The Prevailing Wage Double Whammy

Projects that call for the payment of “prevailing wages” can be a challenge for prime contractors, especially when they discover that one or more of their subcontractors have failed to pay their employees “prevailing wages.” That challenge becomes even greater when the government entity charged with investigating and enforcing wage claims utilizes an unnecessarily heavy handed procedure against the prime contractor to ensure payment of the prevailing wages.

Contractors on most public works projects are well aware of the requirement to pay “prevailing wages” which typically include wages, benefits, and other payments such as apprenticeship programs and industry promotion. The Davis-Bacon Act and its amendments pertain to federally funded projects. There are 32 states that also have prevailing wage laws, also known as “little Davis-Bacon Acts.” The rules and regulations vary from state to state. California, of course, has its own prevailing wage laws.

Typically, it is not the prime contractor that fails to pay prevailing wages, but one or more of the prime contractor’s subcontractors who (innocently or fraudulently) fail to pay prevailing wages. The problem for the prime contractor is that it, and its payment bond surety, is ultimately responsible for paying the prevailing wages, regardless of the fault or solvency of the delinquent subcontractor. With this background, the following recently happened to a California prime contractor on a public works project.
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For questions or more information about this topic, please contact Jim Sell by email at jparton@partonsell.com.

 

Projects that call for the payment of “prevailing wages” can be a challenge for prime contractors, especially when they discover that one or more of their subcontractors have failed to pay their employees “prevailing wages.” That challenge becomes even greater when the government entity charged with investigating and enforcing wage claims utilizes an unnecessarily heavy […]