Payroll for Construction: Software and Compliance
Construction payroll compared: certified payroll and Davis-Bacon explained, which platforms handle prevailing wage, and real cost at 15 employees.
Payroll for Construction
Certified payroll and Davis-Bacon explained in plain language, which platforms actually handle prevailing wage and union fringe, and what it costs a 15-person contractor
Construction payroll fails for a specific reason. A contractor buys a well-reviewed payroll platform, runs it happily for private work, then wins a job with federal funding and discovers the platform cannot produce a certified payroll report. At that point the choice is a manual weekly form, a bolt-on compliance tool, or a migration mid-project.
The threshold that triggers this is lower than most people expect. Davis-Bacon applies to federally funded or assisted construction contracts exceeding $2,000. That is not a large project. And roughly thirty states layer their own prevailing wage laws on top, some with no minimum threshold at all.
This guide explains certified payroll and prevailing wage in plain language, compares ten platforms on the features that actually differ, models real cost at 15 employees across both tiers, and covers the classification and field time-tracking problems that sit alongside payroll in this industry.
What makes construction payroll different
Five requirements separate construction payroll from ordinary payroll. A platform that handles all five is a construction product; one that handles none is a general product a contractor happens to use.
| Requirement | What it involves | Why general payroll struggles |
|---|---|---|
| Certified payroll | Weekly wage report per project with a signed compliance statement | Requires per-project hours, not per-company |
| Prevailing wage | Rates set by government determination, varying by trade and county | Rate is not the employee's normal rate |
| Union fringe | Benefit contributions calculated and remitted to multiple funds | Deduction logic sits outside standard benefits |
| Job costing | Labour cost allocated to project, phase, and cost code | Usually available only via accounting integration |
| Multi-jurisdiction | Crews working across cities, counties, and states in one week | Tax location assumed fixed per employee |
The common thread is that construction payroll is organised around projects while general payroll is organised around employees. An ordinary platform knows that Maria earned $1,400 this week. A construction platform knows Maria earned $600 on the school job as a journeyman electrician, $500 on the private remodel, and $300 on the highway project at a different prevailing rate, with fringe contributions split accordingly.
Certified payroll and Davis-Bacon, explained
This is where most contractors get their first unpleasant surprise, so it is worth understanding before choosing software rather than after.
When it applies
The Davis-Bacon Act covers contracts exceeding $2,000 for construction, alteration, or repair of public buildings or public works that are federally funded or federally assisted. Federal assistance is broader than a direct federal contract. Highway work with Federal Highway Administration money and housing work with Department of Housing and Urban Development money both trigger it, even though the entity signing your contract is a state or local agency.
What you actually submit
A weekly report of wages paid to each worker on the project, plus a signed Statement of Compliance certifying the information is accurate and that workers received at least the required prevailing wage including fringe benefits.
A detail worth knowing: per the Department of Labor, use of Form WH-347 itself is optional. The weekly submission is not. The Copeland Act requires a weekly statement of wages paid, and Department of Labor regulations require the certified payrolls to be submitted. An alternative format is acceptable as long as it contains all the required information and carries the signed compliance statement, which is why software exports in other formats satisfy the requirement.
| Element | Detail |
|---|---|
| Form | WH-347, OMB Control No. 1235-0008, expires January 2028 |
| Frequency | Weekly, generally within 7 days of the pay date |
| Submitted to | The federal agency if it is a party, otherwise the sponsor or owner |
| Contents | Worker name, classification, hours by day, rates, deductions, net pay |
| Statement of Compliance | Page 2, signed by an authorised official |
| Time to complete | About 55 minutes per report, per DOL estimate |
| No-work weeks | Generally require a no-work report to keep the record continuous |
Two things about that table matter more than the rest. The Statement of Compliance makes the person signing personally accountable for the accuracy of every figure, which is a different kind of exposure from an ordinary payroll error. And the 55-minute estimate is per report per project per week: a contractor running four covered jobs is looking at most of a working day every week on paperwork alone.
