Why Accurate Classification of Workers Matters More Than You Think

One of the most common compliance pitfalls on federally funded construction projects is the misclassification of workers. The Davis-Bacon Act requires that every worker be paid according to the correct classification and prevailing wage rate for the tasks they perform. When those classifications are ignored or misapplied, the consequences can ripple across an entire project.

At Davis Bacon Solutions, we break down compliance into simple terms, enabling contractors and subcontractors to stay on track and compliant. And if you ever need a dedicated labor compliance officer to step in and handle reporting and monitoring for your project, our sister company Labor Compliance CA, LLC can provide that support.

What Worker Classification Really Means

Worker classification is the process of identifying the exact duties a worker performs on-site and matching them to the correct Davis-Bacon wage rate.

For example:

• A Laborer moving materials is not the same as a Carpenter framing drywall.

• A Truck Driver hauling materials may fall under different classifications depending on whether the hauling is on-site or off-site.

• A worker classified as a Laborer but performing duties typically associated with Electricians must be reclassified and paid at the higher rate.

The Department of Labor sets these rules to ensure fair pay and compliance across public works projects.

Why Classification Matters

Getting worker classification right is not optional. The stakes are higher than most contractors realize:

1. Compliance with Federal Law
   The Department of Labor enforces strict rules around wage classifications. Errors can trigger audits, back pay, and fines.

2. Financial Risk
   Misclassifications can lead to thousands of dollars in back wages. If your certified payroll is audited and errors are found, you may be liable for months of underpayments.

3. Project Delays
   Payments can be withheld while compliance issues are reviewed, which can slow down or stall projects.

4. Damage to Reputation
   Contractors flagged for repeated violations risk losing eligibility to bid on future public works projects.

5. Workforce Trust
   When workers see they are properly classified and paid at the correct rate, it builds loyalty and reduces turnover.

Common Classification Mistakes

Even well-intentioned contractors make these missteps:

• Relying on job titles instead of actual duties.

• Paying the lowest possible wage rate to cut costs.

• Forgetting to reclassify workers when duties shift.

• Using outdated or incorrect wage determinations.

How to Classify Workers Correctly

1. Check the Wage Determination
   Each project includes a wage determination listing classifications and rates. Always use the most current determination for the county and project type.

2. Base Classifications on Tasks
   Workers must be classified by their job duties, not by their title.

3. Consult the Department of Labor Resources
   The DOL provides classification guides and prior rulings to clear up gray areas.

4. Document Duties
   Keep clear records of what tasks workers perform to protect yourself in case of an audit.

5. Bring in Compliance Support
   Davis Bacon Solutions can review classifications and help you stay compliant. For full-service monitoring, certified payroll reviews, and project reporting, our team at Labor Compliance CA, LLC is available to step in.

Real-World Example

Here’s how misclassification can play out. Imagine a contractor classifying drywall installers as laborers and paying them $25/hour instead of $41/hour. That simple mistake could result in hundreds of thousands in back wages and project delays. Cases like this are not rare — for example, the U.S. Department of Labor required General Interior Systems Inc. to pay more than $380,000 in back wages for misclassifying drywall installers. Read the official release here.

Best Practices for Contractors

• Train staff on classification and certified payroll.

• Confirm the correct wage determination before work begins.

• Reclassify workers when duties change.

• Communicate with subcontractors to ensure they comply with the requirements.

• Audit certified payroll reports internally before submitting.

For more practical help, see:

• Fill Out Form WH-347 Without Getting Confused

• Top Mistakes to Avoid in Certified Payroll Reports

Accurate worker classification protects your project funding, prevents costly penalties, and ensures a satisfied workforce. Davis Bacon Solutions makes compliance simple, and when you need in-depth support, Labor Compliance CA, LLC can provide third-party compliance services to keep your projects running smoothly.