Understanding Prevailing Wage in California: Insights for Workers and Contractors

The state of California boasts a vibrant history of bustling construction and public works spanning well over a century. The Golden Gate Bridge stands as a testament to the millions of workers who have dedicated their labor to crafting the state’s ever-evolving infrastructure and identity. For decades, the state has stood as a pioneer in championing labor standards and policies that place the well-being of its workforce at the forefront. At the very core of this commitment lies the prevailing wage in California.

Since the early 20th century, prevailing wages have been a cornerstone of California’s labor laws, ensuring fair compensation and dignity for all workers engaged in public works projects. Over the years, these wage laws have evolved to reflect the dynamic needs of California’s public infrastructure projects. In this article, we lay the foundation for understanding prevailing wage rates in California in 2024, building a scaffold of the latest information to support workers and contractors alike.

In 2024, the prevailing wage in California is determined based on collective bargaining agreements specified by the California Department of Industrial Relations (DIR). The prevailing wage rates consist of hourly wages, benefits, and overtime paid to the majority of workers. These rates apply to various trades and occupations involved in public construction, alteration, demolition, installation, and repair work.

It includes fringe benefits such as health insurance, pension contributions, and training programs. Contractors are required to pay these fringe benefits directly to workers. Moreover, they can pay these through approved benefit plans on their behalf, in addition to the hourly wage rate.

DIR also provides essential information regarding holidays, scope of work, travel policies, shifts and predetermined increases for various occupations across different counties. These are the five key provisions associated with prevailing wage determinations:

Holidays

Holidays play a significant role in prevailing wage determinations, outlining specific compensation and time off provisions for workers engaged in public works projects. These provisions typically delineate the following:

• Which holidays are recognized
• The corresponding rates of pay for work performed on holidays
• Any additional benefits or conditions associated with holiday pay

Holiday provisions ensure that workers receive fair compensation and appropriate time off to observe recognized holidays. Doing this contributes to a balanced and equitable work environment.

Scope

The scope of work provisions describes the parameters and expectations surrounding the duties and responsibilities of workers engaged in public works projects. These provisions outline the specific tasks, activities, and job functions encompassed within the prevailing wage determination for each trade or occupation.

By delineating the scope of work, these provisions establish clarity and consistency in expectations. This, in turn, helps mitigate disputes and misunderstandings between employers and workers regarding job responsibilities and performance standards.

Travel

Travel provisions address compensation and reimbursement for travel-related expenses incurred by workers as part of their duties on public works projects. These provisions may include allowances for mileage, lodging, meals, and incidental expenses incurred while traveling to and from job sites.

Travel provisions aim to ensure that workers are fairly compensated for the time and expenses associated with travel. This fosters workforce mobility and accessibility to employment opportunities across different geographic areas.

Shifts

Shifts play a crucial role in prevailing wage determinations. They delineate compensation rates and provisions for work performed during non-standard hours, such as evenings, nights or weekends. Shift provisions aim to ensure that workers receive fair compensation for their time and effort during less conventional work hours, reflecting the increased demands or inconveniences associated with such shifts.

Predetermined Increase

Predetermined increase provisions stipulate mechanisms for adjusting prevailing wage rates in response to changes in economic conditions, labor market dynamics, or regulatory requirements. These provisions may outline scheduled increases in prevailing wage rates over time. Or they may specify the criteria for triggering adjustments based on predetermined factors such as inflation, cost of living indices, or changes in prevailing industry standards.

Provisions for predetermined increase serve to maintain the purchasing power of the workers. The competitiveness of prevailing wage rates ensures that workers receive fair and equitable compensation commensurate with prevailing industry standards and economic conditions.

Note: Prevailing wage rates are dynamic and are subject to periodic revision. They usually have an expiration date, after which the DIR reassesses the wage rates based on market trends. Subsequently, updated rates are made available on the government website.

In certain exceptional situations, the Department of Industrial Relations (DIR) may authorize a special determination for a project. Before inviting contractors to bid on a project, the awarding body can engage with the DIR to request this deviation. Such requests may stem from the project’s uniqueness, an urgent or emergency nature, or its inherent complexity. If the DIR responds before the bidding phase, the rates specified in that special determination apply exclusively to that project.

Prevailing wage rates can vary depending on the type of work being performed and the geographic location of the project. For example, prevailing wage rates for a carpenter in San Francisco may differ from those in Los Angeles due to differences in local labor markets and cost of living.

