Projects must meet (PWA) requirements to receive the full value of IRA clean energy tax credits. This article explains what’s required, how wage and apprenticeship rules interact, and what happens if they’re not met.
1. Prevailing Wage Requirements
What’s required: Contractors and subcontractors must pay at least the prevailing wage rates (base + fringe benefits) set by the U.S. Department of Labor (DOL) for:
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The specific work classification (based on actual tasks performed)
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The county & state where the project is located
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The contract execution & construction dates
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Key details:
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Base wage + fringe benefits must be ≥ the required total compensation (required base + required fringe).
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If no cash fringes are paid, we recommend calculating the fringe rate as:
Fringe rate = Weekly Benefit Cost ÷ Hours Worked (that week)
Purpose: Ensures workers are fairly compensated and prevents undercutting local wage standards.
2. Certified Payroll Reporting (CPRs)
Contractors must submit weekly certified payroll reports showing:
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Worker name or ID
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Work Classification
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Hours worked on what date and week
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Wage + fringe rate
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Apprentice status if applicable
Purpose: Provides transparency and documents compliance with prevailing wage laws.
3. Apprenticeship Requirements
Projects must meet three separate apprenticeship requirements:
✅ Apprenticeship Participation
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If a contractor has 4+ total laborers/journeymen, at least 1 apprentice must be employed.
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At least 1 apprentice hour must be shown if that threshold is met.
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✅ Apprentice-to-Journeyworker Ratio
The ratio of apprentices to journeymen must be maintained daily based on:
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The registered apprenticeship program for that trade
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State or DOL requirements
In the Reunion platform, if an apprentice records more hours than a journeyworker on any given day, it is flagged in yellow. This indicates a potential lack of required supervision for that day. The week remains compliant but is marked for review to ensure adherence to supervision requirements.
If the ratio is exceeded on a given day:
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Excess apprentices must be paid journeyworker wages for that day.
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Their hours do NOT count toward the apprentice labor hour percentage.
✅ Apprentice Labor Hours Percentage
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A required percentage of total project labor hours must be completed by apprentices:
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12.5% for projects started in 2023
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15% for projects started in 2024+
Formula: Total apprentice hours ÷ total labor hours × 100
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Approved Apprenticeship Programs
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Apprentices must be from state-approved or DOL-registered programs (apprenticeship.gov).
- You must reach out with a request for apprentices 45 days ahead of the date that the apprentices would start work
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For assistance, reach out to your state apprenticeship office or the DOL Apprenticeship Office at 1-877-872-5627.
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If no program exists for a needed trade:
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Contractors must document outreach to the state or DOL
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If no apprentices are available, they may claim a Good Faith Effort exception.
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Review our support article on Requesting Apprenticeship Programs
Penalties for Failing Prevailing Wage Requirements
If any worker is paid less than the required prevailing wage + fringe rate for their classification:
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Cure option:
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Pay the back wages owed to each affected worker
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Include interest on the underpaid amount
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Pay an IRS penalty of $5,000 per affected worker
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If the failure is deemed intentional disregard:
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IRS penalty increases to $10,000 per affected worker
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If the contractor does not cure the violation, the project’s tax credit is reduced to 1/5th of its full value.
Need Help? Check DOL-approved classifications and wage determinations at sam.gov.2. Penalties for Failing Apprenticeship Requirements
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If apprentice participation, daily ratios, or labor hour percentages are not met:
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Excess apprentices must be paid journeyworker wages
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Their hours do NOT count toward the required apprentice percentage
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If the project fails the overall apprentice requirement, an IRS penalty applies:
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$50 per labor hour not performed by an apprentice
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$500 per labor hour if the violation is deemed intentional disregard
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These penalties are in addition to any wage back pay owed to affected workers.
What Happens if You Don’t Cure?
If you don’t correct the violations:
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The project’s IRA clean energy credit is reduced to 20% of its full value.
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You remain liable for any back wages + IRS penalties.
💡 Best Practice: It’s far less costly to monitor compliance in real-time—incorrect work classifications, underpayments, or missed apprentice ratios create cascading issues that can quickly increase penalties.
Quick Compliance Checklist
✅ Confirm correct work classifications and wage determinations for each county/project
✅ Pay at least the required prevailing wage + fringe
✅ Submit weekly certified payroll reports
✅ Maintain daily apprentice-to-journeyworker ratios
✅ Ensure 12.5%–15% of project labor hours are apprentices
✅ Hire apprentices only from approved programs or document Good Faith Efforts
IRA FAQ: Frequently asked questions about the prevailing wage and apprenticeship under the Inflation Reduction Act