Published date: 02/19/2026
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
Hello! We work in California, and to my understanding, when performing work on a Davis-Bacon project, we’re required to pay the higher applicable wage—often the California prevailing wage rates. Recently, a client told me their project is a “private Davis-Bacon” project and that California DIR wage rates do not apply, meaning we should pay lower wages. This seems to contradict everything I’ve read. Can you clarify whether this is correct?
Answer: When a public works construction project is covered under both California and Davis-Bacon prevailing wage requirements, the higher of both sets of wages must be paid. However, the rules are different for federal projects covered under the Davis-Bacon Act taking place in California. For example, projects that are in direct contract and management with any federal agency, such as the US Army Corps of Engineers, would fit this situation. In these cases, state prevailing wage laws cannot be applied to these projects (California Public Works Manual 2.5.2).
When a project is “private”, the owner or client can in certain cases, require the Davis-Bacon Act regulations to be paid on the project. In these instances, the full regulatory laws need to be followed for the project. In California, however, there is a regulation in the DIR that certain private construction projects can be covered for prevailing wages, such as private development that leases over 50% of a public space. Since these projects are typically not managed by a federal agency, these private projects would require California prevailing wages.
It is interesting the client is referring to the project as “private Davis-Bacon.” I would review the prime contract and look for the labor laws that are referenced in the contract. I would verify not only who is the awarding body/owner is but also find out where all of the funding for this project is coming from.
Question
We strictly pay California prevailing wage. I’m getting pushback from a labor compliance agency regarding how we calculate the vacation fringe for our bona fide, fully vested vacation plan administered through our company. We have always used 2,080 hours as the divisor, but I’m being told we can only take credit for vacation benefits based on actual payments made to employees. Can you clarify whether something has changed in this area?
Answer: Let me preface this by stating I am not an attorney and, in my humble opinion, any response or dispute sent to the labor compliance agency should be run past your legal team. As of January 1, 2026 the Assembly Bill 889 (AB889) was made effective in California which clarified the annualization requirements for fringe benefits. Using 2,080 hours as the divisor (40 hours × 52 weeks) remains an accepted annualization method for employer administered benefit plans, including vacation, when the benefit is available to employees on both public and private work and is not limited solely to public works hours.
Where labor compliance agencies often push back—and where the confusion usually arises—is documentation and timing, not the divisor itself. DIR and awarding agencies increasingly scrutinize whether:
• The vacation plan is bona fide, fully vested, and enforceable
• The benefit is earned and available to the employee, not speculative
• The employer can substantiate the actual cost incurred or liability accrued under the plan
• The hourly fringe credit claimed does not exceed the value of the benefit actually provided over the annualized period
Agencies sometimes phrase this as “credit only for actual payments,” but in practice this means actual employer cost or accrued liability under the plan, not that vacation must be paid out weekly or only when used. Properly accrued vacation under a fully vested plan remains creditable, provided records support the calculation.
Annualization continues to be based on all hours worked during the year, including both public and private work, and fringe credit must reflect the employer’s actual cost or properly accrued liability under a bona fide, fully vested plan. If needed, it is reasonable to ask the labor compliance agency to cite where they are getting their information from so you can properly respond to the dispute.
Question
We have a salaried foreman working on a prevailing wage project. I’m unsure whether he is entitled to receive both his regular salary and the prevailing wage hourly rate, or if he should only be paid the prevailing wage hourly rate. Can you clarify how this should be handled?
Answer: First thing I would like to say is, it depends! To begin, you will need to clarify which prevailing wage laws apply. For example, if the project is covered by Davis-Bacon rules, the Salaried Foreperson whose duties are primarily administrative, executive, or clerical would typically be exempt from prevailing wage requirements (think scheduling work crews, inventory and tool management, onboarding new team members and so on). However, if the salaried foreperson performs more than 20% of their time during a workweek to laborer or mechanic duties, their time spent on manual labor must be paid at least the applicable prevailing wage rate.
It is also important to note that the salaried foreperson will be required to be paid for all hours worked and not just the 40 hours that is listed in their salary. Here are some numbers: If your Foreman worked 10 hours performing manual work out of a 45-hour week, this meets the 20% threshold, and the foreman must be paid at least the applicable prevailing wage rate for the 10 hours. If their regular salary meets or exceeds the prevailing wage rate, fantastic! However, you may need to consider if any overtime pay is also due.
In contrast, state prevailing wage laws may be different. For example, California requires salaried employees who perform labor on a public works project are required to be paid not less than the applicable prevailing wage rate for ALL hours which the labor is performed. Contractors can determine if the employee’s regular salaried amount satisfies the prevailing wage rate, but they must also consider the payment of any overtime, Saturday, Sunday, and Holiday premiums (California Public Works Manual 2.3.1). Again, it is important to note that the employee is required to be paid for all hours worked on public works projects.
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