Minnesota’s approach again pairs a tax incentive with a labor standard. Under SSHF16, “qualified large-scale data centers” were added to the state’s sales tax exemption for purchases of enterprise information technology equipment and computer software, effective for purchases made after June 30, 2025. In exchange, laborers or mechanics performing work to construct or refurbish qualified large-scale data centers must be paid the prevailing wage rate for their work. See our Minnesota prevailing wage compliance page for the state’s existing framework administered by the Department of Labor and Industry (DLI).

States With Data Center Prevailing Wage Bills In Progress

New Jersey — AB 3611

New Jersey’s Assembly Bill 3611 applies prevailing wage directly to data center construction, without pairing it to a separate incentive program. The bill requires that workers employed in the construction of a data center project be paid not less than the prevailing wage rate for their craft or trade, as determined by the Commissioner of Labor and Workforce Development, for data center construction projects with an electrical capacity of five megawatts or greater annually after construction.

Firms doing construction work in New Jersey should compare this threshold carefully against project specs. Our New Jersey prevailing wage compliance page covers the state’s existing Prevailing Wage Act framework that this bill builds on.

Pennsylvania — HB 2061

Pennsylvania’s HB 2061 ties compliance to an affirmation requirement rather than a size threshold. For construction, expansion, rehabilitation, renovation, or site work of a computer data center beginning on or after July 1, 2025, the bill would require an affirmation. This affirmation must be signed by the authorized executive representing the owner or operator and note that all contractors and subcontractors will pay workers not less than the prevailing minimum wage and benefit rates for each craft or classification, as determined and enforced by the Department of Labor and Industry, consistent with the Pennsylvania Prevailing Wage Act (Act of Aug. 15, 1961, P.L. 987, No. 442). This structure puts direct accountability on the owner/operator, not just the contractors performing the work. See our Pennsylvania prevailing wage compliance page for background on how the state’s existing Prevailing Wage Act operates.

Because these two bills are still in progress, their thresholds, effective dates, and even their prevailing wage provisions could change before passage — or the bills could stall entirely. Always confirm current bill status and text directly through the state legislature’s website before relying on it for a specific project.

What This Means for Contractors and Developers

A few patterns are worth flagging as this trend develops:

  • Thresholds vary widely. California’s trigger is a 75 MW peak demand; New Jersey’s proposed threshold is 5 MW of annual electrical capacity. A project that clears one state’s bar for prevailing wage might not come close in another. Don’t assume a single company-wide policy will work across state lines.
  • Prevailing wage and apprenticeship are increasingly bundled. Across several existing prevailing wage types and incentives already established in federal clean energy tax credits, prevailing wage and apprenticeship requirements may travel together to unlock the largest incentive.
  • Some bills reach owners/operators directly, not just contractors. Pennsylvania’s affirmation requirement puts the compliance obligation on the entity commissioning the project, which changes who needs to be at the table when compliance planning starts.
  • Data centers are being treated as “public works” even when privately financed. California’s SB 978 and Minnesota’s SSHF16 both extend prevailing wage to projects that aren’t publicly funded in the traditional sense. The trigger is the incentive or rate structure the facility receives, not government ownership of the project.

Best Practices for Data Center Construction Compliance

  1. Identify your triggers early, per state. Before bidding or scoping a data center project, confirm whether the state has an applicable law and what its size/capacity threshold is — megawatt peak demand, kilowatt capacity, or annual usage can all serve as triggers, and they aren’t interchangeable.
  2. Build classification and wage determination review into pre-construction. As with any prevailing wage project, confirm the applicable craft classifications and current wage determinations before finalizing labor budgets. Rates can shift for a myriad of reasons, ranging anywhere from changes per publication cycle to specific periods in the year.
  3. Plan for apprenticeship utilization where required. Start engaging registered apprenticeship programs early if applicable, and document good-faith efforts if you encounter denials or non-responses.
  4. Confirm who bears the compliance obligation. Determine whether the law places the burden on the contractor, subcontractor, or the project owner or operator (as in Pennsylvania). This affects contract language, certifications, and who needs sign-off before construction begins.
  5. Maintain certified payroll and recordkeeping from day one. Data center construction timelines are often compressed and high-dollar; retrofitting compliance documentation after the fact is far harder than building it in from the start.
  6. Track legislative developments continuously. This is a fast-moving area. New states are introducing similar bills regularly, and existing bills can be amended as they move through committee. What applies to your project today may look different by the time you break ground.
  7. Loop in compliance experts before you bid. Given how much thresholds and mechanisms vary state to state, a pre-bid compliance review can prevent costly missteps once construction is underway.

Conclusion

Data centers are quickly becoming one of the most active construction sectors in the country, and state legislatures are increasingly treating them the way they’ve long treated other large public-facing infrastructure: with labor standards attached. Whether your state has already passed a prevailing wage requirement for data centers, or has a bill working its way through committee right now, the smart move is to build compliance into your planning early, not after the fact.

Have a data center project in the pipeline and want to know whether prevailing wage or apprenticeship requirements apply? Connect with our team to review your project’s state-specific obligations and make sure your compliance strategy is airtight before you break ground.

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Why Supporting Documentation is Key to Compliant Prevailing Wage Projects

Maintaining supporting documentation is the foundation of prevailing wage compliance. For all those working on a prevailing wage project, including (but not limited to), EPCs, contractors, subcontractors, and engineering firms, proper recordkeeping not only protects companies against costly penalties but also ensures eligibility for lucrative public works projects across federal and state programs.

