Contractors in Arizona working on government-funded construction projects must understand the prevailing wage laws in Arizona to stay compliant, avoid penalties, and ensure smooth project execution. While Arizona does not enforce its own prevailing wage law, federal requirements under the Davis-Bacon Act still apply. These rules impact how wages are calculated, how fringe benefits are delivered, and how certified payroll reports are submitted.
What Are the Prevailing Wage Laws in Arizona?
Arizona's prevailing wage refers to the federally mandated wage rates that must be paid to laborers and mechanics working on public works projects funded in whole or in part by federal dollars. Arizona does not have a state-level prevailing wage law, so all compliance falls under the Davis-Bacon Act.
This law requires contractors to pay workers at least the locally prevailing wage, including both the basic hourly rate and fringe benefits, for each job classification listed in the applicable wage determination. These rates are issued by the U.S. Department of Labor and are specific to each county and trade.
For example, if a wage determination lists a rate of $28/hour for general laborers with $7/hour in fringe benefits, contractors must meet that total $35/hour obligation. If only $5/hour is provided in fringe benefits, the remaining $2/hour must be added to the worker's cash wages or paid as a cash fringe.
Following this structure ensures wage fairness across all contractors working on federal projects and keeps contractors aligned with legal requirements.
Projects That Fall Under Arizona Prevailing Wage Rules
Because there is no Arizona-specific prevailing wage law, compliance is triggered only by federal funding. Any public works project in the state that receives federal dollars is subject to Davis-Bacon wage rules. Examples include:
Airport and highway improvements
VA hospital renovations
Government-funded school and housing developments
Infrastructure upgrades funded through federal grants
Even projects managed by local or state agencies must comply with federal prevailing wage rules if any part of the funding originates from the federal government. This makes it critical for contractors to understand when and how these rules apply, regardless of the project owner.
Wage Determinations and Labor Classifications
The U.S. Department of Labor publishes wage determinations on SAM.gov, organized by county and job classification. These documents provide the minimum wage and fringe benefit requirements for trades like carpenters, electricians, plumbers, and others.
A few key compliance requirements include:
Posting the wage determination at the job site in a visible location
Classifying workers according to the duties they actually perform
Requesting a conformance using Form SF-1444 if a needed job classification isn't listed
Classifying workers correctly is one of the most critical aspects of staying compliant. Misclassification can result in back wages, fines, or worse, especially if the Department of Labor conducts an audit.
Certified Payroll Reporting Requirements
One of the core elements of Davis-Bacon compliance in Arizona is submitting weekly certified payroll reports using Form WH-347 or an equivalent digital format. These reports are legally required for every week work is performed on the job and must include:
The worker's name and Social Security Number identification number. This is usually the last four digits of the Social Security number.
Job classification
Hours worked (regular and overtime)
Hourly wage rate and overtime rate
Fringe benefits that apply to the hours on the project
Taxes, deductions, and net gross wages paid
Certified payroll reports serve as official documentation that workers are being paid properly and that the contractor is fulfilling their obligations. Inaccuracies, omissions, or late submissions can trigger contract disputes or enforcement actions.
Additional Compliance Factors in Arizona
Contractors working on Davis-Bacon projects in Arizona should also be aware of several additional compliance requirements.
Under the Contract Work Hours and Safety Standards Act (CWHSSA), any contract exceeding $100,000 requires that all workers be paid time-and-a-half for any hours worked over 40 in a single week.
Fringe benefit documentation must be properly maintained, whether those benefits are provided through a bona fide plan or paid out as cash. These records must be accurate and readily available for inspection upon request.
Contractors are also responsible for subcontractor compliance. Prime contractors must ensure that all subcontractors working under them are fully compliant with prevailing wage laws and federal labor standards.
Finally, maintaining audit readiness is essential. Contractors are required to retain payroll records for a minimum of three years and must be prepared for audits or investigations by the Department of Labor at any time.
Even though Arizona municipalities like Phoenix and Tucson have attempted to implement their own prevailing wage ordinances, state law prevents cities from enforcing these kinds of wage mandates. In 2023, courts reaffirmed that prevailing wage in Arizona must follow federal—not local—rules, giving contractors a clear legal framework.
What Happens If You Don't Comply?
Failure to comply with prevailing wage requirements can have serious consequences, including:
Withheld payments until violations are corrected
Back pay owed to underpaid employees
Fines and penalties for noncompliance
Debarment from future federal contracts for up to three years
Legal action in cases of willful or repeated violations
Compliance issues don't always arise from intentional wrongdoing; many stem from disorganized payroll systems, inconsistent classifications, or clerical errors. That's why using software designed specifically for prevailing wage compliance is critical.
How eMars Helps Arizona Contractors Stay Compliant
Contractors working under Davis-Bacon rules need a tool that simplifies and automates the compliance process from start to finish. eMars certified payroll software is built to do exactly that.
With eMars, Arizona contractors can:
Track wages and hours by classification
Automatically generate WH-347 reports
Identify wage rate errors
Track fringe benefit payments
Maintain digital records for audits and agency review
By streamlining compliance, eMars removes the guesswork and reduces the administrative burden that often leads to errors. Contractors gain confidence that every payroll submission meets federal standards, without the hours of manual labor or paper chasing.
Simplify Your Compliance with eMars
Handling Arizona prevailing wage requirements doesn't have to be overwhelming. With eMars, you gain access to a certified payroll platform trusted by contractors across the country. From tracking wage classifications to automating WH-347 reports, eMars helps you get it right every time.
Schedule a demo today to learn how eMars can keep your payroll compliant and your projects on track.