Prevailing Wage: What do I need to Know?
If you’re thinking about working on a state or federally funded project, it’s important to understand the language. State prevailing wage is required on state-funded projects. Federal prevailing wage is required on federally funded projects. Some projects have state AND federal funding, so both sets of laws must be followed. Local ordinances will point to one or the other, but typically the state prevailing wage regulations act as a contractual obligation. Project Labor Agreements (PLA) are contract-driven, so read the contract provisions carefully to know what you are agreeing to. Some PLAs will only allow union labor to work on the project.
Prevailing Wage on State Projects
Journeyworkers and unlicensed registered electricians must be paid the prevailing wage rate. Individuals in a registered apprenticeship program—like our ETN of MN program—will be paid the rate as specified in their apprenticeship agreement. Most local projects are handled this way, but consult the contract for any other provisions.
Prevailing Wage on Federal Projects
Journeyworkers and unlicensed registered electricians must be paid the prevailing wage rate. Individuals in a registered apprenticeship program must be paid a percentage of the federal base rate or the agreement base rate—whichever is higher. If the apprenticeship agreement doesn’t address fringe benefits, the apprentice must be paid according to the fringe package listed on the federal wage determination. Otherwise, the Federal Department of Labor will enforce any benefit plan listed in the apprenticeship agreement.
It is very important to maintain appropriate ratios as well as supervision of your apprentices. Improperly supervised apprentices require full prevailing wage payment. Keep this in mind when sending workers out on errands or if a licensed electrician needs to take leave.
How do I Pay My Workers Subject to Prevailing Wage?
For your workers who must be paid the prevailing wage rate, the prevailing wage certification/determination is key. On the certification, you will find a base rate, a fringe rate, and a total rate. You can pay your worker any combination of the base rate and the fringe rate as long as it equals the total rate. Fringe benefits include an employer’s contribution to health and welfare benefits, pension and 401K benefits, paid leave, and apprenticeship costs. If payments are not going to a third-party administrator, the benefits must be communicated to your workers in writing. This document must be an enforceable commitment to provide promised benefits.
Where do I Find the Prevailing Wage Rates?
The wage rates should be incorporated into the advertisement specifications. The contracting authority is required to include the prevailing wage rates. If you are a subcontractor, the contractor that hired you should provide you with the rates. If they don’t, ask for them. Do not go to DLI’s website for wage rates. Wage rates change, and some design/build projects may have wage certifications from previous years as a contract requirement. Always go to the contract for the appropriate rates.
What Determines Prevailing Wage Rates?
The Minnesota Department of Labor and Industry performs a survey annually. The wage rate is determined by the most commonly paid wage for a given labor class for a given region. This is called a modal calculation. Modal calculation strongly favors union participation because all union electricians are paid the same, but a merit shop can certainly prevail if they are performing the lion's share of the work in their area.
Surveys are project specific. A contractor can submit a survey for every project they worked on over the past year. Survey invitations are typically sent at the beginning of April and are due within 60 days. Federal rates are also calculated by survey, but there may be 15 years between survey periods.
Special Prevailing Wage Overtime Provisions
There are additional overtime requirements on a state prevailing wage project. Overtime is calculated as time and a half of the base rate listed on the certification plus the fringe rate for every hour of work. If all hours worked in the week are on the prevailing wage project, time and a half the regular rate of pay is still a federal overtime requirement. This is a bit different from the time and a half regular rate of pay for the week that the Federal Fair Labor Standards Act requires. Overtime must be paid after 40 hours a week or 8 hours a day. This means that if an individual works one 10-hour day, they must be paid 2 hours of overtime, even if they don’t exceed 40 hours a week.
If an individual is working both long days and long weeks, determine the amount of overtime required using the 8-hour rule and the amount of overtime required using the 40-hour rule. Pay the amount that is most beneficial to the worker. No pyramiding of overtime is required.
Federal prevailing wage requires overtime after 40 hours of work in a week but does not require overtime for long days.
How Do I Submit Certified Payroll?
Regarding the submission of certified payroll, list all workers on the project, even owners and apprentices. Owners must be paid the prevailing wage, at minimum. Unlicensed registered electricians must be paid the prevailing wage. ETN of MN participants must be paid as previously discussed. Apprenticeship standards will be enforced. If the apprenticeship agreement doesn’t address the fringe rate, the full fringe rate on the federal certification must be paid. The base may also be changed to federal certification if it is higher than the base on the original apprenticeship agreement.
List their daily hours and the wages paid. List the amount paid into the fringe programs and their standard deductions. On the second page, which is the Certification of Compliance, there’s an opportunity to further explain fringe packages and provide third-party administrator contact information. The certified payroll should be submitted by an officer or owner of the company. It’s important to be complete and truthful on your certified payroll submissions. Incomplete or erroneous submissions could lead to a time-consuming audit and potential violations. Fraudulent information could result in penalties and even criminal charges.
Prevailing Wage and Apprenticeship
Along with all the other benefits of a registered apprenticeship program, an apprentice in an authentic registered apprenticeship program is not subject to prevailing wage determinations on public projects. Instead, their wages are governed by their apprenticeship agreement. As such, they can be paid the wages listed in their apprenticeship agreement as long as they’re performing work under that agreement and being supervised properly as governed by the agreement.
The Electrical Association is Here to Help!
We understand that prevailing wage can be confusing to navigate, especially on your first few projects. Sometimes even contracting authorities are confused about requirements! We offer a consulting package for members who need assistance. It’s ideal to get all your prevailing wage questions answered before you enter into a contract so you can bid it appropriately. We also provide additional guidance to any members currently participating in ETN of MN regarding how to best utilize their apprenticeship program and maintain compliance.
Need Help with Prevailing Wage?
We provide customized consulting services to meet your needs. Please contact Michelle Dreier for pricing at (612) 252-2186 or (800) 829-6117!