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Prevailing Wage

Prevailing wages are determined by the government as the normal rate of pay in a particular geographical area for workers who perform certain jobs. The government uses local data to arrive at the prevailing wage determination, which is generally equivalent to union rates. The prevailing wage differs from the minimum wage in that it applies only to contractors and vendors working for a government agency.

Federal Prevailing Wage Laws

Federal law requires employers who are carrying out federal contracts to pay prevailing wages to their workers. The intent is to give organized labor unions a fair chance when bidding for government contracts. If the government contracted with employers who paid their employees less than the prevailing wage, nonunion employers would gain an unfair bidding advantage. If the government utilized nonunion employers to execute contracts, the savings would be passed on to the government in the form of lower bids.

There are several federal laws that require federal contractors to pay a prevailing wage. These include:

  • The Walsh-Healey Public Contracts Act. This law applies to employees who produce or process materials supplied under contracts in excess of $10,000 to the U.S. government or the District of Columbia. Employees who fall under the protections of this Act must be paid a prevailing wage, including overtime compensation for hours worked in excess of forty hours per week. If no prevailing wage rate has been set, contractors are obligated to pay employees the Fair Labor Standards Act (FLSA) federal minimum wage. Contractors and subcontractors who violate this act are subject to an array of penalties, including withholding of contract payments.
  • The Davis-Bacon Act. Laborers and mechanics employed to construct, alter, and repair public buildings or public works in for contracts in excess of $2,000 are entitled to a prevailing wage under this Act. Covered employees are also entitled to overtime compensation. Employers who violate the Davis-Bacon Act are subject to termination of their contract, and debarment from future government contracts for a period of up to three years.
  • The McNamara-O’Hara Service Contract Act (SCA). The SCA applies to contracts entered by federal and District of Columbia agencies in excess of $2,500. Employees must be paid prevailing wages. For contracts below $2,500, employees must be paid the current FLSA minimum wage. Penalties for violating the SCA include termination of the contract, and debarment from future contracts for up to three years.

Prevailing wages are determined by the Department of Labor and Industry, through the Bureau of Labor Law Compliance. The Department is also charged with enforcing the rates and classifications under certain contracts of $25,000 or more where public funding is involved. The Secretary of Labor and Industry takes collective bargaining agreements and other factors into consideration in determining the prevailing wage rates.

Pennsylvania’s Prevailing Wage

In addition to federal laws, many states have their own laws setting prevailing wages for various contracts with state or local government. These laws typically mirror the federal laws in many respects. State prevailing wage laws are often referred to as “Little Davis-Bacon Acts.”

Pennsylvania has a state prevailing wage law for public works contracts in excess of $25,000. These contracts include construction, reconstruction, demolition, certain repair work, and alteration projects paid for with public funds. Contracts performed by manpower or rehabilitation-training programs are not covered.

Philadelphia Employment Lawyers at Sidney L. Gold & Associates, P.C. Fight for Workers’ Right to Fair Pay

The hardworking Philadelphia employment lawyers at Sidney L. Gold & Associates, P.C. are committed to supporting your right to get paid a prevailing wage. If you suspect that you are a victim of unfair labor practices, call us today at 215-569-1999 or contact us online to learn how we can help you.

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