What is Prevailing Wage?

Construction accounting has its challenges. Unlike other industries, accounting processes must adapt to the unique circumstances of not only a mobile workforce, but one that works for multiple organizations, like federal and state governments, or on projects funded by these entities. One factor that needs to be taken into account is prevailing wage.

What is Prevailing Wage?

Prevailing wage is the amount workers must be paid when working on government-funded projects. According to the Department of Labor, a contractor’s prevailing wage obligation may be met by either paying each laborer and mechanic the applicable prevailing wage entirely as cash wages or by a combination of cash wages and employer-provided bona fide fringe benefits.

The prevailing wage rate is determined by the Wage and Hour Division (WHD) and depends on where the work is being done, i.e., a specific geographic area for a certain type of construction. It’s required to be posted by the contractor at the site of the work in a prominent and accessible place where it can be easily seen by the workers. For example, according to Sam.gov, construction employers working on government highway projects in several Pennsylvania counties must pay their workers at least $16.20 per hour if the contract was awarded on or after January 20, 2022. Specializations, like boilermakers and bricklayers, earn a higher prevailing wage. Prevailing wages, including fringe benefits, must be paid on all hours worked on the site of the work and employers must submit weekly certified payroll records.

The prevailing wage is a mandate laid out in the Davis Bacon Act (DBA).

What is the Davis-Bacon Act?

The DBA was created in 1931 to protect workers from receiving low pay while competing for federally funded construction projects during the Great Depression. The act, as currently amended, requires that any federal contractor who takes on a job over $2,000 on public buildings or public works, must pay their workers no less than the prevailing wage and fringe benefits as on similar projects. Types of work include construction, alteration or repair (including painting and decorating).

The DBA rule is defined in conjunction with “related acts,” or the Davis-Bacon and Related Acts (DBRA), because of the many federal laws that authorize federal assistance for construction through grants, loans, loan guarantees and insurance. Examples include: Federal Aid Highway Acts, the Housing and Community Development Act of 1974, the Federal Water Pollution Control Act and the acts and Executive Orders listed below.

How Time Tracking is Tied to Prevailing Wage

Time tracking is intrinsically tied to payroll. You calculate the amount you pay employees based on how many hours they worked. Seems simple enough but with construction, there are several factors at play. For example, if your workers move from one jobsite to another, you need to track how long they were at each site and, if you track cost codes, what jobs each performed. Now if said workers went from a federally-funded job to a private one, it’s likely their wage might change; you may not be paying your workers the prevailing wage for all jobs. If you're tracking this time via paper timesheets, Excel spreadsheets or even generic or one-size-fits-all software, payroll becomes a really big, confusing job.

Workers may not always remember exactly when they arrived at a jobsite and how long they were there until moving on. And supervisors still need to add or approve cost codes manually. If you’re not keeping extremely accurate records for certified payroll – required for government contracts – you could be looking at a costly compliance issue.

Here’s where a time tracking solution built for construction can save the day. A mobile time tracking app downloadable on a mobile device, lets your workers clock in and out with a touch of button. Admins can assign multiple job codes that workers can use on each site. So, a worker gets to a site, opens the app on his or her phone, hits the big green “go” button and chooses an appropriate job code. When they’re done at the site, they hit the big red “stop” button. The process continues at the next site. When the day is over, all the data is uploaded directly to payroll. There is no waiting on supervisors to drop off timesheets, no deciphering numbers and no manual entry of cost codes. Plus, the jobs that require prevailing wages are already parceled out and a record is kept of all of it.

ExakTime was built for construction. Not only did we pioneer the green (clock-in) and red (clock-out) layout, which is super easy to use even with dirty hands, but it includes rich construction-specific features like FaceFront for photo ID capture and GPS tracking and Geofencing. You can even schedule worker shifts, input field notes and track equipment through the app. And if a mobile app doesn’t work for certain job sites or employees, ExakTime offers rugged time clocks and kiosk functionality. Or the crew lead or supervisor can simply sign people or crews in and out on the app. Easily export hours for payroll or take advantage of our integrations with the most popular construction payroll solutions. Plus, there are over 40 built-in reports that will help you better understand your labor spend.

Switching to ExakTime is easy. Contact us today for a free demo to see how it can streamline both your time tracking and payroll processes.