How to Prepare for Government Prevailing Wage Requirements

Don’t get blindsided: Use these tips to prepare for prevailing wage compliance.

Government work can provide great opportunities for contractors, but the decision to move to the government arena should not be made lightly. It requires a true commitment to the entire process from start to finish. To be successful with prevailing wage work, you must follow guidelines and meet requirements. But this is no easy task.

Over the years, I have talked with contractors who have moved into this field and have been blindsided by the requirements—managing the vast amount of paperwork, calculating fringes, paying the correct pay rates and submitting reports. Many contractors finish these jobs by the skin of their teeth and feel like this work is not worth the stress.

But with due diligence and thorough research, government work can provide contractors with great opportunities. To prepare for government work, you must realize the commitment, form mentorships with peers and professionals, do the research and develop standardized processes.

Be Committed

Before doing government work, first ask yourself why you want to move into this field. Is the market dictating that you move in this direction? Or do you truly want to do this type of work?

Government jobs require you to make a long-term commitment and stay on top of the different requirements. Each government job should be thoroughly researched and planned. A poorly researched government endeavor will no doubt be poorly executed, which could be very costly to your company.  

Seek Mentor Relationships

Before starting government work, establish mentor relationships with other contractors who have experience with prevailing wage jobs, and connect with other construction professionals who can provide insight and guidance. Teaming with construction peers will help prepare you for challenges. They may also provide you with valuable information about the tools and processes you must have in place to meet regulations.

Maintaining these mentor relationships during the life cycle of a job (and beyond) can extend this guidance. These contractors can advise you on completing and submitting the proper paperwork and reports throughout the process. They can also help you gauge jobs to ensure they progress properly so that you hit your benchmarks.

These invaluable mentorships will help you successfully complete jobs, maintain a good standing in the government arena and ensure you receive future government work.

It also helps to have a team of professionals on your side who understand government work—for instance, CPAs who have a focus in construction can provide insight into effective job costing, and bonding agents can help you meet prevailing wage requirements.

Conduct Research

The reporting requirements for government work can be very involved. You not only need job costing reports to monitor jobs but also other specialty reports, including the following:

• Certified Payroll – All contractors and subcontractors must submit certified payroll reports to ensure compliance with government contracts. A certified payroll report consists of two parts: a breakdown of your employees’ classes, wages, hours worked and overtime, and a statement of compliance, which allows you to show whether your employees received fringes.

• EEO Minority Compliance –Many prevailing wage jobs also require you to submit EEO minority compliance reports, which provide critical employee information required by the U.S. Department of Labor, including workers’ trades, classification, totals for federal and non-federal work hours and minority percentages to meet affirmative action regulations.

• Over/Under Billing – You might also be required to submit over/under billing reports to surety bond agents to receive bonding.

Establish Processes

Depending on the contract, additional reports may be required. To complete these reports accurately and on time, you must have proven systems in place.

Between reporting requirements, payroll and tracking the job, you may also need to implement outside tools. For instance, most construction-specific accounting packages can handle the complexities of processing construction payroll on a government job by automatically calculating different wages and fringes. Construction accounting software can also automatically produce all the required reports, ultimately saving you time and money.

Having a system that works the way construction works will help you increase your profitability.

Even if you outsource the payroll function, certain construction-specific payroll services can handle the nuances of working prevailing wage jobs. Some of these payroll services also offer free construction reporting for certified payroll, EEO minority compliance, workers’ compensation and more.

Doing government work unprepared can be a financial disaster. However, with the proper preparation, contractors can successfully complete government jobs, widen their spectrum of work and ultimately increase their profitability.