Most know that maintaining payroll records with proper prevailing wage payments is necessary to demonstrate compliance. However, certified payroll reports are only the tip of the iceberg. They summarize wages and classifications, but they don’t stand alone. In the face of a governmental audit, regulators will dig deeper, demanding the supporting documentation that validates every line item. Without it, even unintentional discrepancies can trigger penalties, withheld payments, or disqualification from incentive programs.

Infographic: Prevailing wage compliance is like an iceberg. Certified payroll reports sit above the waterline, while fringe benefit documentation, worker classification records, apprenticeship documentation, time cards and daily logs, subcontractor compliance records, and a supporting audit trail lie beneath.

Why Documentation Matters in Prevailing Wage Compliance

Think of documentation like the seatbelt in your car. Most of the time, you don’t feel its importance. The belt’s just there, quietly strapped across your chest. You might even think, “I’m careful, I don’t really need it.” But the moment an accident happens, whether it’s your fault or not, that seatbelt becomes the single most important thing protecting you from serious harm.

Supporting documentation in prevailing wage compliance works the same way. Day-to-day, it may feel like extra paperwork, especially when certified payroll reports are filed correctly. But if an audit occurs, triggered by a small discrepancy or an unintentional error, those records become your seatbelt. They’re the proof that shields your company from penalties and damage.

What paperwork do I need to prove prevailing wage compliance?

Certified payroll reports are the headline requirement, but they rely on a foundation of supporting records. Examples include, but are not limited to:

  • Fringe Benefit Records: Proof of contributions to health, pension, and training funds.
  • Worker Classification Logs: Documentation that employees are properly classified under wage determinations.
  • Apprenticeship Agreements: Evidence of compliance with apprenticeship ratios and training requirements.
  • Timecards and Daily Logs: Records that validate hours reported on certified payroll.
  • Subcontractor Compliance Records: Documentation showing that lower-tier subcontractors also meet prevailing wage obligations.

These documents are what auditors use to verify the accuracy of certified payroll reports. Without them, the report itself is just numbers on paper.

Getting Assistance with Monitoring Recordkeeping

The examples listed above help cover a big piece of the story, but the list is not exhaustive. The bigger key is ensuring that what is reported on this documentation is all verifiable across each other. When working on a project with several employees for several weeks, months, or years on end, this can be a challenging feat for firms to keep up with. Here, our team steps in to alleviate this burden to complete the review for you. We study prevailing wage and serve to protect firms in the industry from potential penalties that arise in prevailing wage law by supplying our years of experience, technology, and expert team. If you’re interested in seeking assistance with prevailing wage requirements, don’t hesitate to contact our team.

Conclusion

For all firms completing work on prevailing wage projects, compliance can come down to building a trackable paper trail that supports certified payroll reports and proves compliance under scrutiny. No matter what prevailing wage regulation is applicable on a project, supporting documentation is the seatbelt that protects your business in the event of an audit.

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Prevailing Wage & Clean Energy in NY: What Labor Law §224-d Means for Developers & Contractors

Performing construction in New York’s clean energy market? As New York’s clean energy market matures, developers and contractors are encountering a growing set of labor standards. One of the most important, and increasingly relevant, is Labor Law §224-d, a statute that applies prevailing wage requirements to certain renewable energy projects. This blog focuses specifically on §224-d and how wage standards are evolving in the state’s clean energy sector.

How Has Labor Law §224-d Changed?

New York Labor Law §224-d is a state statute that requires construction workers on certain renewable energy projects to be paid prevailing wages, even if the projects aren’t traditional “public works.” In 2022, New York passed legislation, Assembly Bill A.9598 and Senate Bill S.8648, that amended Labor Law §224-d to expand the definition of a “covered renewable energy system.” These bills lowered the system size threshold from 5 megawatts to 1 megawatt or more and clarified that REC procurement by or for a public entity is sufficient to trigger prevailing wage requirements. This expansion significantly broadened the law’s reach, especially for mid-size clean energy projects.

What Triggers Labor Law §224-d?

As amended, Labor Law §224-d requires that workers on certain renewable energy projects be paid prevailing wages, as determined by the New York State Department of Labor (NYSDOL). But unlike traditional public works laws, §224-d is tailored to clean energy and applies when:

  1. The project involves a renewable energy system of 1 megawatt or more, and
  2. The project includes the procurement of renewable energy credits (RECs) by a public entity (or a third party acting on its behalf, such as NYSERDA).

If both conditions are met, the project is considered a “covered renewable energy system” and prevailing wage requirements apply under Article 8 of the Labor Law.

How Labor Law §224-d Growth Affects Developers and Contractors

According to NYSDOL’s July 2024 enforcement guidance, distributed renewable energy systems (like community solar) that are 1 MW or larger (Climate and Community Protection Act, A.9598/S.8648, 2022) and transfer RECs (Renewable Energy Certificates) to investor-owned utilities will now be considered “covered renewable energy systems.” This is because, under a 2025 Public Service Commission order, those RECs will ultimately be purchased by NYSERDA — a public entity whose involvement, even indirectly, is enough to trigger prevailing wage requirements under §224-d.

