Prevailing Wage Payroll Deductions: What the Copeland Act Allows (and Prohibits)

Last Updated: October 2026

Payroll deductions are a routine part of every pay period. On prevailing wage projects, they also follow a specific set of federal rules. The Copeland Anti-Kickback Act defines which deductions can come out of a worker's paycheck on Davis-Bacon and related projects, which ones need Department of Labor (DOL) approval, and how each should appear on certified payroll. This guide covers each category, the documentation to keep on file and how to report deductions on the WH-347.

Key Takeaways

• The Copeland Anti-Kickback Act (40 U.S.C. 3145) prohibits contractors on federally funded construction projects from requiring workers to give back any part of their wages and limits payroll deductions to those permitted by DOL regulations at 29 CFR Part 3.
• 29 CFR 3.5 lists 10 categories of deductions contractors can take without DOL approval, including taxes, court-ordered garnishments, benefit contributions, union dues and repayment of wage advances.
• Deductions outside the 3.5 list, such as employer-required uniforms or vehicle use, need written DOL approval under 29 CFR 3.6. Approval covers one year and must be renewed.
• Benefit contributions and personal safety equipment deductions require the worker's advance written consent or a collective bargaining agreement, and consent cannot be a condition of employment.
• On the revised WH-347, deductions are reported in Column 8 and net pay in Column 9. "Other" deductions should be itemized by type and amount

Navigate This Article

• What Is the Copeland Act?
• How the Copeland Act Regulates Payroll Deductions
• Deductions Allowed Without DOL Approval
• Deductions That Require DOL Approval
• What the Copeland Act Prohibits
• How to Report Deductions on the WH-347
• How to Catch Up Missed Deductions on Prevailing Wage Jobs
• Best Practices for Prevailing Wage Deductions
• State Prevailing Wage Deduction Rules
• Copeland Act FAQ

What Is the Copeland Act?

The Copeland Anti-Kickback Act is a 1934 federal law that protects the wages of laborers and mechanics on federally funded construction projects. It prohibits contractors from inducing workers to give up any part of their earned pay and limits deductions to those DOL regulations permit.

The Act applies to public buildings, public works and projects financed by federal loans or grants, with payroll and deduction requirements for covered contracts over $2,000. It's also the source of the weekly payroll and signed Statement of Compliance, due within seven days of the regular pay date, which is why the Act is so closely tied to certified payroll.

The Copeland Act works alongside the Davis-Bacon Act and its related acts. Davis-Bacon sets the prevailing wage and fringe rates workers receive, and the Copeland Act protects those wages once they're paid. The DOL's Copeland Act overview outlines enforcement by the Wage and Hour Division and penalties, including fines and up to five years in prison for kickbacks.

How the Copeland Act Regulates Payroll Deductions

The Copeland Act regulations at 29 CFR Part 3 place every payroll deduction into one of three groups:

• Permitted without approval (29 CFR 3.5): Ten categories that meet their listed conditions.
• Permitted with DOL approval (29 CFR 3.6): Deductions the DOL has approved in writing.
• Prohibited (29 CFR 3.9): Everything else.

If a deduction is on the 3.5 list and meets its conditions, it's permitted. If not, a DOL approval letter is needed first. These rules were last updated in 2023 and remain in effect.

Deductions Allowed Without DOL Approval (29 CFR 3.5)

The permissible deductions under 29 CFR 3.5 cover the most common items on a construction payroll.

Worker benefit contributions are separate from the employer contributions that count toward the required rate, a distinction covered in our explanation of how fringe benefits work. Our union payroll processing guide walks through how dues are calculated.

Deductions That Require Written Employee Authorization

Benefit contributions and personal safety equipment require the worker's advance written consent or a collective bargaining agreement. Consent should be voluntary, given before the deduction starts and never a condition of employment.

A well-documented authorization form typically includes:

• The worker's name, signature and date
• The deduction type, amount and frequency
• Specific start and end dates, since some agencies don't accept open-ended terms like "ongoing"
• A statement that the contractor doesn't profit from the deduction

The Colorado Department of Transportation's certified payroll deduction guidance is a helpful example of what agencies review. When an amount changes, a new signed form keeps records current.

