Prevailing wage is imposed when:
1. A state, municipal, or local agency administers public funds for works of improvement which exceed $1,000; or,
2. Certain lease arrangements where a building is privately owned, and:
A. A public entity leases 50% of the space in the building before construction begins; OR
B. The building is built in accordance with plans and specifications provided by the state or public entity with the intent that the public entity will lease 50% or more of the building; or,
3. Privately funded projects receiving certain public assistance. Certain types of residential and housing projects.
There are a limited number of exceptions when prevailing wages do not apply to what is otherwise clearly a public works construction project:
Charter City Exemption: A Charter City may exempt a public works project within the City Limits from prevailing wage requirements if 100% of the funding comes from local City funding sources (no County, State or federal funding). LCP Exemption: Small projects may be exempted from prevailing wages if an entity has an approved Labor Compliance Program (LCP) covering ALL public works projects (Labor Code 1771.5) – $25,000 or under for new construction, and $15,000 or under for demolition, rehabilitation, maintenance, or repair.
Any time a project is exempt from prevailing wages, the awarding agency is required to notify the contractor of the exemption in writing. A contractor should always presume that construction work led by a State or local agency for more than $1,000 IS subject to California Prevailing wage requirements. A project does not need to be formally bid for prevailing wage to apply.
Example: A School District which issues a purchase order for $1,500 worth of plumbing repairs triggers prevailing wage requirements.
The information above is brought to you by: Deborah Wilder: “What Every Contractor Should Know About Prevailing Wages”