Prevailing Wages in California: A Complete Guide for Employers
California is known for its strong worker protection laws. One such law that applies to workers completing government-funded construction projects is the prevailing wage.
The prevailing wage is a comprehensive compensation package that includes not only the hourly wage but also various benefits, such as health insurance, pension contributions, and overtime. This ensures that workers on public projects receive competitive compensation comparable to what they would earn in the private sector for similar work.
Why Does This Matter to You?
If you’re engaged in public works projects in the Golden State, it’s important to understand California's prevailing wage laws. Non-compliance with wage laws can result in significant penalties, payment disputes, contract termination, and disqualification from future public work contracts.
With a solid understanding of wage laws, you promote fair treatment of your workers and encourage business competition based on the quality of work completed.
PRO TIP: To simplify and streamline your compliance with prevailing wage regulations, consider using time-tracking software like Timeero. This user-friendly software can automate many tasks associated with compliance, including accurate tracking of regular and overtime hours, breaks, and mileage. A sophisticated tracking app such as Timeero, relieves you of common pitfalls and helps you stay up to date with legal requirements.
Understanding Prevailing Wages: Federal vs. California
Federal prevailing wages are set by the Davis-Bacon and Related Acts (DBRA), which apply to federally funded or assisted construction projects of over $2,000.
These laws require workers to be paid prevailing rates and fringe benefits similar to those of jobs in the area, as determined by the U.S. Department of Labor (DOL). The DOL conducts surveys to collect wage and benefit data for various occupations and areas, which it then uses to set the federal prevailing wage rates.
What is Prevailing Wage in California?
California’s prevailing wage laws are grounded in state statutes and regulations, such as the California Labor Code, California Code of Regulations, the California Constitution, and other legislative codes (Civil, Education, etc.).
Following California law, all workers employed on public works projects must be paid the prevailing wage determined by the Director of the Department of Industrial Relations, regardless of the funding.
The prevailing wage rates are set based on collective bargaining agreements specific to the type of work and project location. The Director of the Department of Industrial Relations determines these rates by considering the wages and benefits that are being paid to workers in the same trade or occupation in the locality of the public work project.
PRO TIP: California's prevailing wage laws apply to public works projects valued at over $1,000 - a much lower threshold than the federal requirement of $2,000. This lower threshold means that more projects in California are subject to prevailing wage laws, increasing the importance of understanding and complying with regulations.
How Do You Calculate the Prevailing Wage in California?
The prevailing wage varies depending on the following:
- Craft or Trade. Different types of work have different rates (e.g., electrician, carpenter, laborer).
- Location. Rates can vary significantly from one county to another. Urban areas often have higher rates than rural areas due to differences in the cost of living.
- Worker Classification. Experienced journeymen typically earn more than apprentices still in training.
For instance, in 2024, a bricklayer working on a government project in San Diego should earn a basic hourly rate of $44.65, while a plumber should earn $53.51.
Besides the basic hourly rate, the prevailing wage in California includes additional benefits, such as:
- Health & Welfare. Benefits covering the costs of healthcare (medical, dental, vision, etc.).
- Pension. Contributions made by employers to retirement funds on behalf of employees.
- Vacation/Holiday. Compensation for time off for vacation or holidays.
- Training. Expenses for providing training and skill development opportunities.
- Other. Additional benefits or allowances like tool allowances or bonuses.
- Overtime Pay. The higher rate is paid for hours worked beyond the standard workday or workweek. Read our article on Overtime Law in California to learn more about this topic.
These additional benefits significantly increase the value of compensation, which is composed of an employee's wages, overtime pay, and the value of their benefits.
This comprehensive approach to compensation ensures that workers are fairly remunerated for their work.
The DIR publishes official prevailing wage determinations for each craft, classification, and area on its website. It's important to consult these determinations for the most accurate and up-to-date rates for your project.
PRO TIP: While California meal and rest break requirements are not directly part of the prevailing wage determination, they impact a worker's total compensation on a public works project. If these requirements are not met, the worker is entitled to premium pay, which effectively increases their prevailing wage for that day.
How Often Are Prevailing Wage Rates Updated in California?
The DIR issues general prevailing wage determinations twice a year, in February and August.
However, if labor market conditions significantly change or an awarding body requests special determinations or updates, the DIR can also issue them.
California Prevailing Wage Details
In addition to setting wage rates, the DIR provides detailed information on various aspects of prevailing wages which include,
- Holidays. Recognized holidays, specific pay rates for work on those holidays, and any additional benefits or conditions associated with holiday pay.
- Scope of Work. Parameters and expectations for each trade or occupation, including specific tasks, activities, and functions covered by the prevailing wage determination.