Various types of workers are involved in public works projects, each with their own individual prevailing wage rates. Some examples of worker classifications include Boilermaker, Driver, Electrical Utility Lineman, Iron Worker, Telecommunications Technician, Tree Trimmer and many others.

Note: The director of the Department of Industrial Relations sets the rate under the California Labor Code § 1773.

The prevailing wage in California is also influenced by the distinction between journeymen and apprentices within the skilled trades. Journeyman prevailing wage rates are established based on the compensation levels earned by experienced and fully trained workers in the trade. These reflect the standard rates paid to skilled professionals for their expertise and proficiency.

On the other hand, apprentice prevailing wage rates are determined with consideration for individuals in the early stages of their careers undergoing structured training and mentorship as part of formal apprenticeship programs. Apprentice rates often reflect lower wages relative to journeyman rates, commensurate with the lower skill and experience level of apprentices.

Prevailing wage determinations often encompass various components that contribute to the total hourly rate received by workers engaged in public works projects. Below is an explanation of each component:

Basic Hourly Rate

The basic hourly rate represents the fundamental wage paid to workers for their standard labor performed on the project.

Health & Welfare

Health and welfare benefits cover the costs associated with providing healthcare benefits to workers, which may include medical, dental, vision, and other health-related benefits.

Pension

Pension contributions are payments made by employers to retirement funds on behalf of their employees. These contributions help secure the financial future of workers once they retire.

Vacation/Holiday

This pay ensures that workers receive compensation for taking time off for vacation or observed holidays throughout the year. These provisions help maintain a healthy work-life balance for employees.

Training

Training expenses cover the costs associated with providing training and skill development opportunities to workers. This component ensures that workers have access to necessary training programs to enhance their skills and productivity.

Other

The “Other” category may include additional benefits or allowances provided to workers, such as tool allowances, uniform reimbursements, or bonuses.

Total Hourly Rate

The total hourly rate represents the sum of all components mentioned above. It reflects the comprehensive compensation package received by workers for their labor on public works projects.

In California, prevailing wage laws typically apply to public works projects, which include construction projects funded by government entities. However, there are instances where prevailing wage requirements may extend to residential construction projects.

Suppose a residential project receives public funding or is subject to certain government regulations or contracts. Such a project may fall under prevailing wage laws. In such cases, contractors and subcontractors working on these residential projects must pay prevailing wages as per DIR to their workers.

Residential prevailing wage determinations are specific to construction projects involving residential buildings. These can be single-family homes, townhouses, apartment complexes, and condominiums up to four stories. This residential determination applies solely to the project’s residential portion meeting the defined criteria.

Also, general commercial prevailing wage rates are applicable for construction work related to structures or ancillary facilities on a project that doesn’t meet the residential definition. Specifically, the general commercial prevailing wage rates apply to all residential projects consisting of buildings of five or more stories.

Below, you can see an example of the difference in Prevailing Wages for Residential vs. Commercial Construction for the trade – Carpenter in San Francisco:

Prevailing wages are mandated to be used in various contexts and scenarios for public works projects and government contracts. Here’s when prevailing wages are typically applied:

Public Works Projects

Prevailing wages must be paid to workers employed on public works projects funded by federal, state, or local government agencies. These projects include the construction, renovation, maintenance, and repair of public infrastructure, such as roads, bridges, schools, hospitals, and government buildings.

Government Contracts

Prevailing wages are also required for workers involved in government contracts. This can include the ones awarded by federal, state, or local government agencies for construction, service, or manufacturing projects.

Federally Assisted Projects

Prevailing wages apply to projects that receive financial assistance or grants from the federal government. This is regardless of whether government agencies or private contractors carry out the projects.

Subcontractors

Prevailing wages extend to subcontractors and their employees who work on projects subject to prevailing wage laws. Prime contractors are responsible for ensuring that subcontractors comply with prevailing wage requirements.

State and Local Laws

Many states and localities have their own prevailing wage laws that may apply to public works projects or government contracts within their jurisdictions. These laws may set prevailing wage rates higher than federal rates and impose additional requirements.

Specific Trades and Occupations

Prevailing wage in California is determined for specific trades and occupations based on prevailing industry standards, union agreements, and other relevant factors. Furthermore, different wage rates may apply to different trades and geographic areas.

Prevailing wage rates are influenced by various factors that reflect the complexities of the labor market and prevailing industry standards. Below are key factors that contribute to the determination of prevailing wage rates:

Geographic Location

Prevailing wage rates often vary by geographic location due to differences in the cost of living, prevailing industry standards, and local economic conditions. Urban areas with higher living costs and construction demands typically have higher prevailing wage rates compared to rural regions.

