Prevailing Wage is a labor law that is regulated by both the federal and local state governments. It affects all public works contractors who perform services under a federal or state contract. In states with prevailing wages, the minimum compensation varies based on trade speciality and is always higher than the base minimum wage of that locale.
As of January 2022, there are 26 states who have a prevailing wage law in effect. Those states are:
The prevailing wage rates are set by each state's Department of Labor (DOL). Some states have special councils or departments involved with setting these rates, but final approval comes from their DOL. The DOL is also responsible for enforcement.
No. The prevailing wage rates vary based on job title or specialty and may change every year or mid-year, which can create issues for companies that have to comply with the law.
In most cases, a stop work order will be issued if the violation is occurring on an active worksite, as well as back pay ordered for all workers to make them whole. If the violation occurred in the past, the company will be required to give back pay to all employees who were supposed to receive the prevailing wage but didn’t, which may include interest and penalties. In addition, the company may receive hefty fines imposed by its DOL for violating the law.
In most cases, yes. Apprentices receive a reduced prevailing wage based on their year of apprenticeship and specialty.
While the law says a worker is due a total compensation, that can be broken down into two sections - base hourly wage and fringe benefits. Companies can elect to pay the total compensation to an employee in wages, however, that is a much more expensive way to comply. A company can provide benefits to their employees which in turn saves money for the company and for their employees, who will have a lower tax burden.
It's also best to have great recordkeeping to ensure a smooth experience if you get audited, an occurence that happens more frequently as labor law crackdowns have increased. The cost of the delays that postpones or stop work orders cause can be devastating to a project and all involved.
With so many nuances to the law and changes that occur so frequently, managing the prevailing wages for a company can be a daunting task. We take over the task of administering and managing your prevailing wages so companies can focus on their work, not compliance. The best part - there’s no direct cost to the company!
Confirm the correct prevailing wage rate for all employees based on their specialties.
Set up comprehensive benefits programs for employees.
Handle all communications, enrollments / waivers, and ongoing inquiries regarding their benefits.
Provide detailed reports to prove compliance with the prevailing wage law.
Keep their prevailing wage rates accurate by making necessary updates to their program based on changes in the law.