- Travel Policy. Rates and conditions for mileage reimbursement, per diem wages, and other travel-related expenses incurred while traveling to and from job sites.
- Shifts. Compensation rates for different shifts, including regular time, overtime, and double time, as well as provisions for meal periods or rest breaks during non-standard work hours.
- Predetermined Increases. Regulating prevailing wage rates may involve scheduled increases over time or adjustments based on specific economic indicators, such as inflation or industry standards.
PRO TIP: California has specific regulations and requirements beyond those outlined in federal law, such as the requirement for certified payroll reporting.
When Are Prevailing Wages Used?
Prevailing wages are mandated for various projects and services to provide fair compensation for workers across various industries and sectors in the state of California.
Let’s explore areas of work that require prevailing wage.
Public Works Projects
Prevailing wages are required for all public works projects, whether they involve new construction projects, renovation of existing structures, routine maintenance, or repair work to public infrastructure.
This may include various activities, such as building roads and bridges, upgrading schools and hospitals, and maintaining parks and public spaces.
Government Contracts
Government contracts, whether at the federal, state, or local level, are also subject to prevailing wage requirements. This applies to contracts for various services, including construction work, janitorial, security, food, and transportation.
Additionally, prevailing wages must be paid to the workers involved if a contract involves manufacturing goods for government use, such as military equipment or office furniture.
Federally Assisted Projects
Projects receiving financial assistance or grants from the federal government, whether carried out by government agencies or private contractors, must comply with prevailing wage laws.
This includes projects funded by infrastructure grants for transportation, energy, water, and environmental improvements, as well as federally funded affordable housing initiatives and disaster relief efforts.
Subcontractors
Prevailing wage laws extend to all subcontractors involved in public works projects or government contracts.
This means that subcontractors at every tier of the project, including those providing specialized services or materials to prime contractors, must pay their workers the prevailing wage rates.
State and Local Laws
While federal prevailing wage laws set minimum standards, many states and local governments have their own prevailing wage laws that may apply to additional projects not covered by federal regulations.
These state and local laws may also establish higher prevailing wage rates than the federal minimums, providing further protection for workers.
Specific Trades and Occupations
Prevailing wage requirements apply to many trades and occupations involved in public works projects and government contracts.
This includes skilled construction tradespeople such as carpenters, electricians, plumbers, ironworkers, painters, and service workers like janitors, security guards, and food service staff.
Who is Exempt from Prevailing Wage in California?
Most public works projects are subject to prevailing wage laws but there are some exemptions:
- Small Projects. Projects under $1,000 are generally exempt.
- Specific Types of Work. Some specialized work, like surveying or materials testing may not be covered.
- Certain Entities. Public agencies, like school districts, may have different requirements.
Most Common Prevailing Wage Violations and Their Consequences
California's prevailing wage laws are complex, and unintentional violations can occur. Inadvertent errors can lead to severe consequences for employers.
Understanding the most common pitfalls is an important part of maintaining compliance and avoiding costly repercussions.
Common Prevailing Wage Violations
Misclassifying Workers. Incorrectly classifying worker job duties or skill levels can result in underpaying them with the appropriate prevailing wage rate. This is a frequent issue, especially when multiple trades are involved in a project.
Underpaying Wages. Failing to pay the full prevailing wage, including all required benefits and overtime, is a severe violation. This can happen due to calculation errors, misinterpreting the wage determination, or simply overlooking specific provisions.
Inadequate Record-Keeping. Accurate record-keeping is essential for demonstrating compliance. Failure to maintain precise records of hours worked, classifications, wages paid, and benefits provided can lead to unpaid wage disputes and accusations of non-compliance.
Unlawful Deductions. Employers cannot deduct costs from an employee's paycheck that would bring their earnings below the prevailing wage. This includes deductions for tools, uniforms, or other work-related expenses.
Retaliation. It is illegal for employers to retaliate against workers who raise concerns about prevailing wage violations or exercise their rights under the law.
To learn more about the nuances of wage theft and how it can impact your business, read our in-depth guide: Wage Theft in California: What Employers Need To Know
Enforcement and Penalties: The High Cost of Non-Compliance
California takes prevailing wage laws seriously. The DIR and Awarding Body Labor Compliance Programs (LCPs) are responsible for enforcing the law. These agencies educate employers about prevailing wage requirements, review certified payroll reports for accuracy, and conduct thorough investigations to ensure compliance on public works projects.
The consequences of non-compliance are severe and can significantly impact a company's bottom line and reputation.
Employers found in violation may be liable for the following penalties:
- Back Wages and Interest. Employers must pay back any wages owed to workers and interest calculated from the due date.
- Liquidated Damages. Additional damages may be awarded to compensate workers for any losses from underpaying wages.