In other words, once NYSERDA becomes the end buyer of those RECs, regardless of the project’s funding source, the project is treated as publicly supported for labor compliance purposes.

This means that many mid-size projects entering construction in 2025 are now subject to prevailing wage, even if they aren’t directly funded by public dollars.

Who is Affected?

  • Developers of solar, wind, thermal, or offshore wind supply chain infrastructure
  • General contractors and subcontractors performing construction work on qualifying systems
  • Project teams working with NYSERDA or other public REC procurement programs

Even if your project is privately financed, it may still fall under §224-d if RECs are sold to a public buyer.

Prevailing Wage Responsibilities

Under New York Labor Law Article 8, including §224-d, contractors and subcontractors working on covered projects must:

  • Pay workers the prevailing wage and supplemental benefits for their specific trade and locality.
  • Maintain certified payroll records showing hours worked, job classifications, and wages paid.
  • Post the wage schedule at the job site in a visible location.
  • Cooperate with audits or investigations by the NYS Department of Labor (NYSDOL) or, in NYC, the Comptroller’s Office.

These requirements apply to laborers, mechanics, and tradespeople.

Exceptions to the Law

The Bureau of Prevailing Wage shall not enforce the prevailing wage requirements of §224-d when:

  • The project was solicited, contracted for, or work began, prior to October 1, 2021
  • The system has a capacity between 1 and 5 megawatts and was solicited, contracted for, or work began prior to July 5, 2022
  • The system has a capacity of less than 1 megawatt and is not a thermal energy network
  • The construction work is performed under a labor peace agreement, project labor agreement, or an enforceable agreement between an owner or contractor and a bona fide building and construction trade labor organization.

Conclusion

As clean energy construction expands across New York, prevailing wage requirements under Labor Law §224-d are increasingly shaping project planning and execution. With more mid-size systems now falling under its scope, especially those involving REC procurement by public entities like NYSERDA, contractors and developers must remain diligent in identifying when the law applies, understanding the appropriate prevailing wages, and maintaining proper records to stay compliant throughout the build.

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The Hidden Risks of Ignoring Labor Compliance: Why Payroll Records Alone Won’t Save You

Infographic showing what prevailing wage auditors request and what compliance firms review

Introduction

Prevailing wage compliance isn’t just about checking a box—it’s a critical safeguard that ensures workers receive fair wages while protecting contractors from costly violations. Yet, one of the biggest pitfalls companies face in prevailing wage and apprenticeship compliance is the misconception that payroll records alone tell the full story.

Many businesses assume that submitting payroll records is enough to satisfy compliance requirements. But in reality, payroll records can be manipulated, contain errors, or, they can miss key information. Without supporting documentation like pay stubs, time cards, fringe benefit remittances, and other forms of verification, proving that prevailing wages have actually been paid becomes nearly impossible. This misunderstanding can lead to audits, penalties, and even legal trouble—risks that no company wants to face.

The Costly Consequences of Overlooking Compliance

Failing to properly document prevailing wage payments can result in:

  • Loss of Tax Credits/Funding – Funding earned with prevailing wage provisions within the project may be lost when prevailing wage requirements aren’t met.
  • Financial Penalties – Agencies conducting audits won’t hesitate to issue heavy fines when compliance isn’t fully demonstrated.
    • ex. IRS issues a penalty of $5,000 for each laborer or mechanic who was not paid at the prevailing wage rate in the year under the Inflation Reduction Act.
  • Project Delays or Disqualifications – Non-compliance can halt work or even disqualify companies from future bidding opportunities.
  • Legal Liability – In worst-case scenarios, businesses may face legal action for misrepresenting wage payments.

These consequences don’t fall solely on the contractors working on the project. Even if a group isn’t performing work on-site, that doesn’t mean they are exempt from adhering to prevailing wage requirements. Higher-level parties tied to a project with prevailing wage funding—such as within the IRA, for example—are liable for all penalties accrued by contractors if they are capturing IRA credits. This differs from public works projects, where the contractor is penalized directly.

Common Mistakes

In our 20+ years of experience, we have seen a wide range of mistakes. Some of the most common mistakes we’ve witnessed made on payroll records alone include, but are not limited to:

  • Incorrect Prevailing Wage Rates
  • Misclassification
  • Mis-reported Hours
  • Missing Employee Benefits
  • Unauthorized “Other” Deductions
  • Incorrect Overtime Issuance
  • Missing Statement of Compliance
  • Incorrect Project Information

When these mistakes are made, the liability varies depending on the project type. For IRA, liability would fall upon the taxpayer, whereas on public works projects, liability can come down directly to contractors. Generally, consequences can be faced at all levels, and it is upon the contractors, developers, and EPCs involved to make sure these errors are corrected, restitution is paid, and that substantial evidence is provided to prove the accuracy on the records.

Projects can last anywhere from weeks to years, and the document collection process over the course of a project should be clarified as early as possible to prevent potential back-logging of completed work. One of the largest challenges groups face is a lack of timely documentation review, as some tend to only conduct review quarterly. It’s best practice to detect non-compliance early on to prevent issues from stacking and becoming costly or difficult to resolve. Regular, proactive documentation reviews help identify discrepancies before they escalate. Establishing a clear process for document collection and compliance checks from assists with smoother project execution and minimizes the risk of penalties or delays.se, check out our video tutorial here.

