Understanding Wage Rates Under California’s Prevailing Wage Law

8-16-17
Richard E. Donahoo

California’s Prevailing Wage Law requires contractors to pay specific wage rates on public works projects. The rates are published by the State’s Department of Industrial Relations (“DIR”). The published rates include many different prevailing wage rates, which are based on the geographic location and the type of work that is performed. The rates are organized and published by the DIR in General Prevailing Wage Determinations, which set forth the rates for worker classifications (e.g., Laborer, Carpenter, Plumber, Operator). The specific rates applicable for each craft, classification, or type of work, and for each geographic locality throughout the state, can be located on the DIR website at http://www.dir.ca.gov. Understanding how to read a General Determination is important to understanding the required rate.

Prevailing Wage Determinations

California Labor Code (section 1774) states that workers must be paid not less than the “specified prevailing rates of wages” to all workmen employed in the execution of the contract. These specific rates are found in the General Determinations, which correspond to the type of work actually performed by individual workers. As explained in the State’s Public Works Manual,

“A worker’s title or status with the employer is not determinative of an individual’s coverage by the prevailing wage laws. What is determinative is whether the duties performed by the individual on a public works project constitute covered work. An individual who performs skilled or unskilled labor on a public works project is entitled to be paid the applicable prevailing wage rate for the time the work is performed, regardless of whether the individual holds a particular status such as partner, owner, owner-operator, independent contractor or sole proprietor, or holds a particular title with the employer such as president, vice-president, superintendent or foreman. For example, a “working” foreman or a “working” superintendent – one who performs labor on the project in connection with supervisorial responsibilities – is entitled to compensation at not less than the prevailing rate for the type of work performed.”

The Basic Hourly Rate vs Total Rate

General Determinations include both a Basic Hourly Rate and the Total Hourly Rate for each location and classification. Employers are required by California law to pay employees the Basic Hourly Rate as the minimum hourly wage for all hours worked. The Total Hourly Rate includes the Basic Hourly Rate and additional compensation for “employer payments” which are typically fringe benefits such as health insurance, vacation, pension and other “fringe benefits.” Employers can choose to pay fringe benefits directly to employees as part of their wages or can obtain an offset for the employer’s “actual cost” of the benefit provided to the employee that was paid into a bona fide health, pension, vacation, or fringe benefit plan. Either way, the total compensation paid by the employer to the employee must match the Total Hourly Wage set by the Director in the General Determination.

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