Best Payroll Software for Construction Companies 2026
Construction payroll runs on rules generic software ignores: certified payroll for prevailing wage projects, Davis-Bacon compliance, and job cost allocation.
Is it right for you?
- Do you work on any federally funded or state-funded public projects requiring certified payroll?
- Do you have union employees requiring specific benefit fund contributions and dues deductions?
- Can the software allocate labor costs to specific job numbers for project profitability tracking?
- Does it handle different workers' comp codes for different trades (carpenter vs. laborer vs. equipment operator)?
- Can it generate WH-347 certified payroll reports for government projects?
Quick verdict
For private commercial construction without prevailing wage requirements: Gusto or Paychex Flex handles the basics at reasonable cost. For any project involving federal funding (federal buildings, federally assisted housing, transportation projects): you need certified payroll capability, which means LCPtracker, eMars, or a payroll service with certified payroll expertise. The Davis-Bacon Act penalties for non-compliance on covered projects are significant enough that using a generic tool is not worth the risk.
Quick answer
Certified payroll and prevailing wage: when it applies
The Davis-Bacon Act requires contractors and subcontractors working on federally funded construction projects to pay workers "prevailing wages," which are the locally prevailing wages and benefits for the type of work being performed. Covered projects include federal building construction, federally assisted construction (HUD housing, highway projects, school construction using federal funds), and many state-funded projects under "Little Davis-Bacon" acts.
Certified payroll is the weekly report (form WH-347 or equivalent) that covered contractors must submit to the contracting agency proving workers were paid the required prevailing wage rates. Getting certified payroll wrong on a covered project can result in debarment (being prohibited from bidding on future federal contracts), back pay obligations, and civil penalties.
If any project you bid involves public money, prevailing wage rules may apply. The determination depends on the project type, funding source, and location. When in doubt, ask the general contractor or contracting agency before starting work.
Standard construction payroll (private projects): Gusto and Paychex
For private commercial or residential construction without prevailing wage requirements, standard payroll tools work fine with some manual configuration. The main construction-specific needs are multiple workers' comp codes per employee (since the same worker may do different work on different days) and job cost allocation for tracking labor costs by project.
Gusto supports multiple workers' comp codes and integrates with workers' comp insurance providers including Employers (via Gusto's workers' comp partner). Job cost allocation requires manually tracking hours by job code and then importing into your accounting or project management software; Gusto does not have native construction job cost tracking.
Paychex Flex handles union payroll better than Gusto, including benefit fund contributions and dues deductions tracked by trade and local. For union contractors, Paychex is generally the better fit despite higher cost.
Certified payroll software: LCPtracker and eMars
LCPtracker is the most widely used certified payroll platform for contractors working on public projects. It handles WH-347 report generation, prevailing wage rate lookups by county and trade, and electronic submission to contracting agencies. LCPtracker integrates with most payroll systems; you run payroll in your standard system and then import the data to LCPtracker for certified payroll report generation.
Pricing: LCPtracker starts at around $89/month for basic certified payroll. Agency submission fees vary by contracting agency. For subcontractors working on multiple public projects simultaneously, the cost scales with the number of projects and workers.
eMars (formerly Elation Systems) is the alternative most common in highway and transportation projects. Some state DOTs use eMars as their required submission platform; if your state DOT uses eMars, you need eMars regardless of your general preference for LCPtracker.
Frequently asked questions
Do prevailing wage requirements apply to subcontractors? Yes. If a general contractor is working on a Davis-Bacon covered project, all subcontractors on that project are also covered, regardless of whether their portion of work directly involves federal funds. The GC is responsible for ensuring all subs comply and should require proof of compliance (certified payroll reports) from every subcontractor.
What workers' comp code applies when a worker does multiple types of work? The correct approach is to classify hours by the work actually performed. A carpenter doing foundation work is classified under the concrete or laborer code for those hours and under the carpentry code for carpentry hours. This requires tracking hours by task, not just total hours. Most construction companies underreport this distinction, which creates workers' comp audit exposure.
Can construction workers be paid as 1099 contractors instead of W-2 employees? This is one of the most common and costly mistakes in construction. The IRS and most state labor agencies apply strict tests for independent contractor classification in construction. Workers who work regular hours under your direction, use your tools or equipment, and do not have their own separate business generally qualify as employees regardless of what the contract says. Worker misclassification in construction carries substantial back tax liability, penalties, and exposure to unpaid benefits claims.