Why Hiring a Seasoned Labor Compliance Firm Matters

Navigating prevailing wage requirements is complex, and missing a single critical detail can put your company at risk. A seasoned labor compliance firm ensures that your documentation is airtight—verifying every aspect of wage payment, benefits, and worker classifications to protect your company from compliance pitfalls. Here’s what an experienced compliance firm brings to the table:

Experience – Connecting with a team that’s seen it all matters. You want to know that you are aligning with people that have a track record of compliant projects and the knowledge needed to meet your needs. Having years of experience equips experts with the skills of knowing exactly what to look for and having a wealth of knowledge that can only come from time in the space.

Comprehensive Documentation Review – Payroll records are just the beginning. A compliance firm verifies that the submitted time cards, pay stubs, and all cumulative supporting documentation align with reported wages. At Alliant, the documents we collect include, but are not limited to, certified payroll reports, apprenticeship documentation, itemized wage statements, payroll deduction authorization forms, fringe payment verification, and all supplemental prevailing wage documentation.

Audit Prevention Strategies – By proactively addressing compliance gaps, expert consulting firms help businesses avoid costly penalties. This assists in saving time and creates a safeguard if experts are added onto the project before it even starts.

Expert Guidance – With evolving regulations, a compliance firm ensures you’re always ahead of changes, keeping your business compliant and secure. Prevailing wage is constantly changing and can be confusing. Having a team dedicated to remaining up-to-date with prevailing wage laws to answer your questions is paramount to securing your project’s protection.

Secure Your Compliance Before Auditors Step In

Businesses that underestimate the importance of thorough compliance documentation risk financial and reputational damage. Payroll records alone don’t represent a project’s prevailing wage and apprenticeship compliance—comprehensive supporting documentation is the key to proving wages have been properly paid.

Don’t let compliance confusion put your company in jeopardy. Our team specializes in guiding businesses through prevailing wage requirements to ensure full compliance. Reach out today to safeguard your projects and avoid unnecessary risks.

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What to Know About the New WH-347 Form

Download the WH-347 form here

Table of Contents

Introduction

The WH-347 form is a weekly certified payroll report template for contractors to use on projects subject to the Davis-Bacon and related Acts. While the use of the form itself by contractors is optional, it contains information that is required to be maintained under the Davis-Bacon Act, and its use can ease the payroll process.

The form was recently revised, and knowing how to properly complete the form with the changes in mind is key to verifying that you are compliant with the DBA payroll reporting requirement. Walk through the major differences side by side and how to complete each section below.


Old WH-347
New WH-347

Basic Information Section

The “Basic Information” section containing basic info about the contractor, project, and payroll have taken a new table format. All information on the old form still remains on the new one, with the new addition of the “Wage Determination No.”.


Old WH-347

New WH-347
  • Wage Determination No. – DBA projects have a “Wage Determination” set for the project, which is a list of applicable wages and fringe benefits for all trades that would be on the project, dependent on factors like the Contract Award Date and project location. The Wage Determination No. would be the General Decision Number found at the top of your wage determination page

The remainder of the information on the Basic Information includes:

  • Project Name
  • Project Location: The address of the project site.
  • Project No. or Contractor No.
  • Certified Payroll No.: A sequential number for the week’s submission. For example, if this is the first payroll, the Certified Payroll No. would be 1. For the following week, it would be 2, etc.
  • Week Ending Date: The date of the last day of the recorded pay period. For example, if a payroll week ran from 2/10/25 – 2/16/25, the week ending date would be 2/16/25.
  • Prime Contractor’s/Subcontractor’s Business Name: Your business name.
  • Prime Contractor’s/Subcontractor’s Business Address: The address of your business location.

Employee Information Section


Old WH-347
New WH-347

The information under Column 1 of the old form has been broken out into separate columns of the new form. The No. of Withholding Exemptions column from the old form was removed, and the (J) Journeyworker (RA) Registered Apprentice column and Worker Entry No. columns were added.

  • (J) Journeyworker (RA) Registered Apprentice: Write in J if the employee is a journeyworker. Write in RA if the employee is a registered apprentice, meaning they are undergoing an apprenticeship program with a registered institution.
  • Worker Entry No. – The sequential number of the employee listed. For example, the employee listed in the first row would be Entry No. 1, the second would be 2, etc.

The remainder of the information maintained in this section includes:

  • Worker Last Name
  • Worker First Name
  • Worker Middle Initial
  • Worker Identifying No.: A unique identifier, such as the last four numbers of their Social Security Number or an employee ID number.
  • Labor Classification: The classification or trade title as it correlates with the one listed in the wage determination. Examples include Carpenter, Electrician (Cable Splicer), Operator: Power Equipment (Tunnel Work) Group 3, etc.

Work Week Hours


Old WH-347
New WH-347
 

All areas under this section remain the same, with a few slight positioning adjustments of the Straight Time and Overtime hours.

  • Days of the Work Week
    • Top: Ex. M, Tu, W, Th, F, Sa, Su
    • Bottom: Ex. 2/10, 2/11, 2/12, 2/13, 2/14, 2/15, 2/17
    • Work weeks aren’t required to occur on a Monday – Sunday structure and would follow the date range of your pay period.
  • Hours Worked Each Day
    • ST (Straight Time) – Number of hours worked at a regular, non-overtime rate for each day.
    • OT (Overtime) – Number of hours worked past the straight time rate for each day.
  • Total Hours Worked for Week

Payment Section


Old WH-347
New WH-347

All areas from the old form were maintained with the addition of two new columns, the Total Fringe Benefit Credit column and the Payment in Lieu of Fringe Benefits column.