Prevailing wage varies more than the federal rule suggests
Federal Davis-Bacon is the floor, not the whole picture. About thirty states plus the District of Columbia have their own prevailing wage laws, commonly called Little Davis-Bacon acts, applying to state-funded work.
| Jurisdiction | Threshold | Note |
|---|---|---|
| Federal Davis-Bacon | Over $2,000 | Applies wherever federal funds are involved |
| California | $1,000 | Contractors must also register with the state |
| New York | No minimum | Own determinations, typically above federal rates |
| Illinois | No minimum | 2025 law requires full journeyworker fringe for apprentices |
| Virginia | $250,000 state-funded | Six-year record retention, longer than federal three |
| Georgia, Florida, Indiana | No state law | Federal Davis-Bacon still applies with federal funding |
Three practical consequences follow. On projects funded by both federal and state money, you pay whichever rate is higher, which means tracking two determinations rather than one. State rates in major metros such as Chicago, New York, and Los Angeles consistently run above the equivalent federal rate. And record retention obligations differ, with the federal three-year requirement being the minimum rather than the standard.
Electronic submission adds another layer. Many agencies require filing through a compliance platform rather than by document, using dedicated compliance platforms and state-specific portals such as the California Department of Industrial Relations. A payroll platform that exports directly into those systems removes a rekeying step that is otherwise weekly and error-prone.
How we evaluated these platforms
Construction payroll is a category where feature lists mislead more than usual, because several platforms describe certified payroll support that turns out to mean an export to a third-party tool rather than native generation.
Ten platforms compared on what actually differs
Feature parity on ordinary payroll is near-total, so the matrix below covers only the capabilities that separate these products for a contractor.
| Provider | Type | Certified Payroll | Prevailing Wage | Union Fringe | Job Costing | Mobile Time |
|---|---|---|---|---|---|---|
| Payroll4Construction | Construction-native | |||||
| Foundation Software | Construction ERP | |||||
| Miter | Construction-native | |||||
| Sage Construction | Construction ERP | |||||
| ADP Workforce Now | Enterprise generalist | |||||
| Paychex Flex | Generalist | |||||
| Gusto | SMB generalist | |||||
| OnPay | SMB generalist | |||||
| QuickBooks | SMB generalist | |||||
| Square | SMB generalist |
The pattern is clean and worth stating plainly: no general payroll platform generates certified payroll natively. That is not a criticism of Gusto, OnPay, Square, or QuickBooks, all of which are good products. It is a category boundary, and a contractor who bids public work sits on the other side of it.
Construction-native platforms
Payroll4Construction
A subsidiary of Foundation Software with about two decades in the category, and the most frequently cited answer for contractors with heavy certified payroll and union obligations. It handles certified payroll including WH-347, prevailing wage rate application, union fringe across multiple funds, multi-state and multi-jurisdiction tax, workers compensation by class code, EEO reporting, new hire reporting, and job costing that feeds from payroll rather than from an integration.
Pricing is quote-based. Third-party reporting places typical operators in the $700 to $2,500 per month range depending on modules and headcount, which is a different order of magnitude from general payroll and reflects a different product rather than a markup.
Foundation Software
The parent product: construction accounting and payroll as an integrated ERP rather than payroll alone. It suits contractors who want job costing, project accounting, and payroll on one data model, typically from ten employees up to well over a thousand.
The trade-off is weight. Reported implementation runs ten to sixteen weeks, and the product assumes a finance function rather than an office manager doing payroll between other duties. For a fifteen-person contractor it is usually more system than the situation requires unless the accounting side is also a problem.
Miter
The modern cloud entrant in this category, aimed at contractors who want construction compliance without an ERP implementation. It covers certified payroll, prevailing wage, union rules, and job costing, and is consistently rated strongest in the category for mobile time entry and field crew adoption, which matters more than it sounds when the people recording hours are on scaffolding rather than at desks.
Pricing is quote-based, typically reported at $30 to $50 per active worker per month. Implementation runs four to eight weeks, materially faster than the ERP options.
ADP Workforce Now for Construction and Sage
Both aim above the small contractor. ADP has a construction-specific configuration with certified payroll, union, and multi-jurisdiction support, and according to an ADP executive its sweet spot is contractors of roughly fifty employees and upward with one to five million dollars in revenue, which is explicitly above a fifteen-person firm. Reported implementation is ten to fourteen weeks.
