Depending on your home state, the consequences for incorrectly filling out prevailing wage forms, or the consequences of ignoring them entirely, can be steep.
Following the laws and regulations can seem overwhelming.
It doesn't have to be.
Here we will walk you through the basics of prevailing wage laws and how to find out if they apply to you.
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By using Flexbase, customers can:
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As a central repository for your financial data, Flexbase can automatically generate accurate, compliant prevailing wage forms.
What Is Prevailing Wage?
Prevailing wages are the ...
- Hourly wages
- Overtime pay; and
- Usual benefits
… that are paid to the majority of workers in a trade or occupation.
Every state has a minimum wage. However, unions also set minimum wages for their trade. For example, if you're hiring an electrician in Ohio, the minimum wage for that trade may be $35 to $50 an hour.
The state minimum wage may be much lower, as it often is, but the prevailing wage changes depending on the trade. The worker has to be paid at least the prevailing wage for their time.
Prevailing wage laws set benefits and wages based on market conditions. These are often higher than across-the-board minimum standards. These laws tend to produce high compensation rates for federally funded work. This is especially true in areas with strong unions.
A few cities and states have enacted sectoral minimum wage laws which operate in a manner like traditional prevailing wage laws. These regulate private businesses that are not conducting federally funded or assisted work. These prevailing wage laws, known as “little” Davis-Bacon Acts, cover state and local projects.
For example, in 2019, Maine changed its laws to require prevailing wages on all construction projects of $50,000 or more funded in whole or in part by state funds.
What Is the Prevailing Wage Law?
The reason we have prevailing wage requirements is because of the Davis-Bacon and Related Acts (DBRA). In 1931, Congress adopted the Davis-Bacon Act. This act has been amended over the years to expand its coverage and strengthen enforcement.
Throughout the history of DBRA enforcement, there has been debate over:
- The Act’s economic impact
- The scope and pattern of coverage
- The Act’s administration
As the debate continues, different states apply their own legislation and threshold amounts to the enforcement of the DBRA.
Federal Prevailing Wage Laws
The DBRA requires that federally funded or assisted construction projects pay the prevailing wage.
Does your contract exceed $2000 for:
- Alteration; or
- Repair of public works or buildings?
If the answer is yes, the Davis-Bacon Act applies.
The “related” portion of the DBRA relates to projects that receive federal assistance through:
- Loan guarantees
- Grants; and
So, if the project exceeds $2,000, is federally funded, or receives money from one of the above federal sources, the DBRA applies.
There are employees excluded from the Davis-Bacon Act, which include:
- Public agency employees
- Contracting agency inspectors
State Prevailing Wage Laws
Which States Have Prevailing Wage Laws?
Not every state requires a prevailing wage on a state government-owned construction project.
Currently, 32 states have prevailing wage laws:
- New Jersey
- New Mexico
- New York
- Rhode Island
Each state has a different dollar threshold amount for contract coverage under state prevailing wage laws.
For example, California has a $1000 threshold amount, while Delaware has a $500,000 threshold amount for new construction and a $100,000 threshold amount for remodeling.
And a few states have no threshold amount at all. Some states also have separate laws governing specific projects like state college or university construction projects, or work that involves roads, streets, alleys, etc. that are connected to road or bridge construction.
How Are Local Prevailing Wages Determined?
Local prevailing wages are determined in one of two ways:
- A survey is conducted of the wages received by the different classes of workers employed on a project. These workers have to be similar to the contract workers in the political subdivision of the state the work is performed.
- The local prevailing wage rate can be determined by using the Davis-Bacon Act and its amendments.
How to Ensure You Pay the Prevailing Wage
Depending on the project, the process of confirming the appropriate wage varies. For federal projects, you can confirm how to pay the appropriate prevailing wage with the Wage and Hour Office hotline through the Department of Labor.
For state projects, you can call or visit your State Labor Office online.
The Consequences of Not Following Prevailing Wage Laws
If convicted of a violation, contractors and subcontractors may be found guilty of a disorderly person’s offense, which is subject to fines and possibly imprisonment.
Penalties may also include wages, costs, and attorney’s fees for the worker in a civil claim. In many cases, each day that an employer pays a worker less than the prevailing wage is a separate violation.
That can add up quickly.
The Copeland "Anti-Kickback" Act, which supplements the DBRA, prohibits contractors from inducing an employee in any way to give up part of the compensation they’re entitled to under the DBRA.
To remain compliant, contractors are required to submit a weekly statement of the wages paid to each employee doing DBRA work.
If you are found guilty of a DBRA violation, contractors and subcontractors may challenge violations and debarment. This is done before an Administrative Law Judge.
Decisions by the Wage and Hour Division can also be challenged before a judge.
What Is a Prevailing Wage Form?
A prevailing wage form is available for contractors and subcontractors to submit their weekly payrolls. This also helps satisfy the Copland Act.
Form WH-347 is used by the DOL to make sure that each contractor and subcontractor is accurately paying the prevailing wage for each worker classification in that location. Different states may also have their own form that they include on their government website.
How to Complete a Prevailing Wage Form
The Old-Fashioned Way
Many contractors fill out this form by hand. By going to the DOL, you can find a PDF version of form WH-347 to download and fill out as needed. This is a long, drawn-out, error-prone process. Making mistakes on this form can put you in the path of danger with federal contracting agencies.
The DOL estimates that it will take an average of 55 minutes to complete this form.
This includes the time required to:
- Collect information
- Review instructions
- Search existing data sources
- Gather the needed data
- Complete a final review of the gathered information
Depending on your organizational system, this process may take longer. Gathering the required information may take more time if the categories of information you need are not matched with the prevailing wage form.
Integrate Your Payroll
Each worker's payroll needs to be accurately recorded. Your payroll system needs to be able to accurately track both base pay and fringe benefits.
The contractor's obligation to pay fringe benefits can be met by payment of the fringe benefits to:
- A bona fide benefit plan
- Funds or programs
- Cash payments to workers in lieu of fringe benefits
Fill Out the Prevailing Wage Form by Hand
You can fill out this form manually.
Here are the details of what needs to be included on the prevailing wage form:
- Your firm's basic information such as your address and name
- Which payroll number this submission is for, beginning with the number one
- Information about the project, location, and/or contract number
- The full name and the individual identifying number of the worker, which may include the last four digits of the worker's Social Security number
- Information about the word classification performed by each laborer or mechanic - Be sure to check your contract specifications to clearly label each worker. Your payroll should have an accurate breakdown of the hours worked in each classification.
- Total hours worked - Hours worked in excess of 40 hours a week are labeled as overtime.
After this information is added, you now begin to add payment information:
- Add the rate of pay including fringe benefits. Any cash paid in lieu of fringe benefits can be shown separately from the basic rate.
- Enter the gross amount earned on this project. If part of the worker’s weekly wage was earned on a separate project other than the one described on this payroll, this amount earned is put in a separate column. The federal government wants you to separate what is earned from what is not earned on a federal or federally assisted project.
- Enter deductions and net wages paid for the week. Totals are added at the bottom.
The Easy Way: With Flexbase
Flexbase is the central repository for all of your financial data. We can auto-fill and attach your prevailing wage form, certifying that the prevailing wage was paid.
This will remove the human error that may occur when manually filling out forms. Because our system is automated and synced to each state's laws, this takes the guesswork out of filling out prevailing wage forms.
We’re here to help make remaining compliant with prevailing wage laws as painless as possible.