Prevailing wages in California: A contractor’s guide

More than half of U.S. states have their own prevailing wage laws, and California is one of them. That means public works contracts come with strict pay rules for different job classifications, as well as special certified payroll reporting requirements to prove compliance.

There’s no single California prevailing wage rate that applies to each and every job. The details vary by trade and county, and those details change twice a year. In this guide, explore prevailing wages in California, how to determine rates for different projects, and the most common violations to watch out for.

What is prevailing wage in California?

While many states have no prevailing wage laws of their own, California maintains its own detailed system, California maintains its own detailed system, starting with the definition of public works in California Labor Code §1720 and the wage setting rules in sections 1770, 1773, and 1773.1

As everywhere else, prevailing wage laws in California set the minimum wage and fringe benefit rate employers are required to pay workers building public works projects. A public works project is any job funded at least in part using public funds.

Prevailing wages apply to a laundry list of tasks, including:

• Construction
• Demolition
• Installation
• Repair
• Maintenance
• Pre- and post-construction activities related to the project’s scope, such as inspection and cleanup

Just because a project is subject to California prevailing wage requirements doesn’t exempt it from federal ones. If a project receives a mix of funding from federal as well as state or local sources, federal Davis-Bacon requirements may also apply in parallel.

Compliance with any form of prevailing wages, whether state or federal, depends on meticulous worker classification and time tracking. Contractors need to conduct diligent subcontractor oversight and certified payroll reporting.

How to find the right California prevailing wage rates

How much is prevailing wage in California? The answer depends on a few different variables, such as trade, county, and project timing. That means contractors have to do some legwork before bidding or starting on a job. For each worker:

1. Visit the official prevailing wage determination page: Navigate to the California Department of Industrial Relations (DIR) general prevailing wage determinations page. Then, choose the determination type needed (e.g., journeyman determinations or apprentice determinations).
2. Identify the job classification: Determine which type of job classification applies to the employee, such as Laborer or Carpenter.
3. Find the rate determination: Follow the instructions on the page to find the rate determination for the role. Some classifications are statewide, some specific to Northern or Southern California, and some tied to particular counties. For example, if a contractor is looking for the rate for journeyman carpenters in San Francisco, they’d find it in “Step two (A) Northern California.” Clicking the “Carpenter” link opens a PDF showing that the basic hourly rate in San Francisco Bay Area (“Area 1”) counties is $67.01. The total hourly rate (including fringe benefits) is $104.09.
4. Check shift differentials, predetermined increases, and special requirements: Review the document for additional pay requirements that affect total compensation, such as overtime rates, shift differentials, and travel allowances.
5. Look for predetermined increases: Some determinations come with scheduled pay increases that take effect mid-project. To check for predetermined increases, return to the previous page (Step two (A) Northern California in our carpenter example) and check the “Predetermined Increase” column. If there’s a scheduled increase, there will be a link to a document here explaining the details.
6. Record the wage rate determination number: Locate and save the determination number from the top-left corner of the rate table PDF for the job classification. For a journeyman carpenter, the number is “NC-23-31-1-2025-1.”

What are prevailing wage rates in California based on?

DIR sets prevailing wage rates using union collective bargaining agreements for different trades and counties. When there’s no single rate to rely on, DIR draws on other wage data to home in on a suitable rate. Prevailing wage rates also change twice a year, every year.

While the rate in effect upon bidding or contract award usually applies for the duration of the project, many determinations come with predetermined rate increases. If a scheduled rate increase happens in the middle of a project, contractors must meet that increase.

Other factors that influence prevailing wage rates include:

• County and geographic region: Rates for the same trade can vary significantly by location. For example, an Area 1 Carpenter in Northern California earns a basic hourly rate of $67.01, while an Area 4 Carpenter makes $59.78.
• Trade classification and craft: Laborers don’t make as much as skilled tradespeople like Carpenters. Every type of work has its own wage determination and classification requirements.
• Experience level: Different levels of experience are also compensated differently. An apprentice makes much less than a journeyman.
• Fringe benefits and employer contributions: Benefits like healthcare and pension plan contributions count toward the total wage package.
• Overtime and holiday rates: California law contains provisions regarding overtime and premium pay for hours worked during holidays, weekends, or at night.
• Travel and subsistence requirements: Some job classifications add rules about travel pay or subsistence obligations to cover any commuting, meals, and lodging required.

