California Prevailing Wage: A Contractor's Complete Guide

Prevailing wage requirements are one of the most complex aspects of public works contracting in California. Failing to comply can result in severe penalties including wage restitution, fines, project delays, and debarment from future public work.

This guide explains California's prevailing wage laws, registration requirements, certified payroll obligations, and best practices for compliance.

What is Prevailing Wage?

Prevailing wage is the hourly wage, including benefits, paid to the majority of workers in a specific craft in a specific geographic area. In California, the Department of Industrial Relations (DIR) determines prevailing wage rates for each trade classification by county.

When a construction project qualifies as "public works," all workers on that project must be paid at least the prevailing wage rate for their classification — regardless of what the contractor would normally pay for private work.

When Does Prevailing Wage Apply?

California Labor Code Section 1720 defines public works as construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part with public funds. Thresholds:

• Over $1,000 for new construction
• Over $25,000 for alteration, demolition, repair, or maintenance

Public works include projects for:

• State of California agencies
• Counties, cities, and special districts
• Public schools (K-12 and community colleges)
• California State University and UC systems
• Public utilities
• Private projects receiving certain public subsidies

DIR Registration Requirements

Since 2014, all contractors and subcontractors must be registered with the Department of Industrial Relations (DIR) to perform public works in California.

Registration Requirements

• Must be registered before bidding on public works
• Must maintain current registration throughout the project
• Annual renewal required (registration expires June 30 each year)
• Registration fee is $400/year as of 2024
• Subcontractors at all tiers must also be registered

Consequences of Non-Registration

• Bids rejected as non-responsive
• Contracts voidable by awarding body
• Civil penalty of $100/day per worker
• Potential debarment from public works

Understanding Prevailing Wage Rates

Prevailing wage rates have two components:

Basic Hourly Rate

The hourly wage paid directly to the worker. This must be paid in cash (cannot be offset with benefits beyond the specified fringe rate).

Fringe Benefits

Additional hourly amount for health insurance, pension, training, and other benefits. This can be paid as:

• Direct payments to benefit trust funds
• Additional cash wages (subject to taxes)
• Employer-provided benefits of equivalent value

Worker Classifications

Every worker must be classified according to DIR's predetermined craft categories. Common classifications include:

• Carpenter (including drywall, acoustical, and scaffolding)
• Cement Mason
• Electrician
• Laborer (with multiple groups based on work performed)
• Operating Engineer
• Painter
• Plumber
• Sheet Metal Worker
• Roofer

Workers must be classified based on the actual work performed — not their job title. A "helper" performing journeyman-level work must be paid journeyman rates.

Certified Payroll Requirements

Contractors must maintain and submit certified payroll records for all public works projects:

What Must Be Reported

• Worker name, address, and last four of SSN
• Work classification for each day
• Hours worked each day (straight time and overtime)
• Hourly wage rate and total wages
• Deductions and net wages
• Employer payments for fringe benefits

Submission Requirements

• Submit to awarding body within specified timeframe (typically 10 days)
• Upload to DIR's eCPR (electronic Certified Payroll Reporting) system
• Retain records for at least 3 years after project completion
• Make records available for inspection upon request

Apprenticeship Requirements

Public works contracts over $30,000 require contractors to employ registered apprentices:

• Minimum ratio of 1 apprentice hour per 5 journeyman hours
• Must use apprentices from state-approved programs
• Must request apprentices from programs within your geographic area
• Exemption requests must be submitted to the applicable apprenticeship committee

Penalties for Non-Compliance

California enforces prevailing wage requirements aggressively:

• Wage restitution: Full back pay to underpaid workers
• Penalties: Up to $200 per day per underpaid worker
• Liquidated damages: Equal to unpaid wages
• Debarment: Prohibition from public works for up to 3 years
• Criminal penalties: In egregious cases, willful violations can result in criminal prosecution

Best Practices for Compliance

1. Verify project coverage before bidding — assume prevailing wage applies unless clearly exempt
2. Maintain current DIR registration — set calendar reminders for renewal
3. Use current wage rates — download and save applicable rates at bid time
4. Classify workers correctly — when in doubt, use the higher classification
5. Track hours meticulously — require daily timesheets signed by workers
6. Submit payroll on time — late submissions trigger audits
7. Verify subcontractor compliance — you're responsible for their violations
8. Document everything — maintain records for at least 5 years (longer than required)

Cal Coast Construction: Your Prevailing Wage Partner

Cal Coast Construction has extensive experience with prevailing wage projects throughout Ventura, San Diego, and San Luis Obispo Counties. We maintain:

• Current DIR registration (verify at dir.ca.gov)
• Certified payroll staff experienced with public works requirements
• Relationships with approved apprenticeship programs
• Strong compliance track record with public agencies

Contact Evan Scott, our Ventura County Regional Manager specializing in government contracting, for prevailing wage project consultations.