Working on a public construction project in Washington requires compliance with the state’s prevailing wage and certified payroll laws. Here’s what construction businesses and laborers need to know about Washington prevailing wage jobs, the rules they must follow, and how to avoid penalties.
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Types of projects in Washington
As a GC or subcontractor in Washington state, you can bid and work on three distinctly different types of construction projects:
The first two options are the most common type of construction projects. As the contractor on these jobs, you determine the hourly wages paid to your workers and installers.
But on public projects, also referred to as prevailing wage projects, there is an entirely different set of rules, reporting requirements, and forms for contractors to use.
If you comply with all the elements of the prevailing wage project, then collecting your construction payment is a pretty straightforward process.
However, even minor mistakes can derail your ability to get paid.
Your construction invoice will not get paid until the errors get corrected and then re-submitted to the GC or owner. You have just pushed off collecting your public works construction payment for an additional thirty days.
You might incur late fees on your supply house account for the project because of a typo or misplaced decimal point.
What makes a prevailing wage project?
A project is a public work or prevailing wage job if the project owner or lender is a city, county, Washington State, or the federal government, or agency thereof.
These are some examples of common prevailing wage projects:
- City hall
If you are working on one of these, there is a good chance that it is a prevailing wage or public works project.
But not always. That list of project types above isn’t always a public project. If not, they’re not bound by prevailing wage requirements.
Here’s what I mean:
- School: If owned by a church or other private group, it is a commercial project, funded by the owner.
- Hospital: If owned by a private medical group or company, it is a commercial project funded by the owner.
- Library: If owned by a church or another company, it is an owner-funded commercial project.
- Meeting hall: If for a private community or office building, it is an owner-funded commercial project.
- Private roads: Those found in business complexes, housing communities, and golf courses are not public works projects.
- Airport project: If privately owned and funded, it would not be a public works project.
The bid forms will list who the owner and funder are for the project if you are currently bidding the job.
If you are working on the project, and wondering if it is a prevailing wage or public works project, you can contact Labor and Industries directly to find out for sure.
Washington Prevailing Wage Rules
Chapter 39.12 RCW requires local government contractors and subcontractors to pay prevailing wages to workers on all public works and maintenance contracts – on public buildings and projects – regardless of the dollar value of the contract.
This requirement includes the following sections of the RCW (Revised Code of Washington) or the WAC (Washington Administrative Code):
- Public works projects (RCW 39.04.010)
- Building service maintenance – defined as janitors, waxers, shampooers, and window washers (RCW 39.12.020 and WAC 296-127-023)
- Construction, reconstruction, building maintenance, or repair (RCW 39.12.030)
- Turn-key leases, rentals, or purchases (RCW 39.04.260)
- Off-site fabrication of non-standard items for a public works project (WAC 296-127-010(5)(b))
If the above links don’t completely answer your question, you can contact Washington State Department of Labor and Industries for further clarification.
If you are an owner/worker, you generally don’t have to pay yourself the current prevailing wage for work you do on the project.
All other employees MUST be paid at the current prevailing wage rate.
Current Prevailing Wage Rates for Washington
Typically, the prevailing rate is very close or identical to the current union scale for the same work scope.
The Department of Labor and Industries (L&I) governs compliance with prevailing wage requirements in Washington, and sets the rates.
The L&I website includes a link to descriptions of different trades and classifications.
Statements of Intent
Washington law requires every contractor and subcontractor on a public works project to file a Statement of Intent to Pay Prevailing Wages. Click here for the Step-by-Step Instructions to the WA Prevailing Wage Intent & Affidavit System.
These forms get filed with L&I immediately after the contract is awarded and before work begins, if the construction schedule allows for it.
The L&I Industrial Statistician approves the statement of intent, and the agency administering the contract may review the form.
The completed form must be on file with L & I before the GC or subcontractor can receive their first construction payment.
Weekly Certified Payroll Reports
Effective January 1, 2020, contractors must file weekly certified payroll reports for all prevailing wage jobs (regardless of project amount) and submit them directly to L&I through the online Prevailing Wage Intent and Affidavit (PWIA) system.
The local government agency in charge of your project is not responsible for reviewing or checking the reports.
Instead, Labor and Industries ensure that everyone gets paid correctly by overseeing all of the project’s certified payroll report forms.
If a paperwork issue arises, your construction payments will cease until your paperwork gets accepted as “true and correct.”
L&I can enforce some severe penalties against the contractor for non-compliance.
Penalties for non-compliance
The civil penalty for the non-payment of prevailing wage is a minimum of $5,000 or an amount equal to 50 percent of the total wage violation found on the contract, whichever is greater.
They can also assess interest at 1 percent per month, for each occurrence or employee.
These penalties are in addition to any amounts you failed to pay to the employee for his work.
A penalty can result from payroll calculation errors for straight time work, overtime work, and even paid holidays.
Whether you are a contractor or employee, it makes sense to double-check with Labor and Industries to see if the job is a public works project or not.
Is a Prevailing Wage Project in Your Future?
Choosing to work in the public works sector can be financially rewarding for your company.
All things being equal, the typically higher wage rates should increase your profit margins on the project. The higher wages can be a boon for your employees, especially for a large project or an extensive timeline.
However, the rules and regulations are substantially more complicated and rigid than typical residential or commercial projects.
- Timelines for billing and payment have no gray area, and enforcement is rigorous.
- Paperwork errors will delay your construction payments until corrected.
- Contractors cannot file mechanic liens for non-payment on a public work project.
- A minor error, or complete disregard for the prevailing wage rules, will land you in hot water with the folks at Labor and Industries.
If you’re considering a prevailing wage or public work project in Washington, be sure that you understand the requirements, laws, and exemptions entirely for the project.
It will be time well spent and save you some time, money, and frustration down the road.