Bidding on and performing prevailing wage projects can be an excellent strategy for construction businesses to expand their reach and revenue. However, many firms shy away from tackling these public works projects, viewing compliance and administrative requirements as overwhelming. With nearly 40 years of experience, Beneco has worked alongside contractors to help them simplify these processes and capitalize on the opportunities prevailing wage projects provide. Below, we answer some of the most common questions we’ve encountered and provide insights to guide you as you explore this avenue for business growth.

What are Prevailing Wage Projects?

Prevailing wage projects include all federally funded construction projects over $2,000, which must comply with the Davis-Bacon Act (enacted in 1931). This Act ensures that construction workers are paid fair wages that align with local pay standards. Many state-funded projects also have prevailing wage requirements that mirror federal standards but may include additional nuances specific to the state’s legislation.

Understanding these regulations can help contractors confidently bid on projects while complying with the law. Curious about prevailing wage laws in your state? Contact Beneco for tailored guidance.

Navigating State and Federal Laws

While federal projects fall under the Davis-Bacon Act, many individual states have their own prevailing wage laws, modeled after federal regulations but with notable differences. For example:

• New York’s prevailing wage law extends coverage to specific private projects receiving substantial public subsidies.
• California includes stringent apprenticeship requirements in its prevailing wage laws.

Ensuring compliance with both federal and state laws requires research and due diligence. Contractors can contact a local prevailing wage consultant to help them minimize time spent navigating complex regulations.

Where Can You Find Your Local Prevailing Wage Rates?

Finding accurate and up-to-date wage rates is essential to preparing bids and payrolls for prevailing wage projects. Local prevailing wage rate determinations are published on SAM.gov, the official U.S. government website for wage-related information and compliance. However, state-level rates may only be available on specific state labor department websites. Be sure to identify the correct rates for your jurisdiction ahead of bidding.

Which Employees Qualify for Prevailing Wages?

All laborers and mechanics working on covered projects and performing manual or physical duties must be paid prevailing wages. Supervisors, administrative workers, and those performing tasks outside of manual labor are typically exempt. However, some exceptions may apply depending on the project. Confirming worker classifications is essential to avoid wage disputes or compliance violations.

How are Fringe Benefits Applied?

The fringe portion of the prevailing wage can include any combination of:

• Cash wages
• Contributions to “bona fide” fringe benefit plans include retirement, health and welfare, vacation and holiday pay, or apprentice programs.

Employers have flexibility in determining how to allocate fringe benefits, but keeping accurate records is key for compliance. Additionally, allocating fringe dollars toward benefits can offer contractors significant savings in payroll taxes, improving project profitability.

Payroll Processing for Prevailing Wage Projects

Payroll handling is one of the most critical aspects of managing prevailing wage projects:

• Weekly Payroll: All federally funded projects require payroll to be processed weekly.
• Certified Payroll Reports: Contractors must submit certified payroll records that detail hours worked, wages paid, and fringe benefits provided for each employee.

Failing to submit these records accurately or on time may result in penalties or withheld payments. Partnering with payroll specialists ensures contractors stay organized and compliant.

How is Overtime Calculated?

Overtime on prevailing wage projects is calculated by paying time and a half for hours worked beyond the standard 40-hour workweek. Importantly, fringe benefits must always be provided for all hours worked, including overtime.

The Benefits of Pursuing Prevailing Wage Projects

Taking on prevailing wage projects offers substantial benefits for construction companies despite their administrative challenges. Here’s why they’re worth considering:

• Stable Revenue Opportunities: The federal government allocated $194 billion for public construction projects in 2024 alone, spanning infrastructure, housing developments, and environmental improvements. These projects often include multi-year contracts that provide consistent work and revenue.
• Competitive Advantage: Many companies avoid prevailing wage projects due to compliance concerns, leaving less competition for informed contractors who are well-prepared.
• Worker Retention: Offering comprehensive fringe benefits funded through prevailing wages helps construction firms attract and retain skilled workers in a competitive job market.
• Opportunities for Growth: Public works projects can lead to partnerships with government agencies and long-term relationships, opening doors for future opportunities.

Closing the Compliance Gap with Beneco

For contractors eager to grow their businesses, prevailing wage projects present a unique opportunity to increase revenue streams while building a strong workforce. However, if compliance challenges feel like too much to manage, resources like Beneco are here to help.

With nearly four decades of experience in the construction industry, Beneco partners with contractors to deliver strategic solutions. We can help optimize fringe benefit plans and walk you through ways that may simplify the process, allowing you to focus on the job at hand.

If prevailing wage compliance keeps you awake at night, we’re here to set your mind at ease. Click here to schedule a free Prevailing Wage Strategy Review and see how these projects can drive your company’s success.