Prevailing Wages are standard hourly wages, benefits, and overtime paid to workers in a specific geographic area for a particular type of work, typically established by government authorities to ensure fair compensation on public works or government-funded projects. These rates are often based on local union contracts or surveys of wages paid in the area for similar work.
It is important to note that prevailing wage requirements vary by jurisdiction. For example, in California, the Department of Industrial Relations sets wage rates based on collective bargaining agreements and enforces compliance on all public works projects
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Key Facts
- Purpose: Prevents underpayment on government contracts and promotes local wage standards.
- Determination: Set by the Department of Labor or equivalent state agencies based on surveys of wages paid in the area.
- Applicability: Often required for construction, maintenance, or service contracts funded by public money.
- Components: Includes base wage, fringe benefits, and overtime rates.
- Legal Requirement: Contractors must comply to avoid penalties and ensure eligibility for government contracts.
1. What is a prevailing wage?
It’s the typical wage paid to workers in a specific area for a specific job, mandated on public projects.
2. Who sets prevailing wage rates?
The U.S. Department of Labor or state labor departments based on wage surveys.
3. Which projects require paying prevailing wages?
Public construction and service contracts funded by federal, state, or local governments.
4. What happens if a contractor doesn’t pay prevailing wages?
They may face fines, contract termination, or disqualification from future contracts.
5. How are fringe benefits treated in prevailing wages?
They must be included as part of the total compensation and can be paid directly or via benefits.
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