  • Total Fringe Benefit Credit – The total gross fringe benefit credit earned across all hours worked within the week. Ex. $20 in fringes x 30 hours = $600
  • Payment in Lieu of Fringe Benefits – The cash amount a worker earned instead of fringe benefits. This is separate from the base rate earned in cash.

The remaining fields include:

  • Hourly Wage Rate Paid for
    • ST (Straight Time): The hourly straight time rate the worker is being paid in accordance with their classification.
    • OT (Overtime): One and a half times the base hourly rate.
  • Gross Amount Earned: The sum of all earnings across the base hourly rate and fringes for the project.
  • Gross Amount Earned for All Work: The sum of all earnings across the base hourly rate and fringes for all projects this employee is contracted on that would reflect the pay stub.
  • Deductions for All Work:
    • Tax Withholdings: All applicable taxes, including those that are mandated federally, locally, etc.
    • FICA: Federal Insurance Contributions Act – federal social security and Medicare contributions.
    • Other: All other potential deductions authorized by the employee. If the amount is specific to a single deduction, it must be described under the “Additional Remarks” on page 2 of the form. If there are several deductions under the “other” category (ex. life insurance, pension, etc.), an addendum must be submitted that itemizes each deduction with a description and amount for each.
  • Total Deductions: The sum of all deductions.
  • Net Pay to Worker for All Work: The actual dollar amount paid to the worker for all hours worked across all projects during the week.

Notice and Public Burden Statement


Old WH-347

New WH-347

The statement at the bottom of the page has been revised, but the basis of the content includes:

  • The Requirement to Submit Payroll Weekly (The Copeland Act (40 U.S.C. § 3145)
  • The Requirement to Include All Required Information on Payroll (29 C.F.R. § 5.5(a)(3)(ii))
  • The Requirement to Sign a “Statement of Compliance”, Noting That Payroll is Accurate Under Penalty of Perjury
  • Acknowledgment of Time Commitment Required to Complete Form

Page 2

The second page of the WH-347 received a complete revamp:


Old WH-347

New WH-347

Both versions contain a Statement of Compliance, but the second version separates the statements with certifications of Proper Payment, Accurate Payroll and Obligation to Supply Records, Work Performed, Apprentices, Fringe Benefits, and Deductions.

Authorized Certifier Information

  • Project Name
  • Project Location
  • Project No. or Contract No.
  • Payroll No.
  • Week Ending Date
  • Prime Contractor’s/Subcontractor’s Business Name
  • Certifying Official’s Name and Title – This individual should verify that they were given authorization by a party to certify all information included on the payroll report. Their name and title/position should be written in.

Certifications

  • Box 1, Certification of Proper Payment
  • Box 2, Certification of Accurate Payroll and Obligation to Supply Records
  • Box 3, Certification of Work Performed
  • Box 4, Certification of Apprentices: If apprentices are employed during the work week, the programs that they’re registered under, the body that the program is registered with, OA (DOL’s Office of Apprenticeship) or SAA (State Apprenticeship Agency), and the name of the labor classification working.
    • If not applicable, leave the box unchecked and enter “N/A” under the blank sections.
  • Box 5, Certification of Fringe Benefits
    • If you’re claiming an hourly credit for contributions to benefit plans, funds or programs, this box should be checked with the following information completed:
    • Name of Worker
    • FB Name: Fringe Benefit Name (Ex. Anthem)
    • FB Type: Fringe Benefit Type (Ex. Health Insurance)
    • Plan No.
    • Funded or Unfunded
    • Hourly Credit
    • Total Hourly Credit
    • Per the DOL, if more than six bona fide fringe benefits are provided to the workers for which the contractor is claiming a credit, submit an addendum for each providing the information requested in this section.
  • Box 6, Certification of Deductions

Additional Remarks and Signature

  • Additional Remarks: Optional space for additional information on deductions, hourly cost of fringe benefits, or explanations.
  • Signature of Certifying Official, Date, Telephone Number, and Email Address: The Statement of Compliance must be signed by the contractor or subcontractor, or their agent who paid or supervised the payment of the workers under the contract during the weekly time period covered by the form. Enter the phone number and email address of the individual who is signing the statement and the date signed. Legally valid electronic signatures are acceptable. A legally valid electronic signature includes any electronic process that indicates acceptance of the certified payroll record and includes an electronic method of verifying the signer’s identity. Note: Photocopies or scanned copies of signatures do not satisfy this requirement.

Getting Assistance with the WH-347

Verifying that all boxes are filled correctly to remain in compliance with the Davis-Bacon Act is only part of the compliance process. Having the supplemental documentation to prove that everything reported on the payroll form is the major key to confirming that prevailing wage payments have been met. Verifying proper completion for several weeks of payroll and a wide range of employees may be difficult, and enlisting a team to assist in reviewing documentation would alleviate the stress of reviewing paperwork. We’ll put you in touch with a team of prevailing wage experts who can meet you where you’re at with your current needs – whether it be education with prevailing wage trainings, as-needed support, or full project oversight from start to finish. Get in touch now to secure your projects.

