What You Need to Know About Wage Law in the US: A Complete Manual

Wage law is a key factor that influences the wages of construction workers in the US. As we approach the new year, the US wage landscape is changing rapidly, and prevailing wage laws have a significant impact on the industry.  Shaped by a complex web of federal and state regulations, prevailing wage laws play a pivotal role. This intricate wage system is crucial for both workers and employers to understand. In this article, we’ll briefly examine the historical development of minimum wage, delve into the prevailing wage landscape, and offer insights into the states enforcing prevailing wage laws along with their specific thresholds.

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 A Brief History of Minimum Wage in the U.S.

The foundation of minimum wage in the United States can be traced back to the Fair Labor Standards Act of 1938. This act laid the groundwork for the federal minimum wage. Over the years, this baseline wage has undergone revisions driven by economic factors and changes in the cost of living. In 2023, the federal minimum wage remains stagnant at $7.25 per hour, a rate that has remained unchanged since 2009.

A Decade of Change: Shifting Minimum Wage Landscape in Construction

Over the past decade, the construction industry has witnessed notable shifts in minimum wage regulations. These shifts impact the compensation landscape for workers. Various states have responded to economic changes and increasing living costs by adjusting their minimum wage laws. This has translated into a more competitive environment for attracting skilled labor in the construction sector. The adjustments aim to strike a balance between fair compensation for workers and maintaining the industry’s economic viability. In addition to state-specific changes, federal initiatives have also played a role in shaping minimum wage standards within the construction domain. The evolving dynamics highlight the ongoing dialogue between industry stakeholders, policymakers, and workers. It emphasizes the need for a responsive approach to wage regulations in the construction sector over the past ten years.

Minimum Wage State-Specific Wage Law Adjustments

Acknowledging the necessity for regionally tailored wage rates, many states have introduced their minimum wage laws, often exceeding the federal standard. For instance, states such as California and New York have set substantially higher minimum wage rates. New York is on track to achieve a $15 per hour minimum wage, while California already enforces a $15.50 per hour rate for all employers.

Prevailing Wage Laws Defined

In construction, prevailing wage laws establish the minimum wage for workers on federally funded projects. This ensures fairness in contractor bidding and helps guarantee equitable compensation for construction workers. These hourly wages and fringe benefits are determined by craft and location.

Prevailing Wage Law Federal Guidelines

At the federal level, the Davis-Bacon Act (DBA), Davis-Bacon And Related Acts (DBRA), and the McNamara-O’Hara Service Contract Act (SCA) are the primary prevailing wage laws. States and municipalities may have their own versions for state-funded projects, with the Department of Labor (DOL) or similar state organizations serving as the go-to source for information. A key federal law is the Davis-Bacon and Related Acts, administered by the U.S. Department of Labor for federally funded projects over $2,000. Contractors must adhere to locally prevailing wages and fringe benefits, determined by the DOL. This applies to federal and District of Columbia contracts, including “Related Acts” projects assisted by federal agencies. For prime contracts exceeding $100,000, overtime rates under the Contract Work Hours and Safety Standards Act apply for work beyond 40 hours a week, with potential additional coverage under the Fair Labor Standards Act. The Department of Labor (DOL) recently revised Davis-Bacon and Related Acts (DBA) regulations for the first time in nearly 40 years. Effective Oct. 23, 2023, the Davis-Bacon Act Final Rule aims to enhance compliance and guidance in the modern economy.

Key Wage Law Amendments:

• Re-Defining “Prevailing Wage”
  • Re-implements a three-step process for determining prevailing wages.
• State and Local Wage Rates
  • WHD Administrators can adopt DBA wage rates from state and local governments.
• Fewer Conformance Requests
  • WHD will identify more wage and fringe benefit rates in advance to reduce conformance requests.
• Determination Factors
  • The default area for wage determinations expanded beyond county to multi-county and state subdivisions.
• Recordkeeping
  • Revised requirements for keeping payrolls and basic records for at least three years.
• Fringe Benefits
  • Fringe benefits should be annualized, and credits allowed for apprenticeship programs.
• Other Key Takeaways
  • DOL can adjust non-collectively bargained rates based on the Employment Cost Index.
  • DBA standards apply at secondary construction sites.
  • Agencies must submit annual reports for projects under DBA wage determinations.
  • Specific projects like solar panels, wind turbines, and more are subject to DBA standards.
  • Clarity on DBA requirements for flaggers and truck drivers.
  • Material suppliers don’t fall under DBA standards.
  • Electronic signatures and certified payroll submission methods are permitted.
  • Compliance with apprentice wage standards is now required.

