What is Prevailing Wage?

Filed under: Payroll

Two People Discussing Plan ProjectIn California, construction workers are entitled to a form of pay known as prevailing wage. This is a base pay rate which ensures that all public works construction workers are compensated adequately and fairly for their craft. Based on an hourly pay rate plus fringe benefits, the prevailing wage creates a level playing field for all construction workers. It also helps to ensure that the municipality receives a high standard of work in return for pay.

Prevailing wage applies to workers who actually work on the project itself, at the job site. It does not apply to professional or support staff such as architects, security guards, or clerical workers. Materials suppliers are also not subject to the prevailing wage, unless they also aid in construction or installation upon delivery. In that case, prevailing wage applies from the moment they begin to work on the project.

Twice per year, California’s Department of Industrial Relations determines the prevailing wage rate for the state’s construction workers. Contractors are responsible for educating themselves on the current prevailing wage rate and making sure their payroll system is up to date. These figures are published online at http://www.dir.ca.gov/OPRL/Pwd/.

Aside from paying all construction workers according to the prevailing wage, contractors must also report all wage payments to the Office of Contract Compliance. A certified payroll must be completed, signed under penalty of perjury, and submitted to the OCC on a weekly basis. Prime contractors are responsible for ensuring that all sub-contractors, vendors, owner-operators, and personnel services who provide on-site work will complete and submit their own certified payrolls.

Since the rules regarding prevailing wage can be confusing, and the process for correctly documenting payments can be daunting, it is recommended that contractors work with a skilled payroll reporting service. A payroll service can keep contractors in compliance with the law, without all the hassle and worries about potential mistakes. Give R&R Payroll and Bookkeeping Services a call if you have questions about prevailing wage or would like to set up an appointment for more information. 951-296-0412.