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Understanding California DAS Forms

Stack of paper, Document, many jobs waiting to be done on the table, busy concept

The contents of this blog post have been partially transcribed from our YouTube series, “Apprenticeship Series” 

California prevailing wage mandates the use of apprentices on public works projects. Amongst the apprenticeship requirements are the proper documentation practices. We’ll be uncovering the DAS (Division of Apprenticeship Standards) 140, 142, and 7 forms and how to maintain compliance with the apprenticeship requirements. 

Table of Contents

The DAS 140 Form

The DAS 140 form is the “Notice of Award” form. So, it’s most applicable to contractors utilizing an apprentice-able craft. The document is meant to work as a notice to apprentice halls that you’re working on a prevailing wage project. Enforced by Labor Code 1777.5(e), the law states, “Before commencing work on a contract for public works, every contractor shall submit contract award information to an applicable apprenticeship program that can supply apprentices to the site of the public work.” For a step-by-step guide, you can visit this video on our YouTube channel, “How to Fill Out a California DAS 140 Form.” 

Completing the DAS 140 Form

The top of this form should be filled out with all of your basic info. This includes: 

• Your company name 

• Your company’s address 

• Project address 

• Awarding agency’s address 

• Your state license number 

• Your company’s phone number

• The date your contract was executed 

• The actual or expected date that your company will start on site

The remainder of the top half of the form requires that you list the following: 

• The estimated number of journeymen hours being worked 

• The occupation/craft being utilized 

• The estimated number of hours you’ll have an apprentice work

• An estimate of the dates you plan to utilize them 

• The apprenticeship program/hall the form is going to

Entering a “0,” “TBD,”, “N/A” or blank on the following boxes may invalidate the form. So, if you don’t have the exact dates or hours, it’s best practice to place an estimate. 

Finding Apprenticeship Halls

Since this document goes out to all apprentice halls of each of your apprentice-able crafts, multiple versions of this may be filled out and sent. The website listed at the top of this form is where you’d find all halls that this form is to be sent to. 

You can access this site here. Let’s do an example. 

In our example, we are employing Laborers for a project located in San Diego County.

Once you hit “search,” a list of halls will pop up. Your DAS 140 form should go to all listed halls before you start on site. Even if the specific hall listed does not cover the scope of work you will be performing, the DIR still considers it to be applicable, and a DAS 140 form will still have to be sent.

Which Box to Check

There’s 3 options to choose from. Box 1, Box 2, or Box 3. Only one box should be selected. 

Check off Box 1 if you’re signatory to a union hall and approved to train. Write the name of the union you’re signatory to on this line. If you’re checking box 1, then the DAS 140 would only have to be sent to this one hall. 

Check box 2 if you are complying to a specific hall’s standards, paying your training to this hall, but are not approved to train. When you’re box 2, you will have to submit the DAS 140 to all halls listed on the DIR website. 

If you check box 3, this means you will not be complying to any union’s standards and will be making your training payments for the listed classification to the CAC. You will also have to submit a DAS 140 to all halls listed on the DIR website. 

DAS 140 Penalties

It’s crucial that this form is filled and sent out correctly, otherwise penalties of $300 per day, per classification may accrue, and that is a costly mistake. 

The DAS 142 Form

The DAS 142 form is the “Apprentice Request Dispatch” form. For a step-by-step guide, you can visit this video on our YouTube channel, “How to Fill Out a California DAS 142 Form.” This form is utilized to help aid contractors in hitting a 20% apprentice ratio. Per CCR Title 8 Section 230.1, 20% of the workforce that you employ should consist of registered apprentices. 

An apprentice is an employee who is undergoing an apprenticeship program approved by the Department of Apprenticeship Standards and is also registered in the state of California. 

Apprenticeship Registration

If an employee is not registered with the state as an apprentice, they cannot be classified as an apprentice and must be paid the journeyman rate when working on a public works project. This discretion is also applicable if their apprenticeship status has expired by the time they’ve performed work on site. You can access this information using the DIR apprenticeship status lookup tool. 

Completing the DAS 142 Form

The first section of this form outlines the website contractors can use to verify where the form can be sent. It also references the increments that you must hire an apprentice under. 

In the second section, contractors must list the date, the applicable apprenticeship committee the form is being sent to, and your contractor information. If you checked box 2 or 3 on the DAS140, this form should be sent to the corresponding halls that your DAS 140 form was sent to. 

In the third section, you must list the project information. If you have any questions regarding this portion of the form, please refer to your prime contractor. 

The fourth section is the most important one. This is how the apprentice will know where to go and what time to show up. Let’s break it down.

The areas above are going to be filled out with two points in mind. First, the requested apprentice must be hired in 8 hour increments as referenced in Section 1. Second, the form must be sent 72 hours before the apprentice is needed as referenced in Section 5. 

This 72 hour notice does not include weekends or holidays. 

If this form is sent without these two criteria being fulfilled, it may be considered invalid. Underneath the dispatch request information, you should input the following: 

• The number of apprentices needed 

• The craft or trade they will work under 

• The date and time they’re expected to report 

• The name of the person they’re to report to on site 

• The address of the project 

It’s important to note that all information should be filled out accurately. Again, if any “0s,” “N/As,” “TBDs,” or blanks are located on the form, it may be considered invalid. 

DAS 7 Form

Proof of approval to train apprentices includes an “approval to train” letter from your union, or a DAS 7 form. 