Industry Standards

Prevailing industry standards and practices within specific trades and occupations influence prevailing wage rates. These standards reflect the skill levels, experience requirements, and productivity expectations associated with various construction tasks and specialties.

Labor Market Conditions

Prevailing wage rates are sensitive to fluctuations in the labor market, including supply and demand dynamics, labor shortages, and changes in workforce demographics. Shifts in labor market conditions can impact prevailing wage rates by affecting the availability and cost of skilled labor.

Government Regulations

Government regulations and prevailing wage laws play a significant role in shaping prevailing wage rates. State and federal laws mandate the payment of prevailing wages on public works projects. The laws also establish guidelines for determining prevailing wage rates based on industry surveys, union agreements, and other relevant factors.

Union Agreements

Collective bargaining agreements negotiated between labor unions and employers may influence prevailing wage rates. This can be by means of establishing minimum wage standards, benefits, and working conditions for unionized workers in specific trades and industries.

Project Complexity

The complexity and scope of public works projects can impact prevailing wage rates. Projects requiring specialized skills, advanced technologies, or stringent safety standards may command higher prevailing wage rates to attract skilled workers and ensure project quality and compliance.

Inflation and Economic Trends

Prevailing wage rates may be adjusted periodically to account for inflation and changes in economic conditions. Economic trends, such as inflation rates, fluctuations in material costs, and overall economic growth, can influence prevailing wage determinations to maintain wage levels reflecting prevailing market conditions.

For Journeymen

Workers and contractors can identify the correct information about prevailing wage in California for their county and trade by following the 6-step process below. This can be for holidays, scope, travel, shifts and predetermined increases, if any:

For Apprentices

The DIR offers a comprehensive online resource called the Public Works Apprentice Wage Sheets to streamline prevailing wages across counties for different trades and occupations. These wage sheets serve as an essential reference point for contractors seeking to ensure compliance and apprentices interested in fair compensation. By simply entering the wage determination period and the county relevant to your project, the system generates a list of prevailing wage rates for different apprentice trades, including carpenters, bricklayers, electricians, and more.

Note: This resource provides information regarding projects advertised for bids on or after March 3, 2016. If you require information for projects advertised prior to this date or any other information not specified in this article or the official government website, the DIR offers additional assistance through their Research Unit. You can reach out to them via phone, fax, email, or mail using the contact details provided below:

Office of the Director – Research Unit
Department of Industrial Relations
P.O. Box 420603
San Francisco, CA 94142-0603
Phone: 415-703-4774
Fax: 415-703-4771
Email: [email protected]

As of December 15, 2023, an important notice has been issued regarding prevailing wage rates below the California minimum wage. On January 1, 2024, the minimum wage in California was increased to $16.00 per hour. Notably, the Director of the Department of Industrial Relations’ prevailing wage determinations are mandated to align with this minimum wage requirement. This is true for public works projects exceeding one thousand dollars ($1,000).

Every employer must adhere to this directive, ensuring that the basic hourly rate paid to workers is at least equivalent to the California minimum wage. That’s even for cases where the published prevailing wage rate falls below this threshold. Moreover, there can be a scenario where the California minimum wage undergoes future increases surpassing those reflected in prevailing wage determinations. In that case the basic hourly rate outlined in said determinations automatically adjusts to match the new minimum wage standard.

Compliance with prevailing wage rates is mandatory for contractors and subcontractors working on public works projects funded by state or local government agencies. Failure to adhere to the requirements can result in serious legal and financial consequences, which can significantly impact their business operations and reputation. Here’s what happens if contractors don’t follow the laws:

Legal Penalties

Contractors may be subject to legal action, including fines of up to $200 per day per worker, penalties, and potential criminal charges for willful violations of prevailing wage laws.

Government agencies and labor enforcement authorities have the authority to investigate and prosecute instances of non-compliance, which can result in costly legal proceedings and litigation expenses.

Payment Disputes

Contractors risk facing payment disputes and claims from workers who are not compensated in accordance with prevailing wage requirements.

Workers have the right to file complaints and pursue legal action to recover unpaid wages, fringe benefits, and damages resulting from non-compliance with prevailing wage laws.

Contract Termination

Non-compliance with prevailing wage laws can lead to contract termination by government agencies or project owners. This can jeopardize the contractor’s ability to secure future government contracts and business opportunities.

Contract termination can result in financial losses, damage to the contractor’s reputation, and potential litigation to recover damages or dispute contract termination.

Debarment and Suspension

Contractors found to violate prevailing wage laws may face debarment or suspension from bidding on or participating in government contracts for up to three years.