Deductions That Require DOL Approval (29 CFR 3.6)

Agency guidance generally places employer-required uniforms, required vehicle use, cell phones and charges for lost or damaged equipment in this category.

Under 29 CFR 3.6, the DOL approves a deduction when:

• The contractor and affiliates don't profit from it
• It's permitted under other applicable laws
• The worker consented in writing beforehand, or a collective bargaining agreement provides for it
• It serves the worker's interest

Requests go to dbadeductions@dol.gov and describe the deduction, its purpose, the worker classifications affected and any third party receiving funds. Approval covers all of the contractor's contracts for one year, so adding renewal dates to your compliance calendar keeps it active.

What the Copeland Act Prohibits

Under 29 CFR 3.9, any deduction that isn't permitted under 3.5 or approved under 3.6 is prohibited. This includes kickbacks, such as asking a worker to return pay, charging a fee for a job or deducting equipment the employer must provide.

When an agency identifies a deduction that isn't permitted, the contractor typically repays the worker, and false statements on the Statement of Compliance can lead to debarment. Our overview of what Davis-Bacon violations can cost contractors explains the broader impact.

How to Report Deductions on the WH-347

On the revised WH-347 form, deductions are recorded in Column 8, and net pay (gross wages minus total deductions) is recorded in Column 9. The DOL released the revised form in January 2025, and the previous version carried a September 30, 2026 expiration date, so certified payrolls should now use the revised form. Our recap of WH-347 updates covers the other changes.

A few habits keep deduction reporting clear:

• Itemize other deductions: List each by type and amount, such as "Loan repayment 1 of 3, $50."
• Keep supporting documents ready: Authorization forms, DOL approval letters and redacted court orders are often requested during review.
• Follow portal requirements: State and local reporting portals often include a dedicated field for deduction notes.

Our guide on how to create a certified payroll report walks through each section of the form.

How to Catch Up Missed Deductions on Prevailing Wage Jobs

A missed deduction often happens when a benefit enrollment starts mid-cycle. On prevailing wage projects, the catch-up follows the same Copeland Act rules as any other deduction.

1. Confirm the deduction is permitted. Check that it falls under 3.5 or has a current 3.6 approval.
2. Review the authorization. Make sure the worker's written consent covers the catch-up amount and schedule. If not, get a new signed authorization first.
3. Recover the amount without interest. If the employer covered the worker's share, recovery is generally treated like repaying a wage advance under 3.5(b), with no interest or fees.
4. Set a clear schedule. Spreading recovery out keeps take-home pay predictable.
5. Note it on certified payroll. List the catch-up as its own line each week.

For example, a $60 weekly health premium missed for two weeks can be recovered at $40 per week over three weeks with the worker's signed authorization, noted as "Health premium catch-up 1 of 3, $40."

Agency expectations vary, so confirm your approach with your contracting agency or compliance advisor before the first catch-up deduction.

Best Practices for Prevailing Wage Deductions

• Confirm each deduction against the 3.5 list before setting it up in payroll
• Use authorization forms with specific amounts and end dates
• Track DOL approval letters and renewal dates
• Charge safety equipment and lodging at cost
• Itemize deductions on every certified payroll

Our guide to common certified payroll report mistakes shares more tips.

State Prevailing Wage Deduction Rules

State agencies may add requirements beyond the Copeland Act, such as specific authorization forms or portal fields for deduction notes. Our state-by-state certified payroll reporting guide covers requirements in California, New York, Illinois and other states.

Copeland Act FAQ

Keep Every Deduction Clear and Compliant

The Copeland Act protects the prevailing wage after it's paid. Following the 3.5 list, securing DOL approval for anything outside it, keeping signed authorizations on file and itemizing deductions keeps your reporting accurate on every project.

Certified Payroll Reporting by Points North generates certified payroll reports in each agency's required format, using the completed payroll data from your system. Prefer added support? Our Managed Services team partners with you to manage report generation and submissions.