Published date: 10/23/2025
Aliecia Taormina, CCEP, MCA has over 20 years of experience in construction (including a role as a Senior Compliance Manager of a Fortune 300 contractor), accumulating extensive prevailing wage and Davis-Bacon knowledge over her career.
Question
When a wage determination is added to a modification on a federal contract, do the updated wages apply to just the modified work or the entire contract (remaining work) going forward?
Answer: In my experience, if a change order is issued on a project with a new wage determination, then that covers all work going forward, unless the contract language specifies that it is only for one type of work. Which I’ve personally never seen – this doesn’t mean it hasn’t happened. To cover your bases, make sure to ask your Prime or project owner – and ideally in writing (this is just good practice in general).
Question
Are fringe benefits on a prevailing wage project subject to federal, state, local, and SS tax withholding? Has this recently changed so that it is now taxable? We don’t have a plan we pay into and we pay all the fringes (without tax withheld) to our employees by check with the exception of a Training Fund. We pay that to the California Apprenticeship Council.
Answer: In general, fringe benefits provided in the form of cash or cash equivalents are considered taxable compensation under both Federal and California state tax laws, unless a specific exclusion applies. Here is a bit more detailed review of what is considered taxable and non-taxable income.
- Federal Tax: The IRS treats most fringe benefits as taxable income unless they fall under a qualified exclusion (e.g., health insurance, pension, or vacation/holiday). Cash or cash-equivalent benefits are always taxable, regardless of their intended use.
- California State Tax: California generally conforms to federal tax treatment of fringe benefits. Therefore, cash payments or reimbursements made directly to employees are subject to state income tax, unemployment insurance (UI), state disability insurance (SDI), and other applicable payroll taxes.
Question
If we perform work on projects in which the owner or prime contractor provide multiple prevailing wage determinations covering multiple different construction types, but our scope of work in particular only falls under one construction type (highway-heavy, for example), should we ONLY be meeting the highway-heavy prevailing wage, or do we need to be evaluating each wage determination and meeting the highest total package rate for each trade classification represented across the different construction types?
Answer: Quick disclaimer: the original question as it was submitted here (as well as the answer provided) had to be altered to fit the intended format of this series. In truth, it might warrant a more in-depth Q&A discussion on a case-by-case basis, because as we all know, labor compliance can be nuanced. I will take a stab at a more high-level response to this question, but I would encourage anyone wanting more in-depth discussions around their specific situations to attend one of our live, in-person events (like our semi-annual Ignite Conference or our regional Spark Seminars).
As many of us already know, there are some things contained in the Davis-Bacon and Related Acts and DOL regulations that are not always as clear as we’d like them to be. From what’s stated, the applicable prevailing wage determination for a contractor is based on the type of construction work being performed on the project. The DOL defines construction types (e.g., building, highway, heavy, residential)and issues separate wage determinations for each (most of the time). For states publishing their own wage determinations, there are instances where one wage determination can include multiple construction types (a couple examples would be the CA20250018 which includes Building, Heavy, and Highway; or NY20250003, which is all four construction types!) According to the DOL’s guidance:
- The DBA requires the DOL to determine prevailing wage rates for inclusion in covered contracts based upon those paid to ‘corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work.
The inclusion of multiple determinations by the Agency (Client) is often done to cover various types of construction on the project, not to require all contractors to evaluate and apply the highest rate across all determinations. HOWEVER, if there are any questions at all regarding which wage determination the scope of work is applying to, it is the responsibility of the Prime Contractor to get clarification from the Agency (or Client, if private) so the contractors can pay their employees the appropriate wages based on the classifications.
I tell you all of the information above, so you can evaluate the scope of work and what type of construction that your scope falls under for each individual project. Even if your scope has typically fallen under the highway or heavy wage determinations in the past, there are instances in which the work could fall under one of the other types of construction as well. The DOL clarifies that:
- When construction projects subject to Davis-Bacon Acts have work in more than one category of construction, wage determinations from other categories must also be incorporated when the work in the other category is substantial.
I would highly recommend getting direction from the Prime to clarify what type of construction that your scope of work falls under if there is any confusion.
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Have a burning question about labor compliance that you’ve been eager to ask? Submit it anonymously to our live submission form and you might just see it answered in a future entry of our monthly Ask the Expert series! You can also check out our past entries here.
Want an opportunity to get questions like these and other topics answered in person? Check out our events page for our educational Spark Seminars. These are perfect opportunities for you to hear from industry experts and expand your prevailing wage knowledge.
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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.
