Payroll for Construction: Software and Compliance

Construction payroll fails for a specific, avoidable reason, and the time to learn it is before you buy. A contractor buys a well-reviewed payroll platform, runs it happily for private work, then wins a federally funded job 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, the federal prevailing wage law, 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 wherever vendors publish prices, 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 covers certified payroll, prevailing wage, and union fringe natively is a construction product; one that lacks them is a general product a contractor happens to use.

The common thread is that construction payroll is organized around projects while general payroll is organized 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

On federally funded or assisted construction, the Davis-Bacon Act requires you to pay at least the prevailing wage, a government-set rate for each trade and county. Certified payroll is the weekly report that proves you did. This is where most contractors get their first unpleasant surprise, so it is worth understanding before choosing software rather than after.

When it applies

According to the Department of Labor (DOL), the Davis-Bacon Act covers contracts exceeding $2,000 for construction, alteration, or repair of public buildings or public works. The Related Acts, a set of federal funding laws, carry the same labor standards to federally assisted projects.

Federal assistance is broader than a direct federal contract. Highway work with Federal Highway Administration (FHWA) money, covered under 23 U.S.C. 113, and housing work with Department of Housing and Urban Development (HUD) 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.

Because the form is optional, an alternative format is acceptable as long as it contains all the required information and carries the signed compliance statement. That is why software exports in other formats satisfy the requirement.

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 nearly four hours every week on paperwork alone.

Prevailing wage varies more than the federal rule suggests

Federal Davis-Bacon is the floor, not the whole picture. Most states add their own laws for state-funded work, known as Little Davis-Bacon acts. The Department of Labor's state threshold table lists 28 states plus the District of Columbia with such laws, and Michigan has reinstated its law since, for about thirty states in all.

Two practical consequences follow. First, where both laws cover a project, a state can require the higher of the two rates, as Oregon's labor bureau does on non-residential work, so you track two wage determinations (the official rate schedules) rather than one. Second, record retention obligations differ, and the federal three-year requirement is the minimum rather than the standard.

Virginia shows how far the retention gap can run. Its prevailing wage statute applies to public works contracts over $250,000 and requires employers to preserve payroll records for at least six years, twice the federal period.

Electronic submission adds another layer. Many agencies require certified payroll to be filed through a dedicated compliance platform or a state-specific portal, such as the one run by the California Department of Industrial Relations, rather than as a document. A payroll platform that exports directly into those systems removes a rekeying step that is otherwise weekly and error-prone.

Where the rates actually come from

Rates come from the state, not from a payroll platform. Ohio publishes its rates through the Department of Commerce prevailing wage portal. Its building thresholds are fixed in statute, but the lower road and street thresholds are re-set every two years rather than annually. A change that comes that rarely is easy to miss, which is how a stale figure ends up in a bid.

Michigan is a common source of stale advice for a different reason. Prevailing wage on state-funded work was reinstated there effective February 13, 2024, and the Department of Labor and Economic Opportunity now requires contractors and subcontractors to register annually before they bid or start covered work.

Oregon sits at a $50,000 contract threshold, and the Bureau of Labor and Industries issues its rate books on a fixed revision cycle. The software question in every one of these states is narrow: can the platform hold the determination you were handed and apply it by trade and project, or does somebody retype a schedule each time it changes?

What no platform on this page will do is tell you which determination governs your contract, or split base and fringe for you at bid time. That work belongs in the estimate rather than in payroll, and our guide to prevailing wage covers reading a determination and satisfying the fringe rate.

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. So each platform here was checked against four questions rather than a feature list.

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.

The pattern is clean and worth stating plainly: none of the five general payroll platforms lists native certified payroll generation. That is not a criticism of Paychex, 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

These platforms produce certified payroll, apply prevailing wage rates, and calculate union fringe on their own. What separates them is how much else comes along, from a managed service to a full accounting system.

Payroll4Construction

Payroll4Construction is a payroll service from Foundation Software, in business since 2006 and built for contractors with heavy certified payroll and union obligations. You submit time, and the service runs the payroll.

The service 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: a form on its site returns custom pricing on submission, and no rates are published. Because it is a managed service rather than software you run yourself, compare its quote against a general platform plus the hours your office spends on certified payroll, not against a subscription fee alone.

Foundation Software

Foundation Software is the parent product: construction accounting and payroll in one integrated enterprise resource planning (ERP) system rather than payroll alone. It suits contractors who want job costing, project accounting, and payroll on one data model, with timecards entered and approved from the field in its mobile app.

The trade-off is weight. Implementation covers the accounting system as well as payroll, 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

Miter is 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 puts field time tracking and daily reports in the same platform as payroll, which matters more than it sounds when the people recording hours are on scaffolding rather than at desks.

Pricing is quote-based, with no rates published on its site. Onboarding and training are handled by its US-based support team, and because there is no accounting system to migrate, the project is narrower than an ERP implementation.

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-state support, and field crews can clock in from its mobile app with geofencing. ADP itself positions Workforce Now for Construction at firms with 50 or more employees and points smaller ones to RUN, its small-business payroll product. That puts Workforce Now above a fifteen-person firm.

