As a construction law firm with years of experience working representing contractors, we know just how how complicated public works projects can get. Which is why our construction litigation attorneys have created this California Public Works Contract series—to help public contracts workers and contractors, within the state of California, to familiarize themselves with this intricate system.

Last week, in part two of our four-part California Public Works Contract series, we discussed how public contracts are formed and what bonds are needed. Today, we’ll extend this conversation to cover the basics of prevailing wages.

1. What Is a Prevailing Wage?

According to the Department of Industrial Relations (DIR), in the state of California,  the prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area (if a majority of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing.

What are prevailing wages and how necessary are they?

Labor Code Section 1773 requires that Contractors employed for public works must pay prevailing wages, even if a contractor has not been advised that the work is a “public work” requiring payment of prevailing wages.

All workers employed on public works must receive payment of at least the prevailing wages and benefits and premium pay, if applicable, for the proper craft and classification of their work. In addition if  Prevailing wage fringe benefits are not properly payable to a union or another authorized entity, they  must be paid directly to the worker as additional wages. There are damages and penalties for prevailing wage violations.

  1. Apprenticeship Requirements

All contractors and subcontractors must employ apprentices properly enrolled and participating in registered apprenticeship programs. These may be paid at the lower prevailing wage rates established for them, but again extensive reporting and compliance duties exist.

A contractor who employs journeymen, must employ apprentices in the same craft or trade as the journeymen employed.

  1. Notification to Contractors of Public Work

The Labor Code requires that public agencies have to advise contractors that the work for which they are contracting is a “public work” requiring payment of prevailing wages.

  1. Certified Payroll Records (CPRs)

Contractors working on public works also have to keep Certified Payroll Records ( CPRs).  A CPR is a payroll record with a required certification under penalty of perjury.  CPRs must be on forms provided by the federal or state authority that has jurisdiction over the work or contain the same information as the forms.

Any person or entity can request inspection or copies of CPRs.  A contractor or subcontractor has 10 days to respond after receiving the written request for the CPRs and can be potentially debarred if it fails to provide the CPRs.

The preceding is a summary of legal subjects provided for informational purposes only.  Most legal issues need complex factual and legal analysis. You are advised not to rely on these blogs and seek legal advice about your specific issues from a licensed attorney in your jurisdiction.  Nothing in these writings is intended to create, or creates, an attorney-client relationship.  For consultation with a licensed attorney