How Prevailing Wage Compliance Will Change in 2021

The importance of prevailing wage payroll and HR compliance has increased dramatically for construction contractors. Construction work is changing to meet new demands for open design, workforce diversity and inclusion, and recordkeeping requirements for programs like PPP.

Though it will be impossible to forecast the future of public works project funding in 2021, many in construction feel that the number of starts will increase and prevailing wage compliance will play an important role for both general contractors and subcontractors. Prevailing wage payrolls in 2021 will almost certainly receive increased attention from government agencies and GCs.

Public Works Bidding Will Become More Competitive for Prevailing Wage Projects

Contractors bidding on public works projects will see an increase in competition from new arrivals. Financial pressure from a challenging 2020, increased interest in American politics and increased involvement with federal programs will create a climate that inspires many contractors to try bidding on Public Works projects for the first time, or at least for the first time in many years.

However, the total number of starts is expected to stagnate or increase only moderately for government-funded projects – and funding will decrease in some areas as well. This will result in a more competitive bidding environment, and increased scrutiny on those contractors who do win bids.

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Government agencies will face increased pressure to protect funding, which will require them to track Certified Payroll reports carefully.

Requests For Detailed HR and Prevailing Wage Payroll Records Will Be Unpredictable

Construction firms that remained operational during COVID-19 will remember the level of detail required to obtain funding. Whether applying for PPP loans or simply submitting Certified Payroll reports, contractors were expected to provide detailed current and historic records in order to receive a timely response from any agency or GC.

Certified Payroll reports will also need to match HRIS records exactly, as agencies and GCs continue to emphasize fair payment of wages, workforce diversity improvements and even location-based workforce preferences. Awarding agencies will want to understand not only how workers are paid, but which workers are paid.

Major HCM Vendors Will Increase Support for Prevailing Wage Compliance

Human Capital Management vendors such as ADP, Paychex, Paycor and Paylocity are adopting new technologies to support job-based rates and fringe benefit requirements. Construction contractors interested in adopting modern HR compliance best-practices will be able to customize their major HCM solutions to create a “best of both worlds” solution.

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