Guides / Allowed deductions

Which payroll deductions are allowed on certified payroll?

On a Davis-Bacon job, each worker gets the full wage owed "without subsequent deduction or rebate on any account," except the deductions the Copeland Act rules allow. Those rules are in 29 CFR part 3. Here is what is on the list, what needs approval first, and how to show deductions on the WH-347.

Why deductions have their own rules

The Copeland Act makes it a crime to get a worker on a federally funded job to give up any part of the pay he is owed. The penalty is a fine, up to 5 years in prison, or both (18 U.S.C. 874). The deduction rules in part 3 are where a normal deduction ends and a kickback starts.

You also sign for it every week. Page 2 of the WH-347 says no rebates or deductions have been or will be made "other than permissible deductions as defined in 29 CFR part 3."

Allowed without asking (29 CFR 3.5)

These can come out of pay without approval from the Department of Labor. Each one has conditions, and the deduction is only allowed when they are met.

• Taxes and anything else federal, state or local law requires, like income tax withholding and Social Security.
• Paying back a real wage advance. It counts only if you advanced cash or its equivalent, the worker was free to spend it, and you took no interest or discount.
• Payments a court orders to someone else, like child support. Not if the money goes to you, your company or a related person, or if there is collusion.
• Contributions to benefit plans, such as health, pension, life, disability, vacation or savings. The worker has to agree in writing before the work period, and signing cannot be a condition of getting or keeping the job. A bargaining agreement can stand in for the written consent. You cannot make a profit or commission on it, and it has to serve the worker's interest.
• Credit union loan payments or share purchases the worker asks for.
• Gifts the worker authorizes to a 501(c)(3) charity, or to a government or quasi-government agency like the American Red Cross.
• Regular union initiation fees and dues, when a bargaining agreement provides for them. Fines and special assessments do not count.
• The reasonable cost of board, lodging or other facilities that meet section 3(m) of the Fair Labor Standards Act and 29 CFR part 531. Keep records of the cost.
• Safety gear of nominal value the worker buys to keep as his own. Only if no law makes you provide it, the deduction does not break the Fair Labor Standards Act, you charge no more than your cost, and you get nothing back when it comes from a supplier. The worker has to agree in writing ahead of time, and not as a condition of the job, or a bargaining agreement has to cover it. Be careful here. OSHA's construction rule makes you pay for most protective gear yourself, hard hats and gloves included (29 CFR 1926.95(d)). The usual exceptions are plain steel-toe boots and plain prescription safety glasses the worker is allowed to wear off the job.

Everything else needs approval first (29 CFR 3.6)

Any deduction that is not on that list is prohibited unless the Secretary of Labor approves it before you take it (29 CFR 3.9). DOL can approve one only when all four of these hold. You and anyone related to you get no profit or benefit from it. No other law bars it. The worker agreed in writing ahead of time, not as a condition of the job, or a bargaining agreement provides for it. And it serves the worker's convenience and interest.

The application goes in writing to the Secretary of Labor, by email to dbadeductions@dol.gov or by mail to the Wage and Hour Division (29 CFR 3.7). It does not have to name a contract. It has to describe the deduction, its purpose and which classes of workers it applies to. It also has to state the facts showing you meet 3.6, and name any third party that gets the money. An approval covers all your current and future contracts for 1 year, and you renew it by applying again. DOL answers in writing.

Deductions that cause trouble

Charges for tools, uniforms, or equipment a worker broke or lost are not on the 3.5 list. Without a 3.6 approval, they are prohibited.

Company loans are the next one. The 3.5 list covers paying back a wage advance made without interest or discount. If you charged interest, the repayment does not fit that item.

Then there is housing on an out-of-town job. DOL's Field Operations Handbook says that when you send your regular crew on a special job beyond daily commuting distance, so they can only get home on weekends, and you pay for room and board you do not normally furnish, that is a travel expense for your benefit. It is not the kind of board and lodging part 3 lets you deduct (FOH 15f19).

Watch the 401(k) too. A deferral the worker chooses comes out of his own pay as a plan deduction. The fringe credit is for what you, the contractor, put into a plan or pay for benefits (40 U.S.C. 3141(2)(B)). If the same dollars show in column 8 as a deduction and in column 6B as fringe credit, you counted the worker's money toward what you owe him. The fringe guide covers what counts.

Last, the paperwork. Where a deduction needs the worker's consent, it has to be in writing and in advance of the work period. A form signed after the money came out does not meet that.

How deductions go on the WH-347

Column 8 has boxes for tax withholdings, FICA, other deductions and the total. The DOL instructions say to enter in column 8 all deductions taken from the worker's gross pay for all work that week, the amount in column 7B.

If Other is a single deduction, describe it under Additional Remarks on page 2. If Other covers more than one, attach an addendum that lists each one with a description and amount. A bare number under Other gives the reviewer nothing to check.

Your regular payroll records have to show the deductions made, and you keep them for 3 years after all work on the prime contract is done (29 CFR 3.4(b)). Keep the signed consent forms and any 3.6 approval letter with them.

If one already went wrong

A deduction that is not allowed means the worker was paid less than he was owed, by that amount. Pay it back and correct the payroll for those weeks. The fix guide walks through filing the correction.

Sources: 29 CFR part 3 (3.4, 3.5, 3.6, 3.7, 3.8, 3.9); 29 CFR 5.5; DOL Form WH-347 instructions; DOL Field Operations Handbook, chapter 15; 18 U.S.C. 874; 40 U.S.C. 3141; 29 CFR 1926.95. Checked September 27, 2026.