Prevailing wage

Prevailing wage is the minimum pay a contractor must give workers on a public works project, set for each trade and area by a government agency. It is a general idea with many laws behind it: the federal Davis-Bacon Act is the best known, and many states and some cities have their own.

How it works

The agency publishes a wage determination or wage schedule for the project's location and type of work. For each craft classification it lists:

• a base rate per hour, and
• a fringe amount per hour.

Together they make the prevailing wage package. The fringe can be paid into bona fide plans such as health insurance, pensions and training, paid as extra cash on the paycheck, or split between the two. See fringe benefits for how that credit works.

Federal, state and local

• Federal: Davis-Bacon and the related acts cover federal and many federally funded construction projects.
• State: many states have their own prevailing wage laws, sometimes called "little Davis-Bacon" acts, with their own thresholds, schedules and rules.
• Local: some cities and counties add their own requirements.

A project can fall under more than one. Where both federal and state rates apply, the usual rule is that workers get the higher rate. Your contract and the agency that runs the program say exactly which rules apply to your job; this page is not legal advice.

Example

Say the determination lists an electrician at a base of $45.10 and a fringe of $20.35 per hour (example values):

1. Package: $45.10 + $20.35 = $65.45 per hour
2. Your company pays $8.00 per hour into a health plan and $4.00 into a retirement plan: $12.00 of fringe credit
3. Fringe still owed: $20.35 - $12.00 = $8.35, paid as cash
4. Hourly pay on the check: $45.10 + $8.35 = $53.45

The employer's burden, its payroll taxes and insurance, still goes on top when you price the work.

What it means for the estimate

• Price labor from the determination named in the bid documents, not your open shop rates.
• Match each task to the right classification. A laborer doing an electrician's work is paid as an electrician.
• On federal work, the overtime premium is figured on the base rate, not the fringe. State rules can differ.
• Allow for weekly certified payroll and the office time it takes.

In the IntelCost Wage Calculator you choose the wage determination for the project, including Prevailing Wage Federal (Davis-Bacon) and Prevailing Wage State/Local, and that choice decides the fringe and whether a legal minimum applies. On federal jobs, start with how to read a Davis-Bacon wage determination.