The DAS 7 is a form intended to be filled out by the union hall verifying that your company is approved to train for the applicable craft. This form may be requested to verify that marking Box 1 on the DAS 140 form is accurate. 

Contractors’ priority with this form is to ensure that it’s readily available to fulfill this request. 

If you do not have this documentation, then your company may not be approved to train. With this, you may need to check Box 2 or Box 3 on the DAS 140 form to reflect an accurate status. For more information or resources, feel free to watch our Apprenticeship Series and contact us if you need further assistance.

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Guide Toward Davis Bacon Act Requirements & Best Practices

United States Capitol Building

The contents of this blog post have been transcribed from our YouTube video, “Guide Toward Davis Bacon Act Requirements & Best Practices.” 

When working on a federally funded project, regulations are sensitive to keep up with. Failure to do so can result in costly penalties. Prevailing wage is a frequent standard to be in compliance with in federally funded projects, and the law that put this forth is the Davis Bacon act. 

Table of Contents

What is the Davis Bacon Act? 

The Davis Bacon Act, also known as the DBA, is a rule applicable to federally funded projects that requires a minimum wage to be paid to workers, also known as the prevailing wage. This wage is consistent of a base hourly rate and fringe benefits. Alongside paying prevailing wages is the requirement to submit weekly certified payroll reports and maintain records. The Davis Bacon wages and posters should be posted on the site, easily visible to all workers. These requirements are applicable to all contractors within all tiers of the project, and penalties may be issued if in violation. 

What Projects are Applicable to the Davis Bacon Act?

Applicability under the Davis Bacon Act is subject to a $2000 dollar threshold, so it is applicable to projects with a minimum of $2000 in overall project value. 

The act is then in effect for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. This is further defined under 29 CFR 5.2 under “Public building or public work.”

Who Is Owed Prevailing Wages?

As stated, prevailing wages are the minimum amount required to be paid out to workers on this project, referred to by the Davis Bacon Act as the “laborers or mechanics.” Laborers or mechanics includes “at least those workers whose duties are manual or physical in nature” as defined by 29 CFR 5.2. So, this excludes positions such as executive, professional or clerical, those commonly seen in administrative positions. The definition does include apprentices. Prevailing wages also applies only to workers performing on the site of work. 

Where do I Find the Wages for my Project?

The DBA wages are posted on sheets known as “Wage Determinations” and are available online via sam.gov. The Wage Determination for your project includes a list of work titles, also known as classifications, and their corresponding wage rates. 

The information you would need for your wage determination are your project’s Bid Due or Opening Date, the project County, State, and the project Construction Type. 

Negotiated contracts would use the date of award. Competitively bid projects should look to the wage determination that was in effect 10 days prior to the bid opening date. 

Here’s an example. Our project is competitively bid and had a bid due date of January 16th, 2024. The project is based in San Diego County, California, and has a “Heavy” construction type. 

Upon inputting the applicable information onto the sam.gov site, you would click on the wage determination fit for your project. There may be multiple modifications 

made. Our project had a bid due date of January 16th, 2024. Because we have to take the wage determination in effect 10 days prior to the bid due date to find our effective date. 

10 days before January 16th would gives us an effective date of January 6th, 2024, which falls under Modification 0. Modification 0 is applicable for projects with effective dates from January 5th to January 11th. 

If workers on your project are performing work that isn’t covered under the classifications listed on the Wage Determination sheet for your project, you have the option of submitting a SF 1444 Form, which is a request for an additional classification. 

After finding your wage determination, proper wage payments should be issued to employees. While paying the base rate and fringe amount, other important things to look out for are footnotes or asterisks on your rate. This can include additional amounts required to be paid per classification or notices to changes in the rate.

Please note, there are no general frequent increases made to Davis Bacon wage determinations, and the rate found at the beginning of the project is grandfathered in during its entirety. However, local and federal minimum wage changes are to be taken into account.

Recordkeeping Requirements

The Davis Bacon Act requires submission of Certified Payroll Reports on a weekly basis. 29 CFR 5.5(a)(3) states that payroll records must include the following: the employee name, address, social security number, correct classification, hourly rate of wages paid, daily and weekly number of hours worked, deductions, and actual wages paid. The certified payroll report must also be signed under a “statement of compliance”, indicating that all its contents are accurate and cleared by the signer. A certified payroll report template issued by the U.S Wage and Hour Division contains these requirements for payroll reporting, known as the WH347 Form. 

Alongside certified payroll reports, other documentation expected to be maintain includes additional records relating to fringe benefits and apprenticeship and training as applicable. Please note, additional recordkeeping is not limited to these types of documentation. Any form of record that displays the full picture of employees’ pay, or acts as “support” toward the payroll record would go toward this requirement. 

Apprenticeship Requirements

Under 29 CFR 5.2, Apprentices are defined as “helpers” that are employed and individually registered in a genuine apprenticeship program. Apprentices are generally undertaking training and developing skills to excel within their occupation. If using an apprentice on your project, you must meet the following: 

1) Verify that your apprentice is properly certified by a program registered with the Employment and Training Agency’s (ETA) Office of Apprenticeship (OA), or with a State Apprenticeship Agency recognized by the OA. 

2) If counting apprenticeship costs as a fringe benefit, the costs must bear a “reasonable relationship” to benefits provided to workers. 

