Understanding Prevailing Wage
What is Prevailing Wage?
Wage Standards for Public Construction Projects
Prevailing wage refers to the standard wage rates established for each construction trade classification. It includes both the base hourly wage and the required fringe benefits paid to workers according to their trade.
Each project is regulated by its location, trade classification, and the date the bid is advertised. Publicly funded or assisted projects are overseen by public agencies to ensure that local workers performing the same type of work receive comparable compensation.
Our Security Principles
What is Prevailing Wage?
Prevailing wage is a term refers to a construction worker’s standard pay on a given industry and trade classification.
A worker is paid a base hourly wage plus any required benefits, and they depend on the type of work performed, the location of the project, and the specific bid date of the advertised project.
The primary goal of prevailing wage laws is to ensure equitable pay for all workers engaged on publicly supported projects in comparison to other locals doing the same work.
This is to protect fair competition among contracting firms, and the provision of skilled and steady work on the project.
Why It Matters?
A contractor on prevailing wage projects must adhere to specific and stringent laws governing employment and the required submission of reports.
This particularly applies to the computation of wages and the updating of employment records as required by federal, state, and local laws.
A lack of proper systems to track and report on wages and the workforce employed on the project could lead companies to costly audits, penalties for non-compliance, and back wage payments to employees.
Meeting the obligations of the prevailing wage allows for the following:
- Budgets being accurately planned and kept within budget
- Workers being accurately classified within their respective trade
- Proper wage determinations being accurately and completely applied
Changing Policies & Enforcement Trends
- States with strong prevailing wage regimes complete more training, retain more equitable wages, improve safety, strengthen local workforce retention, and advance training completion outcomes.
- Opposing views exist on the business and policy fronts regarding prevailing wage being detrimental to project costs or competitiveness. However, many studies suggest that wages do not significantly raise project costs.
- Stay alert, as rules change, project types keep expanding (PLA, HUD, IRA, AB 2143/219) and the complexity of record-keeping and regulation continues to increase.
- This is to protect fair competition among contracting firms, and the provision of skilled and steady work on the project.
How our Platform Works
- The Kendall 2-Sided Targeted Workforce Platform has a centralized cloud-based infrastructure that
- Crosses comparisons for each project type and trade wage determinations automatically.
- Monitors unsupervised apprentice hours and journeyman/apprentice ratios.
- Creates essential reports such as Spot-Checking Alerts, Skilled & Trained Report, Project Labor by Employee, Other Deductions, OCIP, and more.
- Handles multiple project types, including Regular State, Federal, PLA, HUD Housing, AB 2143, and IRA projects.
- Assists contractors in managing compliance proactively by risk mitigation, time savings, and data being audit-ready.
Why This Matters to Your Business
Correct compliance for prevailing wage saves your business from costly audits, penalties, re-payments, and reputation damage.
Correct wage budgeting, classification, and wage tracking leads to more competitive bids, and better cost control for projects.
With tight labor markets and increasing scrutiny from regulators, a streamlined system creates a competitive edge.
The prevalence of complex compliance requirements for public-funded, state-funded, and clean-energy projects is increasing. Staying ahead will benefit you tremendously.