Compliance
Section 3 compliance
Hit your HUD Section 3 benchmarks without a manual labor-hour tally. Track qualifying workers, certifications, and the reporting thresholds as the job runs.
HUD Section 3 requires that recipients of covered housing and community development funding direct employment and training to low-income residents. Compliance means meeting labor-hour benchmarks for Section 3 workers and targeted Section 3 workers, verifying worker eligibility, and reporting the hours to HUD for the covered project.
- Threshold (HUD Section 3)
- $200,000, or $300,000 for funds committed on or after March 16, 2026
- Section 3 worker benchmark
- 25% of total labor hours
- Targeted Section 3 worker benchmark
- 5% of total labor hours
The problem
Section 3 is a labor-hour count nobody wants to keep by hand.
Section 3 is measured in hours, not intent. To meet the benchmarks you have to know how many labor hours went to qualifying Section 3 workers and targeted Section 3 workers across every trade on the project, and you have to be able to prove each worker qualifies.
Most contractors reconstruct this at reporting time from timesheets and memory. That is when a shortfall shows up, too late to hire differently or shift hours, and the reporting itself becomes a scramble across payroll and HR records.
Buildalytic ties labor hours to worker eligibility as the job runs, shows the running percentage against both benchmarks, and assembles the HUD report from the same records.
How it works
From timecards to a HUD-ready report.
Flag covered projects
Projects above the funding threshold are marked as Section 3 covered so hours are tracked from day one.
Verify eligibility
Worker certifications for Section 3 and targeted Section 3 status are captured and stored with the record.
Count the hours
Labor hours are attributed to qualifying workers and rolled up against the 25 percent and 5 percent benchmarks.
Report
The benchmark results and supporting hours assemble into the report HUD expects, ready to submit.
What is inside
The benchmark math and the evidence behind it.
Benchmark tracking
Running percentages against the 25 percent Section 3 worker and 5 percent targeted benchmarks.
Worker certification
Eligibility documentation captured and tied to each worker and their hours.
Labor-hour rollups
Hours attributed by worker and trade, so the count is auditable, not estimated.
Covered-project flags
Projects above the funding threshold identified so tracking starts on schedule.
HUD reporting
Report assembly from the underlying hours and certifications, without a separate spreadsheet.
Compliance visibility
A shortfall against either benchmark surfaces early enough to act on it.
Frequently asked questions
What is HUD Section 3?
Section 3 is a HUD requirement that funding for housing and community development create employment and training opportunities for low-income people, especially residents of public housing. Contractors on covered projects must direct a share of labor hours to Section 3 workers and report those hours to demonstrate compliance.
What is the Section 3 threshold?
Section 3 applies to covered projects above a funding threshold of $200,000, rising to $300,000 for funds committed on or after March 16, 2026. Below the threshold, the labor-hour benchmarks generally do not apply, though recipients still work toward the program’s employment goals.
What are the two Section 3 benchmarks?
There are two labor-hour benchmarks. At least 25 percent of total labor hours on a covered project should go to Section 3 workers, and at least 5 percent should go to targeted Section 3 workers. Both are measured as a share of all labor hours worked on the project.
Who counts as a Section 3 worker?
A Section 3 worker is a worker whose income falls below HUD limits, or who is employed by a Section 3 business, or who was a Section 3 worker within the past five years. A targeted Section 3 worker meets tighter criteria tied to public housing residency or the project area.
How do you report Section 3 compliance?
You report the total labor hours on the project, the hours worked by Section 3 workers, and the hours worked by targeted Section 3 workers, along with the qualitative efforts made. HUD expects records that support the numbers, which is why tracking hours and eligibility as the job runs matters.
Track Section 3 as the job runs.
See labor hours attributed to qualifying workers against both benchmarks, with the HUD report built from the same records.