💰 Prevailing Wage Projects: What Contractors Need to Know
🧱 Introduction
If you’re bidding on public works or government-funded construction projects, you’ve likely heard the term “prevailing wage.”
Prevailing wage laws ensure that workers on publicly funded projects are paid fair, standardized wages — but understanding when these laws apply and how to stay compliant can be tricky.
At Nail & Hammer Construction Corp, we manage projects that meet both federal Davis-Bacon and California prevailing wage standards. Here’s what every contractor and subcontractor needs to know before stepping onto a public jobsite.
🧾 Who Qualifies and When It Applies
Prevailing wage laws apply when construction work is funded in whole or in part by public money — whether federal, state, or local.
🏗️ Projects That Typically Require Prevailing Wages:
Government buildings (schools, courthouses, city halls)
Public infrastructure (roads, water systems, utilities)
Federally funded housing or redevelopment projects
Renovations, maintenance, or repairs using public funds
👷 Who Must Comply:
General contractors
Subcontractors
Laborers, mechanics, and tradespeople
Apprentices (must be registered through approved programs)
If even one dollar of public funding touches the project — through grants, subsidies, or tax credits — prevailing wage rates must be paid.
💡 Pro Tip: Always confirm project funding sources during bid review. Hidden public funds (like federal block grants) can trigger wage compliance even in “private” builds.
⚖️ Federal vs. California Prevailing Wage Laws
Both federal and state governments regulate prevailing wages — but the rules differ in how they’re set and enforced.
🇺🇸 Federal Law: The Davis-Bacon Act
Applies to federally funded or assisted projects over $2,000.
Wage rates are set by the U.S. Department of Labor (DOL).
Enforced by federal contracting agencies.
Requires weekly certified payroll (Form WH-347) submission.
🌴 California State Law (Labor Code §1720 et seq.)
Applies to state, county, and city projects of $1,000 or more.
Wage rates set by the California Department of Industrial Relations (DIR) — typically higher than federal rates.
Enforced by the DIR’s Compliance Monitoring Unit (CMU).
Requires electronic certified payroll submission via the DIR’s online portal.
⚙️ Key Differences:
RequirementFederal (Davis-Bacon)California (DIR)Threshold$2,000$1,000Wage SourceDOL Wage DeterminationsDIR Prevailing Wage SchedulesReportingWH-347 (Weekly)DIR eCPR SystemFringe BenefitsCash or plan contributionsCash equivalent or approved planEnforcementFederal AgenciesDIR / CMU
💡 Pro Tip: If a project is funded by both federal and state money, the higher wage rate always applies.
📋 Payroll Compliance Best Practices
Proper payroll compliance is essential for keeping contracts, avoiding fines, and maintaining eligibility for future public projects.
✅ Key Best Practices:
Use Certified Payroll Software
Automate Davis-Bacon and DIR reports to minimize manual entry errors.Classify Workers Correctly
Each worker must be classified according to their trade — e.g., carpenter, electrician, plumber — based on tasks performed, not just job title.Track Hours Accurately
Record all hours worked by project, classification, and day. Overtime must also follow prevailing wage rates.Pay Fringes Properly
Fringes can be paid as cash or credited toward benefit plans (health, pension, etc.) — but documentation is mandatory.Submit Certified Payroll on Time
Federal: Weekly via WH-347
California: Electronically to DIR within 10 days of payment
Keep Records for 3 Years Minimum
Maintain copies of payroll reports, timecards, and classification documents for auditing.
💡 Pro Tip: Nail & Hammer uses integrated payroll systems that track labor classifications and generate both DOL and DIR-compliant reports — ensuring seamless audits.
⚠️ Common Mistakes That Lead to Penalties
Contractors often run into trouble for reasons that seem small but have big consequences:
Misclassifying workers (e.g., paying a carpenter as a laborer).
Failing to include fringe benefits in total pay.
Missing certified payroll deadlines.
Submitting incomplete forms or missing signatures.
Not flowing down wage requirements to subcontractors.
Violations can result in:
Back wages and restitution payments
Contract termination or debarment (up to 3 years)
Civil fines and potential criminal penalties
At Nail & Hammer, we audit payroll weekly and communicate with all subcontractors to maintain 100% compliance.
🧰 Nail & Hammer’s Role in Prevailing Wage Projects
As an experienced general contractor, we understand the complexity of public works and wage compliance.
Our Process Includes:
Reviewing wage determinations during preconstruction
Verifying subcontractor classifications and rates
Managing certified payroll submission for all tiers
Coordinating with DIR and DOL for inspections or audits
Keeping full documentation for closeout and payment approval
Our goal is simple: Deliver high-quality public projects while maintaining full legal compliance.
✅ Conclusion
Prevailing wage projects can be highly rewarding — but only if you understand the requirements and manage payroll correctly.
By knowing when prevailing wage applies, distinguishing between federal and California laws, and maintaining meticulous documentation, contractors can stay compliant and profitable.
At Nail & Hammer Construction Corp, we bring deep expertise in public works construction, certified payroll management, and DIR compliance — helping clients and partners build with confidence.
📞 Call 424-800-3704 today to discuss prevailing wage projects, compliance support, or public bid partnerships.