Sage Construction covers the same compliance ground inside a construction ERP, with setup costs commonly reported above ten thousand dollars. Both are credible for a growing contractor and are usually the wrong purchase for a small one.
General payroll platforms, and when they are enough
The honest position, which most construction payroll articles avoid because they are published by construction payroll vendors: for a contractor doing only private work, a general payroll platform is usually the better buy.
Gusto
Strong general payroll with features that suit construction better than most generalists: workers compensation administered as pay-as-you-go, which matters when payroll varies seasonally, and time tracking with geolocation on the higher tiers. It does not generate certified payroll.
The constraint for contractors specifically is the single-state limit on Simple at $49 plus $6 per employee. Crews crossing a state line force the Plus tier at $80 plus $12, which nearly doubles the per-employee cost.
OnPay
One flat plan at $49 plus $6 per employee with every state included and no multi-state surcharge, which for a contractor working across state lines is materially better value than the identical headline number at Gusto. Workers compensation is supported. Certified payroll and union fringe are not.
QuickBooks and Square
QuickBooks Core at $50 plus $6.50 per employee makes sense when the books already live in QuickBooks Online, where job costing is available through the accounting side. Contractors needing certified payroll typically pair it with a dedicated compliance tool, which works and is a common setup, but means two systems and a weekly handoff.
Square at $35 plus $6 has the lowest base fee and includes local tax filing, which suits a small residential contractor with straightforward payroll and no public work.
What construction payroll costs at 15 employees
The gap between the two tiers is the most useful number on this page, and almost nobody publishes it side by side.
| Provider | Type | Monthly at 15 | Annual at 15 | Certified Payroll |
|---|---|---|---|---|
| Paychex Flex Essentials | Generalist | $114 | $1,368 | Partial |
| Square Payroll | Generalist | $125 | $1,500 | No |
| Gusto Simple | Generalist | $139 | $1,668 | No |
| OnPay | Generalist | $139 | $1,668 | No |
| QuickBooks Core | Generalist | $147.50 | $1,770 | No |
| Gusto Plus | Generalist | $260 | $3,120 | No |
| Miter | Construction-native | $450 to $750 | $5,400 to $9,000 | Yes |
| Payroll4Construction | Construction-native | $700 to $2,500 | $8,400 to $30,000 | Yes |
At fifteen employees a general platform runs roughly $1,400 to $1,800 a year. A construction-native platform runs $5,400 to $30,000. That is three to twenty times more, and the entire difference is compliance capability.
Two ways to think about whether it is worth it. First, the paperwork arithmetic: at the Department of Labor estimate of about 55 minutes per certified payroll report, a contractor running three covered projects spends roughly 143 hours a year on those forms alone. Priced at any reasonable rate for an office manager, that approaches or exceeds the software difference before considering error risk.
Second, the exposure arithmetic. Certified payroll errors on prevailing wage work can produce wage restitution, penalties, and in serious cases debarment from future public bidding. For a contractor whose pipeline depends on public work, losing eligibility is an existential outcome rather than a cost line.
1099 versus W-2 in construction
Worker classification carries more weight in construction than in most industries, both because the practice of paying crews as contractors is widespread and because enforcement attention follows it.
| Aspect | W-2 employee | 1099 contractor |
|---|---|---|
| Tax withholding | You withhold and remit | They handle their own |
| Workers compensation | Covered by your policy | Should carry their own |
| Prevailing wage obligations | Applies | Does not apply directly |
| Certified payroll | Appears on the report | Generally does not |
| Unemployment insurance | You pay state UI | Not applicable |
| Control over the work | You direct how and when | They control method |
The classification turns on behavioural control, financial control, and the nature of the relationship, not on what the agreement says or how the person is paid. A crew member who works your hours, on your sites, with your tools, under your direction is an employee whatever the paperwork calls them.
Union payroll and fringe benefits
For signatory contractors, union requirements are often the single hardest part of payroll and the clearest reason to buy a construction-native platform.
