On construction projects where prevailing wage laws apply, it’s important to abide by those rules. In Pennsylvania, publicly funded projects over $25,000 in costs are subject to prevailing wage requirements. Let’s explore Pennsylvania’s prevailing wage laws, how and when they apply — and the penalties for not following them.
Types of projects where prevailing wage laws apply
In Pennsylvania, prevailing wage laws apply to any state or municipal construction project funded with public funds that cost over $25,000. This includes heavy construction, highway construction, and building construction projects that are within the state’s borders.
Federally funded projects in Pennsylvania are governed by the Davis-Bacon Act and its rules and regulations.
Prevailing wage rates
Contractors working in Pennsylvania on public works projects must pay their workers on a weekly basis. The prevailing wage rates for a project must be posted by the general contractor and each subcontractor on-site. The rates must be accessible to all workers.
The prevailing wage rates are determined on a project-by-project basis. You can look up the rates for a specific project online.
For example, here are a few of the rates for a school project in Adams County (accessed February 3, 2022):
|Painters Class 1||$23.92||$14.37||$38.29|
The contracting authority provides bidders with the prevailing wage rates within the bid and contract documents.
How to deal with higher labor costs
If you’re new to prevailing wage projects, the labor rates may be higher than you’re used to paying on normal projects. While some project costs can be deferred until you receive payment from your customer, payroll can’t wait. Higher labor costs can put a real crunch on your cash flow during a prevailing wage job. Keep a close eye on your project cash flow to ensure you have enough on hand to pay all your bills and still pay your workers on time.
Additionally, building prevailing wages into your estimates and bids isn’t enough. Public projects are notorious for long payment delays. If you don’t have sufficient cash in the bank, you need to find ways to delay paying for some project costs until you get paid by your customer.
One solution is material financing. Material financing allows contractors to use another company’s money to purchase building materials, with repayment terms that stretch up to 120 days. This allows you to save your own cash for payroll while you wait for your invoices to get paid.
You can also explore other financing options for contractors, which can allow them to access funds to cover other project costs — like mobilization and payroll expenses — when they take on bigger projects.
Get materials now, keep your cash.
Enjoy 120-day payback terms with any material supplier.
Who pays prevailing wage rates?
In Pennsylvania all construction contractors providing non-maintenance construction work for state or locally funded projects over $25,000 are required to pay prevailing wage rates. There is no licensing or bonding requirement to work on prevailing wage projects in the state.
Pennsylvania prevailing wage law doesn’t mandate any overtime or weekend rates for workers. However, as of July 9, 2021, Pennsylvania follows federal overtime rules, which state that workers should be paid time and a half for all work over 40 hours in a week, with exceptions for administrative workers. Hourly workers should be paid 1 ½ times the wage rate for each hour worked, plus appropriate fringes.
Certified payroll reports
Contractors working on prevailing wage projects in Pennsylvania need to pay their workers weekly and complete a Weekly Payroll Certification for Public Works Projects form. This form is used to document the name of the workers on the job during each week, the number of hours they worked each day, including overtime, how much they were paid, and how much was deducted from their pay.
The first and last certified payroll reports for a project are to include the Certified Statement of Compliance found on the second page of the weekly report form. This portion of the form must be signed and notarized. It certifies that the contractor has followed prevailing wage laws, paid the correct rates, and has not been previously barred from public projects for any reason.
How to submit certified payroll forms
Certified payroll forms are turned in weekly to the contracting authority, usually by the general contractor. Subcontractors should submit their reports to the general contractor to be turned in to the authority.
The person in charge of making payments for the contracting authority is responsible for reviewing the weekly reports and ensuring that workers are being paid correctly. If there’s a discrepancy, the authority contacts the Bureau of Labor.
Prevailing wage penalties
The contracting authority has the contractual right to withhold funds from a payment to pay workers the correct wages. The contracting authority would then use those funds to pay the worker directly.
If a contractor signs a certification statement that it knows to be false, they could be subject to a misdemeanor charge, fines up to $2,500, and/or a prison term of not more than five years.
If a contractor is found to have intentionally not paid the required rates, they could be barred from public work for up to three years.
Knowing the rules about Pennsylvania prevailing wages can help you get paid
Getting paid on a construction job is already complex enough. But knowing all the rules and regulations surrounding how you get paid and how much that payment amounts to is imperative.
If you’re working on an eligible job in Pennsylvania, pay attention to your pay stubs and compare them with prevailing wage rates. Also, be sure to keep good records. You’ll have to have the paperwork to back up any claims.
On-demand legal help you can afford
Legal Guard puts a team of construction attorneys in your corner, on call for contract review or legal advice when you need it.
The post Prevailing Wages in Pennsylvania: What Contractors Need to Know appeared first on Levelset.