COMPLIANCE·May 8, 2026·9 min read

How to calculate overtime for prevailing-wage jobs (without losing sleep)

If your crew works federal jobs (or state jobs that follow Davis-Bacon rules), overtime math is not the same as a regular private project. Here's how to actually do it right.

Prevailing-wage overtime is the calculation small contractors get wrong most often — and the one that comes back to bite hardest during a Department of Labor audit. This guide walks through the math, the documentation, and the common mistakes that cost contractors thousands a year.

This is a plain-English guide for working contractors — not legal advice. For your specific federal or state job, consult your CPA or labor attorney. Rules vary by state.

What is a prevailing-wage job?

A "prevailing-wage job" is any project where the worker rate is set by a government body, not by you. The most common source is the federal Davis-Bacon Act, which applies to federal construction work over $2,000. States often have their own equivalents — California has the DIR, New York has the NYS DOL prevailing wage, etc.

On a prevailing-wage job, your worker doesn't just earn what you'd normally pay them. They earn the rate published by the government for that trade, in that geographic area, at the time the contract was bid. That rate has two parts:

Basic hourly rate — the cash wage that hits the paycheck
Fringe benefit rate — health/pension/training contributions, which can be paid as cash on the check or to bona-fide benefit plans

Most prevailing-wage rates are higher than your normal private rate. That's the point — it stops government work from suppressing local wages.

The overtime rule that trips people up

Here's the rule most small contractors miss: overtime is calculated on the basic hourly rate only, not on the rate plus fringes. The fringe rate stays the same in straight time and in overtime.

So if Carlos's prevailing-wage classification is $40/hr basic + $15/hr fringe = $55/hr total, his overtime rate is not $82.50 (1.5 × $55). It's:

($40 × 1.5) + $15 = $60 + $15 = $75/hr

The basic rate gets the 1.5× multiplier. The fringe rate gets added on at the regular value. Same is true for double-time on Sundays/holidays in states that require it (CA, for example): basic × 2 + fringe.

Worked example: full week, mixed jobs

Let's run a real week. Carlos worked Monday through Friday — three days on the Hendrix federal job (prevailing wage) and two days on a private remodel (your normal rate).

Monday – Wednesday: federal job. Classified as Electrician Group 3 — $40 basic + $15 fringe.
Thursday – Friday: private remodel. Carlos's normal rate is $32/hr (no fringes).
Hours: 10 hours each weekday. 50 total for the week.

Step 1: figure out his weighted average regular rate for overtime purposes. The FLSA requires overtime to be calculated on the weighted average across all jobs that week:

Federal hours (regular): 24 × $40   = $960
Private hours (regular): 16 × $32   = $512
Federal fringe:          30 × $15   = $450  ← all federal hours
                                     ──────
Total straight-time earnings:         $1,922

Total hours (excluding fringe):       40

Weighted regular rate (excl. fringe): $1,472 ÷ 40 = $36.80/hr

Step 2: overtime premium is 0.5× the weighted rate, applied to the 10 hours over 40:

OT premium: 10 × ($36.80 × 0.5) = $184.00

Step 3: total weekly pay = straight-time + OT premium. Carlos's check:

Straight time pay:  $1,922.00
OT premium:        +  $184.00
                   ─────────
Gross pay:         $2,106.00

Common mistake: contractors compute OT on the prevailing-wage federal rate alone, not the weighted average. That underpays the worker when a mixed week pushes the federal hours into OT territory. The DOL has caught this in audits and assessed back wages.

Documentation: certified payrolls

On Davis-Bacon jobs you have to submit certified payrolls weekly — Form WH-347 (or your state's equivalent). Each row lists the worker, classification, hours worked, gross pay, deductions, net pay, and fringe-benefit method.

Key documentation rules:

Keep records for at least 3 years after the job ends.
Track time on prevailing-wage jobs separately from private work — your records must show which hours were on which job.
Show fringe-benefit payments either as cash on the check or contributions to a bona-fide plan (with annualization).
Sign the "Statement of Compliance" on the back of the WH-347 each week — false signatures are a federal crime under 18 U.S.C. § 1001.

The 4 mistakes that cost contractors money

OT on the wrong rate. As above — overtime is the basic rate × 1.5, not (basic + fringe) × 1.5. You'll overpay by hundreds per worker per OT week if you get this wrong.
Not separating federal hours from private hours. Time-tracking on paper makes it nearly impossible to prove later which hours went to which project. Use software that tags every punch with a project or job.
Wrong classification. If you classify a journeyman as an apprentice, you'll be assessed back wages plus penalties. Get the right wage determination from SAM.gov before bidding the job.
Missing the annualization rule on fringe contributions. If you pay fringes to a benefit plan, you can only count the annualized contribution toward the prevailing-wage fringe rate — not the per-hour cost on the prevailing-wage job alone. Talk to your CPA before assuming a plan contribution covers the fringe.

How Clox handles this

Clox isn't a payroll processor — your CPA or QuickBooks does the final certified-payroll paperwork. But Clox does the hard part: capturing every punch with the right project tag and the right pay classification, so weekly export to QuickBooks (or to your CPA) is a clean CSV.

Specifically: each shift can be tagged to a project. Projects can have their own prevailing-wage classification + rate. When Friday rolls around, you export and your CPA gets the breakdown they need to file the WH-347 — without you reconstructing the week from text messages.

Try Clox free for 14 days →

Clean separation of federal vs private hours. Auto-OT on the weighted rate. CSV export your CPA will actually thank you for.

Frequently asked

Is the overtime threshold 40 hours per week federally?

Yes, under the FLSA. But several states (California, Alaska, Nevada, Colorado) also have daily overtime rules — anything over 8 in a day or 12 (for double-time). Davis-Bacon doesn't supersede stricter state laws; you have to pay whichever yields the higher amount.

What if a worker is on a prevailing-wage job for only part of the day?

Split the day. Each hour gets the rate that matches the project that hour was worked on. Then run the FLSA weighted-average OT calculation across the whole week.

Do I owe prevailing wage to a salaried employee?

No — Davis-Bacon applies to non-exempt "laborers and mechanics" working on the site of the work. Office salaries (estimator, bookkeeper) are exempt. Foremen are tricky: if they spend more than 20% of their week doing manual work, they're covered for those hours.

Bottom line: prevailing-wage overtime is one of those things that looks intimidating but breaks down into 4 steps: classify, compute weighted regular rate, add OT premium on overage hours, document. Software that tags hours by project removes the worst part — the reconstruction.