Prevailing Wage and Davis-Bacon Compliance in California
Exemptions to Prevailing Wage Requirements in California
In California, prevailing wages are typically mandated for most public works projects and their associated workers. However, there are specific exemptions to this rule. Here's a detailed breakdown of who or what qualifies for exemption:
Labor Compliance Program (LCP): Public projects managed by entities with their own Labor Compliance Program (LCP) are exempt from prevailing wage requirements unless construction costs exceed $25,000. The threshold for exemption for maintenance, demolition, or general assistance work is $15,000.
Federal Government Control: Projects that are entirely federally funded and managed are exempt from California's state prevailing wage laws. When federal funding is partial, prevailing wage requirements usually apply per state guidelines.
Volunteers and Non-Profits: Volunteers working for non-profits or on public projects are not required to be paid prevailing wages. Although not contracted by the awarding body, volunteers may receive reasonable accommodations without triggering prevailing wage requirements.
Professional Personnel: Prevailing wage laws primarily apply to trade and construction roles. Professionals outside these fields, such as architects, are generally exempt from these regulations.
Understanding the Basic Hourly Rate versus the Total Rate
General Determinations comprise both the Basic Hourly Rate and the Total Hourly Rate for each location and classification. California law mandates employers provide the Basic Hourly Rate as the minimum wage for every hour worked. However, there are exceptions to this rule, and eMars, the best payroll compliance software, can accommodate these exceptions.
The Total Hourly Rate encompasses the Basic Hourly Rate and the extra remuneration for "employer payments." These payments typically cover fringe benefits like health and welfare, vacation/holiday, apprentice training, and pension.
Employers are free to either directly pay these fringe benefits as part of wages or to acquire an offset for the "actual cost" of the benefit offered to the employee, which was funded into a bona fide health, pension, vacation, or fringe benefit plan. In either case, the total remuneration offered by the employer to the employee must align with the Total Hourly Wage stipulated by the Director in the General Determination.
View California's industry-specific wage rates on the official DIR site.
California Prevailing Wage FAQs
What are the prevailing wage benefits in California?
In California, prevailing wage benefits are additional compensations that workers on public works projects receive, beyond their hourly wage. These benefits typically include health insurance, retirement plans, vacation pay, etc. The California Department of Industrial Relations (DIR) sets the required benefit rates to ensure workers receive fair compensation packages in line with industry standards. Our compliance solutions help companies calculate and administer these benefits accurately, ensuring full compliance with state regulations.
How are prevailing wages determined in California?
What types of projects require prevailing wage compliance in California?
In California, prevailing wage laws apply to all state-funded public works projects. This includes construction, alteration, demolition, installation, and repair work conducted under a public contract. Our compliance solutions can help ensure adherence to these regulations across various project types.
What are the consequences of non-compliance with prevailing wage laws in California?
Non-compliance with California prevailing wage laws can result in significant penalties, including fines, back pay requirements, and potential debarment from future public works contracts. Our compliance solutions help mitigate these risks by ensuring accurate wage payments and documentation.