California Prevailing Wages for Small Businesses

In California, the prevailing wage is a pre-determined rate contractors must pay workers on public works projects. 

The goal is to prevent contractors from undercutting their competitors by paying their team low wages.

For example, if you're a general contractor who aims to work on a construction project for your county, you'll most likely have a certain amount you'll need to pay your team, benefits included.

To figure out if you need to pay prevailing wages, head over to the Golden State's public works coverage determinations page.

How Much Is the Prevailing Wage in California?

There's no single prevailing rate—the prevailing wages set by California's Department of Industrial Relations (DIR) differ by job site location and the type of work done. 

Let's say you're a subcontractor who needs a boilermaker-blacksmith (journeyperson) for a public works contract in Los Angeles (Area 1). 

Under the California Labor Code, you'd need to pay them a basic hourly rate of at least $46.03.

General prevailing wage determinations change throughout the years, too, so it's important to make sure you're staying on top of them.

How Is California's Prevailing Wage Determined?

California's prevailing wage is based on the average wage paid in a particular area for a particular type of work. The state uses collective bargaining agreements and wage surveys to help them figure out their prevailing wage determinations.

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What Are Prevailing Wage Fringe Benefits in California?

California's prevailing wage fringe benefits differ by a worker's job and their work location. Let's go back to the boilermaker-blacksmith making $46.03/hour. 

With various fringe benefits added, their prevailing pay rises to $85.58/hour for an 8-hour day. 

The fringe benefit categories for a boilermaker-blacksmith are health and welfare, pension, vacation and holiday, training, and "other."

There are some slight differences in these fringe benefit categories for different workers. For example, there's no mention of vacation and holiday pay in the fringe benefit categories for an electrical utility lineman.

How To Calculate Fringe Benefits for a Prevailing Wage in California

The prevailing wage fringe benefits for each type of worker are available on the website of California's Department of Industrial Relations and expressed on an hourly basis (e.g., $3.90 training benefit per hour worked). 

You can add each hourly amount for each fringe benefit to the basic prevailing wage (hourly) and multiply the total by the amount of hours worked.   

For example, a boilermaker-blacksmith earning $46.03 per hour has fringe benefits of:

• $8.57 for health and welfare
• $18.44 for pension
• $7.90 for vacation and holiday
• $3.90 for training
• $0.74 for "other" 

Here's how their total prevailing wage (hourly wage + fringe benefits) is calculated: 

Total prevailing wage: 

$85.58 = $46.03 + $8.57 + $18.44 + $7.90 + $3.90 + $0.74

Bonus tip: Wondering how to ensure you pay the right prevailing wage rates and fringe benefits to your employees in the State of California with minimal fuss? 

Sign up for Hourly, a solution that handles time tracking, payroll, and workers' comp at the touch of a button.

What Is the Penalty for Not Paying the Prevailing Wage in California?

You could be fined up to $200 per calendar day for accepting public funds on a project over $1,000 and not paying the correct prevailing wage.

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In California, Awarding Body Labor Compliance Programs (LCPs) monitor and enforce prevailing wage laws. They do this in a number of ways, including:

• Informing businesses about prevailing wage laws
• Obtaining and reviewing certified payroll reports
• Conducting labor compliance investigations

Also note that under California law on public works, unless your project is exempt, you'll need to upload your certified payroll records to the state's payroll reporting system.

Depending on the size of your team, you might want to consider payroll outsourcing to ensure you're in full compliance with the state labor commissioner's requirements. 

If you realize you might have made a payroll error that caused you to fall short on paying prevailing wages, you may want to consider seeking legal advice.

Get the Facts on California's Prevailing Wage Law

We've gone over the example of a boilermaker-blacksmith, but there's a host of other workers who are covered under California's labor laws.

Whether you're hiring people for repair work, framing or something else, it's important to check that prevailing wage. 

Need more information on prevailing wage requirements for different workers and areas?

Visit the website of the Director of the California Department of Industrial Relations to ensure you make the correct employer payments for wages and fringe benefits under state law.

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