Questions and answers

It is the fundamental principle in labor law, particularly concerning public works projects. It ensures that workers on government-funded or government-assisted construction are paid fairly. A prevailing wage is typically defined as the combination of hourly wage rate, fringe benefits, and overtime. "The prevailing wage shall be the wage paid to the majority (more than 50 percent) of the laborers or mechanics in the classification on similar projects in the area during the period in question. If the same wage is not paid to a majority of those employed in the classification, the prevailing wage shall be the average of the wages paid, weighted by the total employed in the classification" (Title 29 Section 1 Code of Federal Regulations). While it is the regulatory responsibility of the awarding body to inform the prime contractor and the prime to inform any subcontractors of the proper wage rates to pay the workers, each employer should know how to identify the proper wage determination and is required to maintain weekly certified payroll records to demonstrate compliance.

California Labor Code requires that all workers employed on “public works” be paid not less than the general prevailing rate of per diem wages applicable to the trade or craft of the work that they perform. There is a plethora of documentation to comply with regulations including: DIR registration, Certified Payroll Reports (A-1-131), DIR’s required Electronic Certified Payroll Reporting, Statements of Compliance, Fringe Benefit Statements, and Division of Apprenticeship Standards (DAS) 140/142 filings (this is not a complete list). There are also Title 8 and Section 16100 considerations. Awarding Bodies, as well as Prime Contractors and Subcontractors are obligated to fulfill a comprehensive range of compliance duties and responsibilities.

The Department of Industrial Relations (DIR) establishes prevailing wage rates, which are determined by the specific type of work and the project's geographic location. Customarily, these rates are influenced by the provisions of collective bargaining agreements. If the craft/trade is not apprenticeable, the Total Hourly Rate must be paid to the worker through a combination of wages and/or benefits by the employer. This must be actual costs for each employee. There is no average costing of employee benefits allowed. If the craft is apprenticeable (denoted by a “#” tag next to the craft/trade), the training rate must be paid to either a DAS approved apprentice program or to the California Apprenticeship Council. The balance of the total hourly rate on the wage determination will then be paid to the worker, through a combination of wages and/or benefits paid by the employer. Apprentices employed on California DIR projects must be a DAS registered apprentice. If the apprentice is only registered with the Federal Office of Apprenticeship, they are not allowed to be paid apprentice wages or satisfy California’s apprentice ratio.

All construction personnel engaged in public works projects are legally mandated to receive prevailing wages. Exemptions apply to professional or support staff, including but not limited to architects, clerical personnel, and security guards. However, this exemption does not extend to sole proprietors, owner/operators, or salaried professionals, who must also be compensated at prevailing wage rates.

For California state-funded projects (excluding those under federal Department of Labor Davis Bacon or Service Contract Acts regulations), the bid advertisement date dictates the applicable wage determination for each trade, rather than the wage determination current at the time of bid submission.

While often corresponding to union wages, the prevailing wage in U.S. government contracting is defined as the hourly wage, typical benefits, and overtime pay provided to workers, laborers, and mechanics in a given area. Irrespective of whether derived from a union's collective bargaining agreement or a survey of contractors in regions where union wages are not prevalent, the project's specific wage determination governs the compensation structure for its workforce.

Construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds. Section 1720 of the California Labor Code provides a comprehensive definition that classify a project subject to California’s public works labor code. Section 1771 governs maintenance contracts. It is not just money provided. For a Prime contract, the baseline threshold is $1,000 with the understanding that a very small number of projects can raise the threshold. It is important to note that this encompasses more than just financial contributions.

Detailed information is available on the Department of Industrial Relations' website: http://www.dir.ca.gov/ and Section 1720 and 1771 provides all the items that subject a project to California’s public works labor code. It is not just money provided. Give CPW a call to discuss the details of your project.

The Davis-Bacon “prevailing wage” is the combination of the basic hourly rate of pay and any fringe benefits for the applicable classification listed in an applicable wage determination. The Davis-Bacon Act is the regulation which governs Federal construction, alteration, demolition, installation and repair work. The Service Contract Act governs Federal maintenance work. California has its own “prevailing wage” regulations, referred to as “public works”, which governs construction, alteration, demolition, installation and repair work under Section 1720 and maintenance work under Section 1771.

California Labor Code Section 1775 imposes significant penalties for failing to pay prevailing wages. These penalties include, but are not limited to, fines of up to $200 for each calendar day, or any portion thereof, per worker paid less than the established prevailing wage rates. In certain circumstances, this penalty may be reduced to a minimum of $40 per day per worker. The most effective way to avoid penalties is to ensure correct and timely payment of prevailing wages. Multiple violations can result in debarment of the contractor or subcontractor for up to three years.

CPW delivers expert-led online webinars and tailored classes, providing in-depth information on California Department of Industrial Relations (DIR) compliance and also covers pertinent information from the Davis-Bacon & Service Contract Acts. Webinars are accessible through individual class payments, while CPW benefits clients receive complimentary access.