- Civil Penalties. The Labor Commissioner can impose penalties of up to $200 per day for each worker paid less than the prevailing wage.
- Investigation and Prosecution Costs. Employers may be required to reimburse the DIR for investigating and prosecuting the violation.
- Contract Termination. Public agencies can terminate contracts with non-compliant employers, leading to significant financial losses and potential legal disputes.
- Debarment. Employers who repeatedly or intentionally violate prevailing wage laws may be debarred from bidding on or participating in public works projects for a specified period, typically three years.
- Criminal Charges. In cases of willful and egregious violations, employers may face criminal charges, which can result in fines and even jail time.
How Timeero Can Help Employers with Prevailing Wages in California
As you can see, complying with California's prevailing wage laws can be demanding for employers using public funds.
This is where using Timeero, a robust time-tracking software solution, makes a real difference.
With its California-specific features, Timeero helps employers maintain accurate records and adhere to detailed labor standards. This ensures compliance with the state’s strict labor laws and avoids costly mistakes.
Accurate Time Tracking
Timeero provides precise recording of employee hours, including overtime, through advanced features like GPS-verified clock-ins, geofencing, and real-time tracking.
This ensures that all time worked is accurately captured, reducing the risk of underpayment and potential legal issues.
GPS-Verified Clock-Ins
Employees clock in and out using GPS verification, ensuring their recorded hours are accurate and verifiable, preventing employee time theft.
Geofencing
Employers can set up geofences around job sites so employees are automatically reminded to clock in or out when they enter or leave the designated area. They can also restrict employees from clocking in from offsite locations or choose to let them clock in while flagging their timesheet entries.
Real-Time Tracking
Timeero allows employers to monitor employee locations and hours worked in real time to ensure compliance and productivity.
Offline tracking
Timeero keeps tracking offline, even when there's no internet connection. If workers are located in remote areas with limited connectivity, the app continues to track location and mileage from the job site.
For a more comprehensive look at the benefits of GPS tracking for workforce management, check out our article on the Five Best GPS Tracking Apps.
Automated Break Compliance
Timeero’s California break tracker feature is designed to help employers comply with the state's strict break requirements. The mobile app automatically reminds employees to take their legally mandated meal and rest breaks and accurately tracks their duration.
Break Reminders
Automated notifications remind employees to take their required breaks, reducing the risk of missed or shortened breaks.
Electronic Sign-Off
Using Timeero, employees can electronically attest to their breaks, providing a record for compliance purposes.
Break Reports
Detailed reports allow employers to identify missed breaks, pay the required meal premiums, and educate employees on their rights and obligations.
California-Specific Payroll Calculations
Timeero automatically calculates overtime pay based on California's labor laws, ensuring compliance and accuracy. When applicable, the app includes provisions for double-time pay to meet state requirements.
Detailed Records and Transparent Reporting
Maintaining meticulous records is essential for compliance with prevailing wage laws. Timeero generates comprehensive reports that promote transparency and accountability for both employers and employees.
Comprehensive Reports
Detailed records of employee hours, breaks, and mileage are maintained and easily accessible for audit.
Electronic Timesheet Confirmation
Employees can review and confirm their timesheets electronically, verifying record accuracy and reducing the potential for disputes.
Mileage Tracking and Reimbursement
Compliance with California Labor Code Section 2802 requires employers to reimburse employees for reasonable expenses incurred during work-related travel, including mileage. Timeero helps businesses simplify the reimbursement process.
Accurate Mileage Tracking
The Timeero mobile app tracks mileage automatically for employees who use their vehicles for work, leading to accurate reimbursement.
Custom Reimbursement Rates
Timeero can calculate mileage reimbursements based on the standard IRS rates or custom rates set by the employer, resulting in compliance and fairness.
Timeero offers a comprehensive solution for employers navigating the complexities of California's prevailing wage laws. By automating time tracking, ensuring accurate record-keeping, and supporting payroll compliance, Timeero helps employers safeguard their businesses, protect their workers, and contribute to a fair and equitable construction industry.
Disclaimer: While we strive to keep this information accurate and up-to-date, employment laws can be complex. To make sure you have the latest details for your specific situation, we recommend checking with the California Department of Industrial Relations or consulting with an attorney.
FAQ: Prevailing Wages in California
How Are California Prevailing Wages Determined?
The California Department of Industrial Relations sets prevailing wage rates by analyzing collective bargaining agreements, wage data from similar projects, and input from labor organizations and employers. The goal is to reflect average compensation for similar work in the region and ensure fair pay for workers on public works projects.
How Much Is the Prevailing Wage in California?
The prevailing wage rates for each job vary based on the work type, location, and worker classification. You should always consult the official DIR website to find the exact prevailing wages for your specific project and location.
