Glossary · Prevailing wage
Prevailing wage
Prevailing wage is the minimum hourly wage and fringe benefit a contractor must pay workers in a given classification on covered public construction, set by government for the locality. On federal work the Department of Labor determines it. The rate depends on the work performed, not on who the employee is.
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This is general information, not legal advice. Laws differ by state and change over time. Check the primary sources below and talk to an employment lawyer about your situation.
How is a prevailing wage set?
On federal and federally assisted construction, a prevailing wage is set by the Secretary of Labor for each classification of work in each locality, based on the wages found to be prevailing for similar work in the area. The result is published as a wage determination attached to the contract.
A wage determination lists classifications such as electrician, laborer or pipefitter, each with a base hourly rate and a fringe benefit amount. The contractor pays at least the total, and may pay the fringe as benefits or as cash in lieu.
Does the rate follow the worker or the work?
The rate follows the work. A worker is paid the rate for the classification actually performed during each hour, so one person can earn two different rates in one day if they do two kinds of work. Federal rules require the payroll to show the classification actually worked.
One worker, two classifications, one day
- Electrician work, determination rate
- 6 hours at $50.00 = $300.00
- Laborer work, determination rate
- 2 hours at $30.00 = $60.00
- Minimum pay for the day
- $300.00 + $60.00 = $360.00
Illustrative rates, not a real wage determination. Fringe and any overtime premium are additional.
Which projects have a prevailing wage?
A prevailing wage applies to covered projects, not to private work. At the federal level that means contracts above $2,000 for construction, alteration or repair of public buildings or public works, and projects funded by assistance programs the related acts cover. Many states have their own prevailing wage laws for state-funded work, with different thresholds and rates.
Because the rate follows the work, the record of which jobsite and which hours each worker had is the foundation of a compliant payroll. See certified payroll and the Davis-Bacon Act.
Frequently asked questions
Is prevailing wage the same as minimum wage?
Does a prevailing wage include fringe benefits?
Who decides which classification a worker falls under?
Sources
- 1.40 U.S.C. 3142, Rates of wages for laborers and mechanics · Legal Information Institute, Cornell Law School
- 2.Davis-Bacon and Related Acts · U.S. Department of Labor, Wage and Hour Division
- 3.29 CFR 5.5(a)(3), Payrolls and basic records · Legal Information Institute, Cornell Law School
