Prevailing wage is the minimum hourly pay, plus fringe benefits, that contractors must pay workers on government-funded projects. The rate is set for each type of worker in each area, based on what similar workers are typically paid there. It exists so that companies can't win public contracts by undercutting local wages.
Free tool: work out the hourly pay, fringe owed in cash, overtime and weekly gross with our prevailing wage calculator.
Which prevailing wage laws apply
| Davis-Bacon Act (federal) | Federal and federally assisted construction, alteration and repair contracts over $2,000. Laborers and mechanics on the site. See Davis-Bacon wages explained. |
|---|---|
| Service Contract Act (federal) | Federal service contracts over $2,500 where service employees do the work: janitorial, guards, grounds, food service, maintenance and many more. |
| State prevailing wage laws | Many states have their own laws for state and local public works (often called "little Davis-Bacon" acts), each with its own rates, thresholds and rules. Some states have none or have repealed them. Check your state's labor department. |
What a prevailing wage rate includes
- Basic hourly rate: the minimum cash wage for the job classification (for example "Electrician" or "Janitor").
- Fringe benefits: an hourly amount you must also provide. On Davis-Bacon jobs it's listed per trade; on Service Contract Act jobs it's the health and welfare amount plus set vacation and holidays.
You can meet the fringe by paying into bona fide benefit plans (health insurance, retirement), by paying the difference in cash on the paycheck, or a mix. The total must reach the rate plus fringe for every hour worked.
How prevailing wage rates are set and where to find them
- Federal rates are published by the U.S. Department of Labor as wage determinations for each county (construction) or area (services). They're posted on SAM.gov, and the one that applies is attached to each solicitation. See how to read a wage determination.
- State rates are published by each state's labor department, usually by county and trade.
- Rates are updated over time, so always use the determination attached to the specific bid or contract, including any amendment.
Overtime on prevailing wage jobs
On federal contracts over $100,000 covered by the Contract Work Hours and Safety Standards Act, laborers and mechanics get time-and-a-half for hours over 40 in a workweek. Overtime is figured on the basic hourly rate; the fringe amount is paid at straight time and isn't multiplied.
Certified payroll and records
On Davis-Bacon jobs you submit a weekly certified payroll (form WH-347 or an equivalent) listing each worker, classification, hours and pay, signed as accurate. Keep payroll records for every covered job, and post the wage determination and required posters where workers can see them.
How prevailing wage affects your bid
- Find the wage determination before you price labor.
- Price each worker at rate + fringe, then add your payroll taxes, workers' comp and insurance. The labor burden calculator helps.
- Budget time for certified payroll.
- Remember every bidder pays the same minimums, so labor rates don't decide who wins; your efficiency and overhead do.
Frequently asked questions
What is prevailing wage?
The minimum hourly wage plus fringe benefits that must be paid to workers on government-funded projects, set for each job classification and area.
What is a prevailing wage determination?
The official list of prevailing wage rates for a county or area, by job classification. For federal work it's issued by the Department of Labor and attached to each solicitation.
Can I pay the fringe benefit in cash?
Yes. You can pay all or part of the fringe as extra cash wages instead of benefits, as long as the total meets the required rate plus fringe.
Do I have to pay prevailing wage on private jobs?
No. Prevailing wage laws apply to government-funded or government-contracted work, not private jobs, unless a state law or the funding source says otherwise.
Is overtime paid on the fringe?
No. On federal jobs, overtime is time-and-a-half of the basic hourly rate; the fringe is paid at straight time.
Bidding prevailing wage work?
We price every bid we prepare from the wage determination, so you never underbid labor. From $495 a bid; you set the price and submit. See the government contracts that fit you.