Debarment or suspension can severely impact the contractor’s ability to conduct business and compete in the marketplace, leading to loss of revenue and potential bankruptcy.

Civil Liability

Contractors may face civil liability for damages, including back wages, liquidated damages, attorney fees, and court costs, resulting from non-compliance with prevailing wage laws.

Civil lawsuits filed by aggrieved workers or government agencies can result in substantial financial liabilities and reputational damage to the contractor’s business

Navigating requirements around the prevailing wage in California and ensuring compliance with labor laws can be complex for both workers and contractors involved in public works projects. Here are some valuable tips for workers and contractors:

For Workers:

#1 Know Your Rights

Familiarize yourself with prevailing wage laws and regulations to understand your entitlements regarding wages, benefits, and working conditions on public works projects.

#2 Keep Records

Maintain detailed records of your hours worked, tasks performed, and wages earned to ensure accurate payment and resolve any discrepancies effectively.

#3 Stay Informed

Stay updated on prevailing wage rates, changes in labor laws, and industry standards through reputable sources and organizations to protect your rights and interests.

#4 Seek Assistance

If you encounter issues or have questions about prevailing wages or labor rights, seek guidance from labor unions, legal aid organizations, or government agencies specializing in labor law enforcement.

For Contractors:

#1 Understand Requirements

Familiarize yourself with prevailing wage requirements specific to your projects, including wage rates, fringe benefits, record-keeping obligations, and reporting requirements.

#2 Compliance Training

Train your staff and subcontractors on prevailing wage laws and compliance obligations to ensure that everyone understands their roles and responsibilities.

#3 Document Everything

Maintain accurate records of employee hours, wages paid, fringe benefits provided, and other relevant information to demonstrate compliance with prevailing wage laws and effectively address any audits or investigations.

#4 Monitor Changes

Stay vigilant about changes in prevailing wage rates, labor laws, and regulatory requirements that may affect your projects, and adjust your practices and procedures accordingly.

#5 Seek Professional Assistance

Consider consulting legal counsel or hiring compliance specialists experienced in prevailing wage matters to navigate complex regulations and mitigate compliance risks effectively.

By following these tips, workers and contractors can navigate prevailing wage requirements confidently, protect their rights, ensure fair compensation, and maintain compliance with labor laws and industry standards in public works projects and government contracts.

Prevailing wage regulations play a crucial role in upholding labor standards and fostering a level playing field for all stakeholders involved. As we’ve explored the intricacies of prevailing wage rates, the significance of holiday provisions, the scope of work requirements, and other key components, it becomes evident that compliance with prevailing wage laws is essential for maintaining the integrity of public infrastructure projects and safeguarding the rights and well-being of workers. In conclusion, we can understand that by staying informed, adhering to best practices, and fostering a culture of compliance, workers, contractors, and government agencies can collectively uphold the principles of fairness, transparency, and respect for labor rights.

What is the prevailing wage in California?

The prevailing wage rates in California vary depending on the specific trade or occupation and the geographic location where the work is performed. The California Department of Industrial Relations (DIR) periodically updates these and you can access them through their website or other official sources. The prevailing wage rates typically include both the basic hourly wage and any applicable fringe benefits.

What is the meaning of the prevailing wage rate?

The prevailing wage rate is the hourly wage, including fringe benefits, paid to workers in a particular trade or occupation within a specific geographic area. It’s established based on the rates commonly paid to workers in similar trades or occupations in the locality where the work is performed, typically determined through surveys and collective bargaining agreements.

Do I have to pay the prevailing wage for travel time in California?

In California, prevailing wage laws require that workers be compensated for travel time to and from the job site if travel is required as part of the job duties. The compensation rate for travel time is typically based on the prevailing wage rate for the worker’s trade or occupation.

Who is exempt from prevailing wages in California?

Certain types of projects and workers may be exempt from prevailing wage requirements in California. Exemptions may include small projects below a certain threshold, residential projects of a certain size, and specific types of work not considered public works. Additionally, some workers, such as volunteers and certain apprentices, may be exempt from prevailing wage requirements.

How is the prevailing wage calculated?

Prevailing wage rates are calculated based on prevailing wage determinations issued by the California Department of Industrial Relations (DIR). These determinations consider factors such as wage surveys and collective bargaining agreements to establish the prevailing rates for various trades and occupations within specific geographic areas. The prevailing wage rate typically includes the basic hourly wage as well as fringe benefits, such as health insurance, retirement contributions, and vacation pay.