Owners, 1099 workers, truck owner-operators and lower-tier subs: who goes on certified payroll

These are the questions a sub asks the prime the week before the first payroll is due. The regulation answers most of them in one sentence: the rate is owed to every laborer and mechanic on the site "regardless of any contractual relationship which may be alleged to exist." The exceptions are narrow and come from Department of Labor policy, so they are worth confirming with the prime or the agency before you rely on them.

Who counts as a laborer or mechanic

29 CFR 5.2 defines laborers and mechanics as workers whose duties are manual or physical, including anyone who uses tools or does the work of a trade, as distinguished from mental or managerial work. Apprentices and helpers are included.

The same definition excludes people employed in a bona fide executive, administrative or professional capacity under 29 CFR part 541. A foreman who spends more than 20 percent of a workweek on the tools, and who does not meet part 541, is a laborer or mechanic for those hours and is owed the rate for them.

5.2 also defines "employed": every person doing laborer or mechanic work on a covered project is employed "regardless of any contractual relationship alleged to exist between the contractor and such person."

The owner who works with the tools

The Department's Field Operations Handbook (section 15f06) and its Prevailing Wage Resource Book apply the business-owner rule from 29 CFR 541.101. Someone who owns at least a bona fide 20 percent equity interest in the business, of any form (corporation, partnership or other), and who is actively engaged in its management, is a bona fide executive. Under that position the owner is not a laborer or mechanic, and the salary tests in part 541 do not apply.

The handbook adds the limit: a person with 20 percent or more who works long hours, makes no management decisions, supervises no one and has no authority over personnel does not qualify. A partner holding 10 percent who swings a hammer all week is a laborer or mechanic for those hours.

How the owner appears on the WH-347 is set less by the regulation than by the agency. HUD's Notice LR-96-01, issued in 1996 and stated to stay in effect until amended, covers HUD-assisted work. It lets an owner working alongside the owner's own crew list a name, a classification that includes "owner," and daily and total hours, with no rate or amount earned. Other agencies and primes may ask for something similar. Ask the prime how its agency wants you shown before the first payroll, and use the same format every week.

The HUD notice draws one more line. A sole proprietor with no employees may not submit a payroll that lists only "Owner" and certifies the owner's own wage. That person has to be carried on the payroll of the contractor they are working for.

Workers paid on a 1099

A 1099 does not take a worker off the certified payroll. 29 CFR 5.5(a)(1)(i) requires the full rate and fringe for every laborer and mechanic on the site, "regardless of any contractual relationship," and the handbook (section 15e00) says the same.

So a carpenter you pay by invoice goes on your WH-347 with a classification, daily hours, the rate and the gross, and must be paid at least the determination's rate and fringe every week, with overtime past 40 hours where the Contract Work Hours and Safety Standards Act applies. Whether that person is an employee for tax purposes is a separate question this does not decide; the deductions column shows what you actually withheld.

HUD's notice puts a number on piecework and lump-sum arrangements: the week's pay divided by the hours actually worked must come to at least the prevailing rate for the craft, and the shortfall is owed if it does not.

Truck owner-operators

The handbook (section 15e17, 2016 revision) and the Resource Book describe a long-standing administrative policy. The Department does not apply the Davis-Bacon and overtime requirements to bona fide owner-operators of trucks who are independent contractors. The payroll lists the owner-operator's name with the notation "owner-operator" and no hours or rate.

Three limits come with it:

• It covers trucks only. Owner-operators of bulldozers, backhoes, cranes, welding machines and similar equipment are covered in the usual way.
• Renting a truck is not owning one.
• Drivers the owner-operator hires are covered like any other worker.

The 2023 rule's truck-driver provisions were vacated by a federal court on June 24, 2026. The handbook and Resource Book text above predates that rule. If a driver's status changes what you put on the payroll, ask the contracting agency's labor advisor what position it is applying on your project. The 2023 rule and what was vacated.

Lower-tier subcontractors

A subcontractor under 5.2 includes subcontractors of any tier, and 5.5(a)(3)(ii)(A) requires every contractor and subcontractor to submit its own certified payroll for each week it performs covered work. A second-tier sub's workers go on the second-tier sub's payroll, signed by that sub or the agent who pays them. They do not go on yours.

The paperwork moves up the chain. Usually the lower-tier sub sends its payroll to the sub that hired it, which forwards it to the prime; the prime decides the route and the cutoff. The prime "is responsible for the submission of all certified payrolls by all subcontractors."

Section 5.5(a)(6) requires each contractor to put the Davis-Bacon clauses and the wage determination into every subcontract, with a clause requiring the next tier to do the same. The handbook accepts a purchase order as a subcontract if the determination and the clauses are attached. 5.5(b)(4) does the same for the overtime clauses.

Liability follows the chain too. Under both clauses the prime is responsible for every subcontractor and lower-tier subcontractor, and the prime and any responsible upper-tier sub are liable for wages owed to a lower tier's workers. If you hire a sub, you can be held liable for its workers' unpaid wages. What the prime is responsible for.

Before the first payroll

• List every person who will be on the site, with who pays them and how.
• Put everyone you pay for site work on your payroll, invoice or not.
• Ask the prime how to show a working owner and a truck owner-operator.
• Flow the clauses and the determination, with its modification number, into any subcontract you write.
• Collect your lower tier's payrolls on a fixed day and check them before you pass them up.