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Overview on the Prevailing Wage

June 29, 2022

The prevailing wage is an hourly rate schedule for a specific classification of employees working on public work projects. The purpose of these laws is to ensure that government contractors are meeting local wage and benefit standards for their employees. Prevailing wage requirements can vary from state to state and even from county to county. This article will provide an overview of the prevailing wage law and some of its requirements.

Violations Can be Costly

More than half of the states across the country, including New York, New Jersey and Connecticut, have prevailing wage laws. Although these laws are quite widespread, they often go unknown or are misunderstood. Because of this, violations in this area are common. Some of the more prevalent violations include employee misclassification, failure to pay overtime, paying cash wages, failing to contribute to benefits, and not considering a partially publicly-funded work as falling under the prevailing wage law. Employers that are not following the prevailing wage law, whether intentionally or unintentionally, can receive severe penalties.

General Requirements

Prevailing wage laws set minimum compensation requirements for certain job classifications working on government funded projects. These requirements are applied whether the project  is fully or only partially funded by a government entity. Contractors may also find themselves bound by prevailing wage laws as a condition of government connections such as assistance with financing, granting of property, or receiving of tax breaks. Employers are required to know if a project they are working on is covered by prevailing wage laws. If they are covered, they must follow the prevailing wage schedule in their state and/or locality and pay their workers accordingly.

New York Labor Law Articles 8 & 9

The prevailing wage law in New York is governed by Articles 8 and 9 of the New York State Labor Law. Article 8 covers work done for both general and residential construction projects. Article 9 covers building service work for public agencies, and includes works such as janitors, doormen, cleaners, and more. If covered by either of these two articles, employers are required to post prevailing wage notices within the worksite, to inform their employees of the prevailing wage law. Employees are not required to be unionized in order to qualify to be paid the prevailing wage.

New York applies a two-tier method to determine the total required compensation, including hourly wage and hourly fringe benefit contributions. Pay rates and other benefits vary by county and job duty, and are subject to annual updates. The prevailing wage schedules for both Article 8 and Article 9 employees can be found on the New York State Department of Labor website. Employers should also keep in mind that prevailing wage laws in New York City may differ from those of New York State.

New Jersey Prevailing Wage Act

The New Jersey Prevailing Wage Act is similar to the prevailing wage laws of New York in that the pay schedule applies a two-tiered method and varies by county and occupation. Further, New Jersey sets a number of monetary thresholds, according to the type of public work, in which contracts in excess of that threshold will be subject to the prevailing wage law. For example, public projects designated by the municipal government with a contract value of more than the threshold value of $16,263 will be subject to prevailing wage obligations. However, there are certain contracts, such as those concerning construction, which need not meet a minimum threshold to be bound by the prevailing wage laws. More information about thresholds and prevailing wage requirements can be found on New Jersey’s Department of Labor and Workforce Development website.

In addition to satisfying the prevailing wage requirements, employers in New Jersey looking to engage in public work projects must first register with the Division of Wage and Hour Compliance and pay an annual registration fee of $300.

Connecticut General Statute Section 31-53

Connecticut’s prevailing wage law can be found in Connecticut General Statutes Section 31-53. The monetary thresholds in Connecticut are separated into two main classifications: new construction and remodeling. For new construction of public works, the public work must meet a threshold of $1,000,000, while for remodeling, the threshold is substantially lower at $100,000. However, these threshold requirements do not apply to projects concerning state highways and/or bridges.

Connecticut also employs the two-tier wage and benefits method to determine total prevailing compensation.

Conclusion

Prevailing wage laws vary by state and locality, each setting its own threshold and prevailing wage requirements. Employers contracting with governmental entities may be subject to costly fines for violations, and should be careful to comply with their state and local prevailing wage laws. If you have any questions on the prevailing wage laws in your jurisdiction, please contact us.

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