Sage Construction covers the same compliance ground inside a construction ERP, so for a firm not already on Sage the payroll decision arrives bundled with an accounting migration. 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.

Paychex Flex

Paychex Flex is a general payroll platform rather than a construction-native one. Paychex describes its payroll services as supporting the underlying data that certified payroll reporting depends on, but its payroll packages list no certified payroll report. The reporting is offered through third-party apps sold in the Paychex Marketplace, so public work means two systems, much like the hybrid setup described below.

One of those apps, Points North's Construction Payroll Compliance, calculates prevailing wage rates and fringe values from time data, sends the payroll file back to Paychex, then builds certified payroll reports from the processed payroll in more than 100 formats. HCM TradeSeal, another marketplace app, covers prevailing wage and union certified payroll at state and federal level.

Inside Paychex itself, job costing and labor distribution are included in the Advanced and Complete payroll packages and sold as an add-on to Basic and Foundations. Time and attendance, with a mobile app for clocking in, is an add-on to any package. No package carries a published price, so like the construction-native tier it needs a quote.

Gusto

Gusto is 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 included on the Plus and Premium plans.

The Plus and Premium plans also carry project tracking, so hours logged to a project feed a workforce costing report that breaks labor cost down by project, including wages, taxes, and benefits. What Gusto does not do is 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 per employee, which doubles the per-employee fee.

OnPay

OnPay sells 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. Certified payroll and union fringe are not supported.

QuickBooks and Square

QuickBooks Workforce Payroll (the renamed Payroll Core plan) costs $50 plus $7 per employee and 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 per employee has the lowest base fee here and includes federal and state tax filings, which suits a small residential contractor with straightforward payroll and no public work.

What construction payroll costs at 15 employees

Only one of the two tiers publishes its prices: the general platforms list theirs, while the construction-native platforms price every contractor by quote. That makes the comparison between them the most useful one on this page, and also the hardest to make.

At 15 employees a general platform runs about $1,500 to $1,860 a year on its entry plan. The construction-native tier has no list price to set against that, so comparing the two means asking for quotes based on your crew. What a construction-native quote pays for 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 your office manager's hourly cost, that is the figure to set against a construction platform's quote, 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.

Under the IRS common-law rules, the classification turns on behavioral control, financial control, and the relationship of the parties, 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, meaning those bound by a union agreement, union requirements are often the single hardest part of payroll and the clearest reason to buy a construction-native platform.

No single rule here is hard; the difficulty is structural. Fringe benefits are calculated per hour worked rather than as a percentage of pay, and the rates differ by union local, by classification, and by whether the work is at straight time or overtime.

The contributions are also split across several funds: pension, health and welfare, apprenticeship training, vacation, and industry funds, each with its own rate and its own remittance. 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.

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.

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.

What drives implementation time

Construction payroll takes considerably longer to stand up than general payroll, because far more has to be loaded before the first run. A construction ERP like Foundation or Sage is a bigger project still, because the accounting system comes with it. Rather than repeat sales timelines, the table shows what drives setup time for each option.

Ask each finalist for a written implementation plan with named milestones, because a timeline quoted during a sales call is not a commitment.

Timing matters as much as duration. 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, on a job whose records are already subject to audit.

Common mistakes in construction payroll

Each of these six mistakes is far cheaper to prevent than to fix.

How to choose construction payroll software

Answer the six questions below for the work you plan to bid, not only the work you have today, since one federally funded job changes the answer.

Answering yes to the first or third question effectively decides the category for you. Everything else is a question of degree within it.

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.

By the time a new hire's hours reach a certified payroll report, the file should already hold an I-9, a W-4, and a state withholding certificate where the state has its own form. Trade certifications, safety training acknowledgments, and a signed handbook come on top when the project or your own policy calls for them. 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 US small businesses at a flat $98 to $198 per month regardless of headcount. It runs alongside whichever payroll platform you choose.

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 organizes around employees; construction payroll organizes 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 puts the average at 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 just over $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. Where both laws reach a project, Oregon, for one, requires the higher rate on non-residential work.

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 at 50 or more employees. If all your work is private: Gusto, OnPay, or Square handle it well, and all three publish their prices.

How much does construction payroll software cost?

At 15 employees, general platforms run $125 to $155 a month on list prices, from Square to QuickBooks Workforce Payroll. Miter, Foundation, and Payroll4Construction publish no rates and quote each contractor individually, so get at least two quotes before comparing tiers.

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 time tracking on its upper plans 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 and is covered by your workers compensation; a genuine 1099 contractor handles both. On a covered site, though, the prevailing wage reaches every laborer and mechanic whatever the contract says. Classification depends on behavioral 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. Check each subcontractor's certified payroll before you pass it on, because an underpayment that first comes to light in an audit has already accrued restitution and penalties.

How long does construction payroll software take to implement?

Longer than general payroll. A construction platform has to be loaded with wage determinations, trade classifications, union rules, and project codes, and an ERP adds the accounting setup on top. Get a written plan with milestones from each finalist, and time the switch around your project calendar.

Do I need to file certified payroll if no work was done that week?

Not under the federal rule, which requires a certified payroll for each week covered work is performed. An idle week can still look like a missing submission, so ask the agency or prime contractor how it wants those weeks noted. 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 labor 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.