The complexity is structural rather than difficult. Fringe benefits are calculated per hour worked rather than as a percentage of pay. Different funds receive different contributions: pension, health and welfare, apprenticeship training, vacation, and industry funds each with their own rate and their own remittance. Rates differ by local, by classification, and by whether the work is at straight time or overtime. And each fund typically wants its own monthly report on its own form.
A general payroll platform can handle a deduction; it cannot readily handle twelve deductions that vary by the job someone worked on that day and remit them to eight different funds with eight different reports. That is what union payroll functionality means in practice, and it is why signatory contractors rarely stay on general payroll for long.
| Union payroll element | What it requires |
|---|---|
| Fringe calculation | Per hour worked, varying by classification and job |
| Multiple funds | Separate contribution rates and separate remittances |
| Local variation | Different rates by local union and jurisdiction |
| Overtime treatment | Fringe often paid at straight time on overtime hours |
| Fund reporting | Monthly reports per fund, often on fund-specific forms |
| Certified payroll interaction | Fringe amounts must appear correctly on WH-347 |
Field time tracking feeds everything else
Construction payroll is only as accurate as the hours entering it, and in construction those hours originate on job sites rather than at desks. This is where payroll problems usually begin.
Certified payroll requires hours by worker, by day, by project, and by classification. If the crew records a weekly total against the company rather than daily hours against a project with a trade classification, the certified payroll report cannot be produced accurately no matter how capable the payroll platform is. The data simply does not exist.
| Capability | Why construction needs it |
|---|---|
| Mobile clock in and out | Crews are on site, not at a terminal |
| Job and cost code selection | Hours must attach to a project to support job costing |
| Classification per entry | A worker may switch trades between jobs in a day |
| Geolocation or geofencing | Verifies presence on the correct site |
| Offline capability | Remote sites frequently lack reliable signal |
| Foreman approval | Catches errors before they reach a certified payroll report |
Offline capability is the requirement most often discovered late. A time tracking app that works in the office and fails on a rural site produces gaps that someone reconstructs from memory at week end, which is exactly the kind of estimate that a certification signature should not be covering.
How long implementation actually takes
Construction payroll takes considerably longer to stand up than general payroll, and vendor estimates run optimistic.
| Platform | Reported time to go live |
|---|---|
| Gusto and comparable general payroll | 2 to 4 weeks |
| Certified payroll add-on alongside existing payroll | 3 to 6 weeks |
| Miter | 4 to 8 weeks |
| Sage payroll inside Sage 100 Contractor | 6 to 10 weeks |
| ADP Workforce Now | 10 to 14 weeks |
| Foundation Payroll | 10 to 16 weeks |
Reported figures run roughly 20 to 40 percent longer than the timelines vendors quote during sales. The practical implication is scheduling: plan a switch around your project calendar rather than the calendar year, because cutting over mid-project on prevailing wage work means reconstructing certified payroll history across two systems for a job that is already under audit-relevant scrutiny.
Common mistakes in construction payroll
How to choose construction payroll software
| Question | If yes | If no |
|---|---|---|
| Do you bid federally funded work over $2,000? | You need certified payroll | General payroll may be enough |
| Do you work on state-funded public projects? | Check your state's prevailing wage law | One less compliance layer |
| Are you a union signatory? | Construction-native is close to mandatory | General payroll stays viable |
| Do crews work across state lines? | Avoid single-state plans | Single-state pricing works |
| Do you need labour cost per job in real time? | Job costing must be native | Accounting integration is fine |
| Do crews record hours on site? | Mobile and offline time entry required | Simpler time tracking works |
Answering yes to the first or third question effectively decides the category for you. Everything else is a question of degree within it. Our guide to payroll software for small business covers the general platforms in more depth if your answers point that way.
Before you choose
FirstHR is not construction payroll software. We do not calculate pay, generate certified payroll reports, apply prevailing wage determinations, or handle union fringe. If any of those is the problem in front of you, the platforms above are where to look, and for prevailing wage work the construction-native tier is not optional.
