What Is Prevailing Wage?

For California, it is found in California Labor Code Sections 1720-1861

For Federal Law it is found in 40 U.S.C 276 Onwards

For contractor is is:

1) A record keeping nightmare;
2) It requires contractors to pay unreasonably high wages that make it near impossible to earn a profit on competitively bid contractsPrevailing Wage Law

When is a contractor required to pay employees prevailing wages?

In any public works contracts. Public works contracts are defined as construction, altercation, demolition, installation or repair work, design, installation, and preconstruction work done under contract and paid for in whole or in part out of public funds EXCEPT work done directly by a public utility company, California Labor Code Section 1720. However, work done for irrigation, utility, reclamation, and improvement districts are covered. The laying of carpet and construction cleanup is also covered. Thus, the coverage of what constitutes a public works contract for which prevailing wage must be paid is not limited to trades in which construction licenses are issued.

Has your employer been vague, or not answered whether you are working on a prevailing wage contract? Call our California prevailing wage lawyers at 1-877-525-0700 to see if you are owed prevailing wages.

How is it determined whether the construction project is a public works contract?

Public works contracts are those funded in whole or part by the payment of money or the equivalent of money by the state or a political subdivision. This money may come from construction bonds, or be loaned. Examples of political subdivisions include: airports, fire stations, local school districts, police stations, roads, the California State University System, the California Community College System, and Regents of California.

Assume prevailing wage is due if the construction project involves a courthouse, highway, library, prison, city, county, and state buildings are always public works contracts.

Privately owned property is subject to prevailing wage if upon completion of the construction project 50% or more it will be leased to the state or a political subdivision. This must be known at the time of construction because there is either a lease, or the government has given specifications about how they want the property to be designed or built. Low to moderate income affordable housing projects paid solely through money from the Low and Moderate Income housing Fund established by California Health and Safety Code Section 33334.2 or 33334.3, according to California Labor Code Section 1720©(4), are not supposed to constitute projects paid for in whole or part through public funds. Projects merely subject to tax credits are also supposed to be exempt.

There are more unusual exceptions that apply to self-help housing projects, or homeless housing found in California Labor Code Section 1720©(6) Private residential projects built on private land are subject to prevailing wage if the project is built pursuant to an agreement with a state agency, redevelopment, or local public housing authority. Query: is a new residential subdivision subject to prevailing wage if it is built in agreement with the Coastal Commission e.g. Seabridge/Westport Marina in Oxnard between 2002-2009 because the housing development abuts a new waterway flowing into the Pacific Ocean?


In gray areas the Department of Industrial Relations will make determinations whether a specific construction project is subject to prevailing wage. There are many examples during the last ten years in which prudent developers, with the help of law firms, made such inquiries to the Department of Industrial Relations. If you wish to research opinion letters from the Department of Industrial Relations when such requests were made, see: https://dir.ca.gov/OPRL/PWDecision.asp. Many of these examples involve senior housing projects built by private developers utilizing government funding. Other common examples include redevelopment districts.

Firm Head, Karl Gerber, has handled many prevailing wage lawsuits including class actions and individual cases on behalf of employees. Call 1-877-525-0700 to see if you are owed money for prevailing wages.

We have offices in Bakersfield, downtown Los Angles, Gardena, Oxnard, Riverside, Sacramento, San Diego, San Francisco, San Jose, Sherman Oaks, and Tustin.

Some of our prevailing wage recoveries for clients are:

  • $350,000 for a few heavy equipment operators
  • $200,000 for job employer claimed was not prevailing wage
  • $200,000 for prevailing wage and PAGA violations