When you’re on a construction project there are a plethora of things to worry about like materials, safety, and deadlines. One thing you shouldn’t have to worry about is whether or not you’re getting paid fairly.
Enter: Prevailing Wage Laws. Read on for a discussion of prevailing wage laws in the construction industry.
What Are Prevailing Wage Laws?
When present, prevailing wage laws require that contractors and subcontractors on public jobs must pay the majority of their workers no less than the local, prevailing wage rate.
Thus, the “prevailing wage” acts as a sort of minimum wage for the construction workers that are working on public projects within a particular geographical area, and it prevents the use of cheap, non-local labor to undercut local workers.
Essentially, these laws aim to level the playing field: regardless of whether local or non-local labor is used, the wages paid to that labor will remain the same. That is, the minimum cost of labor will remain the same.
Where Do These Requirements Come From? Where Do They Apply?
For federal projects, the Davis-Bacon Act created prevailing wage requirements. Federal construction projects taking place in all 50 states are automatically covered by the federal prevailing wage law.
Regarding state projects, not every state requires a prevailing wage on a state government-owned construction project. In a relationship similar to the Miller Act and Little Miller Acts, “Little Davis-Bacon” Acts were passed in most states, following the lead of the Davis-Bacon Act. All in all, 32 states currently have prevailing wage laws on the books.
For more on the Davis-Bacon Act, the Department of Labor has provided this helpful guide.
How Prevailing Wages Are Determined
A local prevailing wage is typically determined in one of two ways:
- Conducting a survey of the wages received by classes of workers employed on projects of a character similar to the contract work in the political subdivision of the state in which the public work is performed; or
- Using the prevailing wage determined by the United States Department of Labor in accordance with the Davis-Bacon Act, and its subsequent amendments.
What If a Contractor Breaks the Rules?
That’s a bad idea. Penalties could result in liability for unpaid wages, liquidated damages, the inability to secure future public jobs, and potentially even civil or criminal prosecution leading to fines and/or imprisonment.
How Do You Know If You’re Being Underpaid
But how do you know if you’re being underpaid? Or for GC’s – how do you know what wages apply?
For federal projects, you can call the Wage and Hour Office hotline, ask questions via email, or even visit a local office. More information on how to inquire about a claim can be found here courtesy of the Department of Labor.
For state projects, every state will handle this process differently so you may need to research how your particular state handles these inquiries. Conveniently, some states require prevailing wages to be posted to the jobsite. Alternatively, this link provides a tool to look up the prevailing wages in different locations.
Making a Claim
If you think your check doesn’t add up, the first step may be to reach out to the prime contractor. The issue could be a simple accounting error, and even if it’s more than just an error, the dispute could be resolved in-house.
If that doesn’t work, it may be time to contact the US Department of Labor or your state’s Department of Labor. Documentation isn’t necessarily required to start the claim. For federal jobs, all you need to do to start the claim is call the DOL or walk into your local DOL office. Once you start the process, the Department of Labor will begin their investigation.
There are a ton of different factors that play into construction payment, and the complexity can really be overwhelming. Contractors, subs, and suppliers must be aware of lien laws, bond laws, licensing rules, and a whole host of other relevant rules and regulations.
It can be frustrating, but it’s important to understand all of the relevant requirements. Construction payment is already fraught with risk – there’s no need to compound your stress with legal problems.