Prevailing Wage
Minimum wage rate for construction and service workers on government-funded projects, set by the Department of Labor.
FAQs
What is a certified payroll and when is it required?
A certified payroll is a weekly payroll report that contractors and subcontractors on covered federal and federally assisted projects must submit to the contracting agency, certifying that each employee was paid at least the applicable prevailing wage rate and fringe benefits. Standard format is Form WH-347 (or equivalent). The report shows each worker's name, classification, hours worked each day, total hours, rates of pay, gross wages, deductions, and net wages. The contractor also certifies under penalty of law that the information is correct and complete. Certified payrolls must be maintained for 3 years after project completion. False certifications can expose contractors to criminal fraud liability and False Claims Act qui tam suits.
How are prevailing wage rates determined?
The Department of Labor determines prevailing wages through surveys of wages paid to workers in specific job classifications in specific geographic areas (counties or metropolitan statistical areas) for similar construction work. When a majority of workers in a classification in a geographic area are paid the same wage, that wage is the prevailing rate. When no majority exists, a weighted average is used. Wage surveys are conducted periodically, and resulting determinations are published in the Federal Register. Contractors must use the wage determination in effect at the time of bid for fixed-price contracts; the DOL may issue new determinations for longer-term contracts. Local unions often formally protest DOL wage surveys to push rates higher.
What happens if a contractor pays below prevailing wage?
Contractors who pay below prevailing wage on covered contracts face: back wage assessments requiring payment of the difference between prevailing wage and wages actually paid for all covered workers; potential contract termination; debarment from federal contracting for up to three years; and False Claims Act liability if false certified payrolls were submitted (triple damages plus attorneys' fees in qui tam suits). Workers can also file private lawsuits for back wages under applicable state prevailing wage laws. Investigations are initiated by DOL Wage and Hour Division investigations, worker complaints, union referrals, or qui tam suits by whistleblowers with inside knowledge of underpayment. Construction and service contractors on federal projects should treat prevailing wage compliance as a significant legal obligation.