Hover over this interactive map

State Prevailing Wage Laws 2023: Dollar Threshold Amount for Contract Coverage

In 2023, several states uphold prevailing wage laws, each with its own set of thresholds. These laws play a pivotal role in maintaining fair labor practices, especially in publicly funded construction projects. States like California, Connecticut, Maryland, and New Jersey have established specific monetary thresholds for different types of construction projects, ensuring that workers receive wages commensurate with local standards.

States with Prevailing Wage Laws and Thresholds:

• Alaska
  • Threshold: $25,000
• California
  • Threshold: $1,000
• Colorado
  • Threshold: $500,000 for state-funded public projects; not applicable to Colorado Department of Transportation projects
• Connecticut
  • Threshold: $1,000,000 for new construction; $100,000 for remodeling
• Delaware
  • Threshold: $500,000 for new construction; $45,000 for alteration, repair, renovation, rehabilitation, demolition, or reconstruction
• Hawaii
  • Threshold: $2,000
• Illinois
  • No specified threshold
• Maine
  • Threshold: $50,000
• Maryland
  • Threshold: $250,000 with specific criteria met
• Massachusetts
  • No specified threshold
• Minnesota
  • Threshold: $25,000 where more than one trade is involved; $2,500 where a single trade is involved
• Missouri
  • Threshold: $75,000
• Montana
  • Threshold: $25,000
• Nebraska
  • No specified threshold
• Nevada
  • Threshold: $100,000; $100,000 for redevelopment project contracts
• New Jersey
  • Threshold: $2,000; $16,263; $50,000 (aggregate cost for maintenance and repair)
• New Mexico
  • Threshold: $60,000
• New York
  • No specified threshold
• Ohio
  • Threshold: $250,000 for new construction; $75,000 for remodeling
• Oregon
  • No specified threshold: major renovations considered public works if over $50,000; any project using $750,000 of public funds is a public work
• Pennsylvania
  • Threshold: $25,000
• Rhode Island
  • Threshold: $1,000
• Tennessee
  • Threshold: $50,000 (only for highway construction; no prevailing wage on non-highway construction)
• Texas
  • No specified threshold
• Virginia
  • Threshold: $250,000 or more, depending on specific criteria
• Vermont
  • Threshold: $100,000 or at least 50% funded by a capital construction act and costs more than $200,000
• Washington
  • No specified threshold
• Washington, DC
  • Threshold: $100,000; federal Davis-Bacon rates apply to contracts exceeding $2,000 for construction of public buildings and public works
• Wyoming
  • Threshold: $100,000

States Without Prevailing Wage Laws

Notably, twenty-four states do not have prevailing wage laws as of 2023. These states include:

The Benefits of Prevailing Wage Software for the Construction Industry 

As the construction industry progresses into 2024, understanding the varied prevailing wage laws and thresholds across states is crucial. Whether a state mandates prevailing wage laws or not, stakeholders must navigate the complexities to strike a balance between fair compensation for workers and maintaining competitiveness within the construction sector. It is important to stay informed, adapt to changes, and ensure a fair and prosperous future for the construction industry. Incorporating prevailing wage software into your construction company’s operations is essential for seamlessly managing complex tasks tied to Davis-Bacon laws and minimum wage regulations. This specialized software not only navigates the intricacies of prevailing wage requirements efficiently but also ensures compliance with evolving minimum wage standards. By automating payroll processes, recordkeeping, and reporting, this tool saves valuable time, minimizes errors, enhances accuracy, and contributes to substantial cost savings. Embracing such software is not just a necessity for regulatory adherence but a strategic move to optimize workforce productivity, allowing your company to focus on core operations and achieve sustainable success.

Additional Resources:

• Dollar Threshold Amount for Contract Coverage
• Your Next Prevailing Wage Platform Will Decide Your Strategy
• ✔️You Need To Know The Davis-Bacon Certified Payroll Requirements
• Finding the Right Prevailing Wage Software
• Prevailing Wage Regulations by State
• 5 Things Every Contractor Should Know About Davis-Bacon & Related Acts
• Davis-Bacon verses the Service Contract Act

FAQ for General Wage Law Concerns

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The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.