What is Prevailing Wage Payroll?

What is Prevailing Wage Payroll?

The prevailing wage payroll is not everyone’s favorite topic. In fact, there are many who outright oppose it. Nevertheless, it’s an important law to know and understand. That’s because if you’re a contractor and hope for government or publicly-funded contracts, prevailing wage is a law created specifically for you.

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The History the Law

The prevailing wage standards were established by the Federal Davis-Bacon Act. The act was developed by a Representative from New York, Robert L. Bacon and the Senator from Pennsylvania, James J. Davis. The act was first developed in 1927and continued to be worked on and refined until 1931. Under the Hoover Administration, this bill was adopted into a law on March 3rd, 1931.

The law was first thought of when a government contract was awarded to a contractor from Alabama. This contractor employed mostly African American employees and there were concerns raised about their safety and the compensation the employees received. The prevailing wage payroll law was passed in response to that and similar incidents.

What Does It State?

According to the Davis-Bacon Act, any and all contractors and subcontractors that are hired for publicly-funded or Federal government projects of over $2,000 must pay all laborers and employees no less than the wages that are locally prevalent along with the fringe benefits for similar and corresponding work and projects in the area.

This means that a contractor hired by the Federal government of publicly funded projects must pay all his employees the prevailing wages and benefits that other contractors working on similar projects in the area are paying. So if the prevailing wage is about $15/hour, you need to pay that or more than that to your workers.

The prevailing wage payroll needs to be reported to the Department of Labour on the basis of this law. The department also states that in the prime projects of over $100,000, the contractors and subcontractors need to pay the laborers, mechanics, watchmen, and guards at least 1.5 times the regular pay for all the hours that they worked over a 40 hour work week.

The prevailing wage payroll requirements

Don’t mistake prevailing wages for minimum wages. As explained above, prevailing wages are the amount prevalent amongst contractors. They’re always higher than the State and Federal minimum wage requirements. Keeping that in mind, the prevailing wage payroll requirements are as follows:

  • You need to pay your workers and employees on a weekly basis
  • Work payrolls aren’t required for days that you company takes temporary break from the project
  • The reports need to be numbered clearly and consequently. This includes No Work payrolls
  • You need to submit certified payroll reports to the company that hired you
  • These reports need to be submitted in 7 to 10 business days of paying your employees.
  • You and any subcontractor or contractor you work with needs to keep a copy of those certified payroll reports and any other records for at least 3 years after the project is completed

There are other prevailing wage payroll requirements but these are a few that you need to keep in mind.

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