3) The costs incurred for apprenticeship must not offset costs incurred for another classification. 

4) Pay the appropriate wages including the percentage of hourly rate required by the apprenticeship or training program and the approved program fringe benefits.

5) Utilize apprentices in accordance with the program-issued ratio of permitted apprentice to journeyman performing oversight. 

To find the proper rates or wages to pay your apprentices, it’s best practice to consult with the program or union that you intend to utilize apprentices from to verify the rates they enforce. The Davis Bacon Act does not establish wage rate for apprentice-level workers. 

Penalties

It’s vital that these requirements are met to avoid the potential penalties that come with violation. These penalties include: 

1) Suspension of funds and withholding (29 CFR 5.9(a)) 

2) Debarment for breach of contract clauses under the requirements listed for this act (29 CFR 5.5(a)(7)) 

3) Restitution for unpaid wages and liquidated damages under CWHSSA (29 CFR 5.5(b)(2)) 

4) Withheld funds for unpaid wages and liquidated damages (29 CFR 5.5(b)(3)) 

Further penalties may be imposed for additional violations found, and enforcement is held by the Division of Labor in which violations are evaluated for the appropriate remedial action. 

Avoid paying restitution interest, facing debarment, and encountering criminal action amongst other penalties by remaining informed and compliant with the Davis Bacon Act requirements. 

Tune into the remainder of this series where we uncover updates made to the Davis Bacon Act known as the “final rule.” These updates provide context to the items we’ve discussed in today’s video and provide additional information in remaining compliant.

To get a full picture on prevailing wage, you can watch this video for a full overview. Have any further questions? Let’s get in touch. 

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Classifying Employees (Davis-Bacon)

Proper classification of employees is a principal point in remaining in compliance with federal regulations. Here’s a breakdown of what “classifications” are and how you use them. 

What is a Classification?

A “classification” is an identifier or title signifying the skill, work, responsibilities, and duties of an employee. Classifications serve as a way of categorizing your employee, and this aids in defining things such as job roles and wage rates. Other commonly exchanged terms in the realm of classifications include “trades” or “crafts.” The term “craft”  is used synonymously alongside “trade” and means “an occupation requiring manual skill.” 

How to Classify an Employee Under Prevailing Wage

Employees should be classified based on their scope of work. An employee’s scope of  work description would include the skills, tasks, machines/tools being used, and even materials being handled. The Wage and Hour Division (WHD) publishes the prevailing wage rates covered under the Davis Bacon Act that includes a list of classifications and the rates owed. These can be found at sam.gov. Here are the main steps to keep in mind as you complete your search: 

1) The following are used to find your Davis Bacon project’s wages: 

a. Your project’s state 

b. Your project’s county 

c. Construction type 

d. Your project’s bid advertisement date (alternately, the contract award date)  

Entering this information onto the wage determinations page should generate the applicable wages for your project. 

The classifications within the wage determination are listed with a union code identifier above the classification title. This may look like this:

example of employee classification davis-bacon

This identifier points to the union that was surveyed to retrieve the classification’s rates. Please note, you do not need to be signatory to a union for this to be applicable. The union within the identifier could be referred to for the scope of work description or  comprehensive list of tasks that would be performed by its corresponding classification. As  previously mentioned, this would include the main identifiers that would align with whatever skills, tasks, machines/tools being used, or material being handled by your employees. Common classifications can include Laborers, Carpenters, or Electricians. If  you’d like to contact the union to find their scope of work description, you can decipher what union is listed with the following indicators: 

• A four-letter abbreviation of the classification 

• The local union number following the abbreviation 

From the above screenshot, the listed union would be the Laborers Local 89.  

There are no established nationwide standard classification definitions under the Davis Bacon Act, so contractors are encouraged to examine “local area practice.” Thus, the act refers to the Wage and Hour Division (who publishes the wage determinations) and/or local construction industry stakeholders for determining the classification of your employees  (scope of work assigning assistance). 

Best Practice for Classifying an Employee on Payroll

When reporting on payroll, it’s best practice to classify employees based on the work  they performed within the day. This affects how an employee appears throughout the week if they are skilled in several trades and certified to perform different types of work – they might be used to complete a variety of tasks across the project. So, they should be classified as such. Keeping timecards and descriptions of the work completed can assist with recordkeeping. 

Let’s use some of the previously listed common classifications as an example.  

If an employee were performing tasks exclusive to Laborers on Monday and were then performing tasks exclusive to Carpenter on Tuesday, the employee would be reported as the Laborer classification on Monday and the Carpenter classification on Tuesday.  

This is additionally important to note because of the difference in required wage rates to the classifications. If an employee were listed as a Classification A and receiving the wages assigned to Classification A but were actually performing the tasks of a Classification B, a classification with a higher wage rate, the contractor may be subject to  penalties for misclassification and underpayments. 

What are the Effects of Misclassifying Employees?

The Wage and Hour Division closely examines the classification of employees. A common mistake in classifying employees is assigning an “independent contractor” status. In a recent case based in Alabama, an aviation maintenance shop was reported misclassifying  employees as independent contractors. The Department of Labor recovered $127,249 back in wages from this case.  

Conclusion

Classifications help in standardizing work across the industry. Maintaining records of the scope of work performed by your employees and classifying them appropriately prevents contractors from misclassifying employees and potential underpayment penalties.  

Have any further questions? Let’s get in touch.