PREVAILING WAGES DISPUTES
Public works contractors and subcontractors located in California must comply with prevailing wage requirements enforced by the California Department of Industrial Relations. Deviations from these requirements are unlawful, and underpayment of employees has the potential to lead to disastrous wage and hour litigation for employers and business owners. Unfortunately, making appropriate prevailing wage determinations can be a complex and challenging task, even for knowledgeable and experienced contractors.
How is Minimum Wage Different?
There are subtle yet critical distinctions differentiating minimum wage from prevailing wage.
Minimum wage is the lowest acceptable rate at which employees may be paid, with rare exceptions for employees who are categorized as “exempt.” The federal minimum wage, currently $7.25 per hour, is uniform across all industries and professions. Minimum wage in California is currently $9.00 per hour.
While tipped employees such as servers and bartenders may be paid a lower minimum wage in other states, California law lacks this provision and prohibits employers from paying tipped employees less than minimum wage. Where conflicts arise between state and federal minimum wage, employers must pay the higher of the two rates.
Prevailing wage is generally described as the minimum rate of pay with which vendors and contractors must compensate employees who work on public works projects. California defines prevailing wage as “the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area.” If the majority of workers are not receiving the same rate, then prevailing wage is determined by “the single or modal rate being paid to the greater number of workers.”
In stark contrast to the minimum wage, prevailing wage (1) can vary dramatically depending on the recipient’s occupation, and (2) is pertinent exclusively to public works employees and employers. Prevailing wage can be traced back to various federal acts dating from the early 1930s – particularly the Davis-Bacon Act of 1931 – which were collectively designed to prevent contractors from slashing employee pay in order to outbid one another.
Prevailing wage requirements apply to the following types of employees in California:
- Construction Site Drivers
- Drywall Installers
- Hazardous Materials (Hazmat Workers)
- Metal Roofing Systems Installers
- Stator Rewinders
- Telephone Installation Workers
- Telecommunications Technicians
- Tree Trimmers
Note the above is not an exhaustive list.
California Prevailing Wage Rate Determination
Unfortunately for employers, there is no single standard establishing one uniform prevailing wage in California. In fact, interpreting the appropriate wage which employees must be paid can become exceptionally complex as the definition of a “public works project” continues to shift and expand – particularly because prevailing wage rate determinations vary across municipalities and moreover, are subject to periodic updates.
Prevailing wage rate determinations are established by the California DIR, the director of whom issues county-specific determinations twice per year: first on February 22, and then a second time on August 22. Different wage rates are subject to different expiration dates. If a given determination fails to account for “a particular craft, classification or type of worker,” a request for a more specific determination must be made within 45 days.
The increasingly blurred line between private projects and public projects often poses a challenge for contractors attempting to navigate California labor laws. The DIR divides public works projects into two categories:
- Commercial Projects – These are projects which involve:
- Residential projects which exceed four stories (including apartments and single-family homes).
- All non-residential projects, “including new work, additions, alterations, reconstruction and repairs.”
- Residential Projects – These are projects which involve apartments and single-family homes up to four stories. Employees working on residential projects must be paid the prevailing wage if the project is being fully or even partially paid for by public funds.
If you’re a public works contractor in California, prevailing wage requirements affect you. It is critical to have a clear understanding of your rights and responsibilities in order to minimize your chance of being targeted by a lawsuit.
Alternatively, if you are a public works employer and have already been served with a lawsuit, or if you are simply concerned about your current business practices and wish to reduce the risk of inviting an expensive and time-consuming lawsuit, you need dedicated legal support from an aggressive attorney. The employment law attorneys at Bellatrix PC have extensive experience defending contractors and vendors against employee lawsuits related to wage and pay disputes, and have obtained favorable outcomes for numerous clients across an array of industries.
To schedule a confidential legal consultation, call Bellatrix PC today at (800) 449-8992.