Those confronted by the demands of prevailing wage law typically have a lot of questions. But the first and most frequently asked one is usually, “How does a contractor determine what wage rates to pay its employees on a public works project?”
The applicable wage determination is the determination for the applicable trade (e.g. carpenter, inside wireman) and geographic area of the project (e.g. Sacramento County) that is in effect on the date the job is first advertised for bid. A tricky issue to be aware of is that wage determinations don’t go into effect until 10 days after they are issued. As an example, a wage determination issued on August 22, 2018 does not go into effect until September 1, 2018, so it would not apply to a job that is first advertised for bid on August 25, 2018.
Once the applicable determination is identified, it is the only determination that applies for the life of the project, the idea being that a contractor needs to know all the applicable wage rates for the entirety of the project at the time a bid is submitted. If a determination contains a ** (double asterisk) designation, that means it incorporates predetermined wage/benefit increases which are known to the contractor at the time the bid is submitted even if they don’t go into effect until a later date. For example, a ** wage determination which is issued on August 22, 2018 may incorporate predetermined wage/benefit increases that go into effect on July 1, 2019 and July 1, 2020. A contractor who anticipates working on a project for several years needs to be aware of these predetermined increases in advance in order to bid the job properly.
Many contractors mistakenly believe that the applicable wage determination is the one that is in effect when the contractor first starts working on a project. That is simply incorrect and, because wage rates typically (although not always) increase in subsequent determinations, this misunderstanding will likely result in the contractor overpaying its employees. No contractor can afford to make that kind of mistake in today’s competitive bidding environment!