California prevailing wage requirements

To maintain full compliance, contractors building public works projects in California must:

Register as a contractor with DIR

Contractors must register with DIR before performing or even bidding on public works projects, on penalty of fines, delays, or disqualification from this type of work in the future.

Pay the correct prevailing wage and fringe benefits

Contractors have to be diligent about applying the correct worker classifications and keeping track of hourly rates and fringe benefits for every crew member. Getting this wrong can lead to back wages and non-compliance penalties, as well as potentially costly tax mistakes. It can also mean payroll tax and workers comp premium errors, since fringe dollars paid as cash are taxed differently than fringe dollars paid into a benefit plan.

Submit certified payroll records

Public works contractors in California are required to keep pristine payroll records and process them at least monthly, though weekly is a more common practice. They also have to submit certified payroll reports according to the awarding body’s guidelines to demonstrate compliance. Reports must go in at least monthly, but most often weekly. Get job classification wrong here and you are looking at a corrected certified payroll filing, and possibly a call from the awarding body.

Who do prevailing wages apply to in California?

Prevailing wage compliance responsibilities ripple across three main parties.

1. Prime contractors

Prime contractors hired directly by a public agency are responsible for overall compliance and oversight across every public works project. This role comes with real liability. A prime contractor can be held responsible for a subcontractor’s underpayment or payroll reporting mistakes.

2. Subcontractors

While prime contractors bear the brunt of the responsibility, subcontractors still have an independent obligation to comply with prevailing wage laws and certified payroll requirements.

3. Awarding bodies

Public entities such as local governments, school districts, and state agencies that award public works contracts often write prevailing wage requirements right into the contract. Some take it a step further by running their own Labor Compliance Programs (LCPs) to monitor and enforce compliance directly.

California prevailing wage exceptions

Not every public works project built in California is subject to California’s prevailing wage laws. Below are some of the exceptions:

Projects below the monetary threshold

California prevailing wage laws typically only apply to public works projects of over $1,000. There may be higher thresholds if the awarding body runs an approved LCP: $25,000 for construction and $15,000 for alteration, demolition, repair, or maintenance.

Federally funded projects under Davis-Bacon requirements

If a California public works project is funded exclusively with federal funds, only federal Davis-Bacon prevailing wage legislation applies. If funding comes from a mix of federal and state (or local) funds, both sets of laws apply, and contractors pay the higher determination for each job classification.

Private projects without qualifying public funding

Public works contracts are only subject to prevailing wage laws when they include at least some public funding or have public-use considerations. If a project is entirely privately funded, California prevailing wage requirements don’t apply.

Most common prevailing wage violations

With so many moving parts, it’s easy to make prevailing wage compliance mistakes. Here are some common errors to look out for:

• Underpayment: Underpayment can lead to back wages and financial penalties of up to $200 per day per worker. It can also negatively affect employee retention and potential debarment from future public works jobs.
• Misclassification of workers: Misclassifying employees throws off wage calculations, opening the door to underpayment and even audits.
• Failure to submit certified payroll records: Submitting certified payroll reports late or with incomplete or inaccurate information may result in additional penalties on top of those levied for wage violations.
• Overtime and holiday pay violations: Payroll liabilities and compliance issues follow when contractors incorrectly apply premium pay rules.
• Failure to pay training fund contributions: Contractors required to make apprenticeship and training fund contributions can get hit with penalties and back payments.

Take the stress out of prevailing wage compliance with Miter

When prevailing wage compliance breaks down, it’s often because rate tables and worker classifications live in separate systems from time tracking and certified payroll reporting. Those systems fail to talk to each other, and that disconnect repeats across jobs, multiplying the gaps.

The gaps are easy to bridge with the right software. Miter helps contractors with:

• Time tracking: Assign the right prevailing wage and fringe determinations to each job so workers are paid the correct rate according to their classification.
• Certified payroll reporting: Attach wage determination numbers directly to rates so everything flows into automatically generated WH-347 and California certified payroll forms. Then, submit directly to the California state portal.
• Fringe offsetting: Offset benefit contributions like healthcare and pension plans against the required fringe rate to avoid paying twice.
• Rate scheduling: Set predetermined rate increases in advance so mid-project rate step-ups kick in automatically.

Simplify prevailing wage management with Miter Payroll, and nail compliance with one-click certified payroll reports.