The reason this section exists is that construction has an onboarding problem sitting upstream of the payroll problem, and it is unusually acute in this industry. Crews turn over. New hires start on a Monday at a site rather than in an office. The paperwork that has to exist before someone can legally appear on a certified payroll report includes an I-9, a W-4, a state withholding certificate, trade certifications, safety training acknowledgments, and often a signed handbook. In practice a lot of that gets chased after the fact, from a truck, by someone who is also running the job.
That is the layer we handle: onboarding workflows, e-signature on offer letters and I-9s, employee records, document management, and training with completion tracking, for 5 to 50 employee US teams at a flat $98 to $198 per month regardless of headcount. It runs alongside whichever payroll platform you choose. Our comparison of employee onboarding software covers that side specifically.
Frequently Asked Questions
What makes construction payroll different from regular payroll?
Certified payroll reporting, prevailing wage rates set by government determination, union fringe benefits remitted to multiple funds, job costing by project and phase, and crews working across multiple tax jurisdictions in a single week. General payroll organises around employees; construction payroll organises around projects.
What is certified payroll?
A weekly report of wages paid to each worker on a covered project, with a signed statement certifying accuracy and that workers received the required prevailing wage including fringe. The federal form is WH-347. Using that specific form is optional; the weekly submission is mandatory. The Department of Labor estimates about 55 minutes per report.
When does Davis-Bacon apply?
To contracts over $2,000 for construction, alteration, or repair of public buildings or works that are federally funded or assisted. Federal assistance is broader than a direct federal contract: highway projects with FHWA funding and housing projects with HUD funding are covered even when a state or local agency signs the contract.
Do state prevailing wage laws apply too?
In about thirty states plus DC, yes. Thresholds vary from $1,000 in California to no minimum in New York and Illinois. Georgia, Florida, and Indiana have no state law, though federal Davis-Bacon still applies there with federal funding. On dual-funded projects you pay whichever rate is higher.
What is the best payroll software for a construction company?
If you bid public work: Payroll4Construction or Foundation for certified-payroll-heavy operators, Miter for a modern cloud product with strong field time entry, ADP Workforce Now above about fifty employees. If all your work is private: Gusto, OnPay, or Square handle it well at a fraction of the cost.
How much does construction payroll software cost?
At 15 employees, general platforms run roughly $114 to $148 per month. Construction-native platforms run considerably more: Miter is typically $30 to $50 per active worker monthly, so $450 to $750, and Foundation or Payroll4Construction are commonly reported at $700 to $2,500 monthly depending on modules.
Can Gusto or QuickBooks handle construction payroll?
For private work, yes. Neither generates certified payroll natively. Gusto offers pay-as-you-go workers compensation and geolocated time tracking but limits Simple to a single state. QuickBooks supports job costing through QuickBooks Online, and contractors needing certified payroll typically pair it with a separate compliance tool.
What is the difference between 1099 and W-2 for construction workers?
A W-2 employee has taxes withheld, is covered by your workers compensation, counts toward prevailing wage obligations, and appears on certified payroll. A 1099 contractor does none of these. Classification depends on behavioural and financial control, not on the agreement. Misclassification on prevailing wage work adds restitution and corrections to payrolls you already certified.
Who is responsible if a subcontractor underpays workers?
The prime contractor, for violations by subcontractors at every tier. That makes reviewing subcontractor certified payrolls a verification task rather than a filing task, since an underpayment discovered during an audit has already accrued restitution and penalties.
How long does construction payroll software take to implement?
General platforms take two to four weeks. A certified payroll add-on takes three to six. Miter takes four to eight, Sage six to ten, ADP Workforce Now ten to fourteen, and Foundation ten to sixteen. Vendor-quoted timelines run roughly 20 to 40 percent shorter than reported go-live.
Do I need to file certified payroll if no work was done that week?
Generally yes. A no-work report keeps the weekly sequence continuous, and gaps look like missing submissions rather than inactive periods, which is a common audit trigger. Check the specific contract, since submission instructions and the receiving party vary by project.
What is job costing and why does construction payroll need it?
Job costing allocates labour hours and cost to specific projects, phases, and cost codes rather than to a single company expense line. It is how you know whether a job is profitable while it is running, and it underpins certified payroll, which requires hours worked on one project specifically.