Definition
Prevailing wage is the minimum wage (and often fringe benefits) that must be paid to workers on public construction projects, as determined by the awarding agency or state/federal labor department. It is intended to reflect local market wages for each craft and prevents undercutting on public work.
Why It Matters
Bidding on public work requires knowing and pricing to prevailing wage rates. Paying below prevailing wage triggers back wages, penalties, and possible debarment. Contractors must use the correct determination for the project and locality and maintain certified payroll to prove compliance.
Field Example
A state DOT project in County X has a prevailing wage sheet: Carpenter $42/hr plus $12/hr fringe, Laborer $28/hr plus $8/hr fringe. The contractor’s bid uses these rates for labor; during the job, payroll and certified payroll use the same rates and classifications.
Calculation / Formula (if applicable)
Rates are published in wage determinations; no internal formula. Total hourly compensation (cash wage + bona fide fringes) must meet or exceed the determination. Overtime rules (e.g., 1.5×) may apply on top.
Software Application
Support storing and applying prevailing wage determinations by project and by classification. Validate labor entries against the determination. Generate certified payroll that shows the prevailing rate and that workers were paid at least that rate. Alert when rates or classifications don’t match.
Tooltip Version
Prevailing wage is the minimum pay rate set for public construction projects by locality and craft; you must pay and report at or above these rates.
Related Objects
Related: