On many federally or state-funded projects, an employer must pay their employees the “prevailing wage” (including benefits) for their hours of work. Prevailing wage laws are intended to prevent government funds from being used to undercut local area wage standards. The prevailing wage rate depends on the type of job being performed (e.g., electrician, janitor, paralegal) as well as the state and county where the work is performed, and whether the project is funded by federal, state or local dollars.
Federal Davis-Bacon Act and Construction Projects
On many government-funded construction projects – such as highway or transit improvement, school or housing construction – government contractor employers must pay the prevailing wage according to the trade of work performed. In metropolitan areas, the prevailing wage is often equal to the wage and benefit package that a union-represented employee would receive, even if the worker on the project is not represented by a union. In many cities and counties, this benefit package can be quite high. The required wage and benefit packages are listed on Wage Determinations published by the U.S. Department of Labor’s Wage and Hour Division or equivalent state agency. Sometimes employers completely fail to pay any prevailing wage to an employee. Other times, an employer will pay an employee performing electrician or carpenter work at the lower-paid laborer rate. Sometimes, employers falsely certify to the government that they paid prevailing benefits (such as retirement or healthcare) on behalf of the employees, when that was not the case. In any of these situations, there may be a violation of the Davis-Bacon Act or equivalent state law.
Service Contract Act
Under federally-funded service contracts, workers employed by government contractors must be paid the prevailing wage and benefit for the occupation of work being performed. Covered service occupations truly runs the gamut: from cleaning or janitorial work to computer programming or engineering, to accounting or law. The Wage and Hour Division’s “SCA Directory of Occupations” contains a description for each classification of work. Similar to the construction context, the Department of Labor also publishes Wage Determinations which list the minimum required wages and benefits for each type of employee. Many times, employers misclassify their SCA-covered workers at a lower-paid classification, or even pay no prevailing wage at all.