The Inflation Reduction Act (IRA) offers valuable tax credits—but only if you comply with both prevailing wage and apprenticeship requirements. If you don’t, your project may face costly penalties.
Prevailing Wage Penalties 💵
If workers are paid below the required prevailing wage:
You must pay the difference in back wages, plus interest.
You may face additional penalties of $5,000–$10,000 per worker depending on the violation.
These penalties apply even if you also miss apprenticeship requirements.
Apprenticeship Penalties ⚖️
If you fail to meet the apprenticeship requirements:
You must pay a penalty of $50 per noncompliant labor hour.
For willful or repeated violations, the penalty rises to $500 per noncompliant labor hour.
When Penalties Apply
Penalties may be triggered if:
You don’t meet the 15% apprentice labor-hour requirement.
Your crew fails the 1:1 ratio requirement on any given day.
You employ unregistered apprentices or misclassify workers.
You miss the participation requirement (no apprentices when crew size requires it).
Correction Window ⏳
Contractors usually have 30 days to correct errors once identified. This means:
Paying back wages with interest for prevailing wage violations.
Reclassifying apprentice hours as journeyman hours when ratios weren’t met.
Documenting corrective actions for review.
Best Practices to Avoid Penalties
Use certified payroll to confirm wages are correct.
Ensure all apprentices are registered and active in Apprentix.
Track hours weekly and monitor daily ratios.
Store all wage schedules, agreements, and Davis-Bacon certificates for audits.
✅ Tip: Apprentix keeps your apprenticeship side audit-ready, but you’ll also need your payroll provider to handle prevailing wage compliance