How Do Prevailing Wage Laws Help the Construction Industry?

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In construction, there are many laws and regulations in place to protect workers from dangerous hazards, but what about fair compensation? Prevailing wage laws are in place to ensure that workers receive fair wages when performing on a public-related project.

In this blog post, we’ll cover why prevailing wage laws are so important to the construction industry and ways to support workers.

What does prevailing wage mean?

To give context, a prevailing wage is the basic hourly rate of wages and benefits that is distributed to a number of closely employed workers in a given area or site. They are laws that apply to public projects that, when present, provide a minimum wage to the majority of workers on the site. 

What are prevailing wage laws?

Prevailing wage laws require contractors and any subcontractors on public jobs must pay the majority of the workers no less than the local prevailing wage rate within a geographic location. Basically, prevailing wage acts as a minimum wage for many construction workers. 

Where do prevailing wage laws come from?

For many federal projects, the Davis-Bacon Act is the starting point. Federal construction projects in all 50 states are automatically covered by the law. Although, not every state requires prevailing wage on a state-owned project. Similar to the miller act, the Little Davis-Bacon Act was born in most states following the Davis-Bacon Act. Roughly 32 states have prevailing wage laws in place. 

Resources:

NYC Prevailing Wage Schedules & Updates

U.S Department of Labor - Employment Law Guide 

Davis-Bacon Act Poster

U.S. Department of Labor - Newsroom

U.S. Department of Labor - For Workers 

U.S. Department of Labor - For Employers 

Ways of determining prevailing wage

Local prevailing wage is determined by basically two ways. They are as follows.

1. Surveys. Conducting surveys of the wages received by classes of workers on a project.
2. Using the prevailing wage rate determined by the United States Department of Labor in accordance with the Davis-Bacon Act and amenities. 

Benefits of prevailing wage in construction

• Helps standardize wages for fairness
• It can attract skilled workers and quality workmanship 
• Can support economic growth
• Levels the playing field 
• Helps reduce turnover

Cost of avoiding prevailing wage in construction

If contractors knowingly violate prevailing wage rates, they will be facing many serious penalties that can affect the business. If contractors and employers are found to ignore these violations, their contract may be terminated and other civil or federal criminal penalties may be made.

How to make a prevailing wage claim

If you are a contractor and believe you haven’t been paid the correct rate, the first steps would be to reach out to your primary contractor. Figure out if it was a simple error or something more. Hopefully the dispute can be resolved in-house. During these stressful times, communication is very important. 

If all else fails, it may be time to contact The United States Department of Labor or your state’s Department of Labor depending on the project type and file your claim. Please keep in mind this is mainly for federal projects. Once the right information is processed, the investigation will begin.  

Supporting prevailing wage with tech

There are many ways to support prevailing wage laws. For some it’s having an automated payroll system in place so things are automatic. Project management tools are another helpful way to support prevailing wage laws by tracking labor hours and costs. 

Many contractors utilize workforce management solutions like Kwant to automate their reporting processes and record keeping to support initiatives such as compliance and prevailing wage.

Want to learn more about Kwant and how we can help support prevailing wage reporting? Contact us today.