A Guide to Prevailing Wage in Pennsylvania: Rules, Requirements, Rates, FAQs, and More for 2024

Need to know Pennsylvania’s prevailing wages to keep your company and its workforce compliant? Our guide has everything to get started!

In Pennsylvania, all contractors and subcontractors involved in state-financed construction projects exceeding $25,000 must pay workers a minimum hourly wage rate. This wage is known as the prevailing wage rate since it “prevails” upon the entire locality and typically varies depending on location and specific craft.

Pennsylvania established its prevailing wage laws in 1961 to shield local construction workers from out-of-state competition. Out-of-state workers would accept far lower wages than the locals, making them preferable for contractors and subcontractors. This would leave many locals out of work and hurt the state’s economy.

Prevailing wage laws set a mandatory base rate, meaning contractors and subcontractors could no longer undercut workers. This forced them to hire skilled and competent local workers worth the prevailing wage rate. In doing so, local construction workers would get employment, receive fair compensation, and help strengthen the economy.

Today’s guide takes an in-depth look at Pennsylvania’s prevailing wage requirements, including the fundamentals, prevailing wage determination, and enforcement. We’ll also highlight some tips on how contractors and subcontractors can ensure compliance.

Understanding Prevailing Wage Laws in Pennsylvania

The prevailing wage concept has its roots in 1898 when Kansas enacted its prevailing wage law for public works. Many states soon followed suit, but it wasn’t until 1931 that the federal government established its own prevailing wage law. This was known as the Davis-Bacon Act of 1931, and it applied to all public works projects funded by the federal government. Since then, 32 states have established their own prevailing wage laws or “Little Davis-Bacon Acts.”

As mentioned, Pennsylvania enacted its Prevailing Wage Act in 1961 under Section 6 of 1961 Code 442. According to this code, contractors and subcontractors working on public works projects funded by the state or other public agencies exceeding $25,000 in cost must pay workers nothing less than the prevailing minimum wage every week.

The prevailing wage consists of the base wage rate plus fringe benefits, including medical, travel, vacation, and retirement benefits. The law prohibits workers from taking less than the prevailing wage and contractors from making lump sum payments. 

Section 6 also requires all contractors and subcontractors to maintain an accurate record with details about the worker’s name, occupation, and the actual hourly wage they pay to all workers involved in the project. They should maintain these records for at least two years after the date of payment and make them available for scrutiny on request. These prevailing wage requirements apply to three categories of public works projects, namely:

Aside from keeping updated records, contractors must submit weekly certified payroll reports (CPRs) to the awarding body. They must use Pennsylvania’s official payroll certification form and number them consecutively with every passing work week. The contractor must sign the certified payroll report in blue ink and submit it within seven days of the last pay date.

Prevailing wage requirements apply to all aspects of public works involved in the projects. This includes construction, reconstruction, demolition, alteration, and repair work. The only exemptions are public works projects under the Walsh-Healey Act of 1936 and federally funded projects inside state borders subject to federal prevailing wage requirements under the Davis-Bacon Act.

Section 9 of Act 442 requires all contractors and subcontractors engaged in public works to post the current prevailing wages for every craft and labor classification involved in the project. These wages should be posted in a visible and accessible place on the job site and should include the effective date and any adjustments made. That way, workers can compare their compensation to prevailing wage rates.

The public body, on the other hand, must obtain the current prevailing wage rates from the Secretary, as stipulated in Section 4 of Act 442. It must then include all applicable prevailing wages in the contract. The contractor and subcontractor responsible for the project must pay the stipulated prevailing wages and post them as required by Section 9.

What Is the Purpose of Prevailing Wage Laws in Pennsylvania?

Prevailing wages are a contentious subject in many states, including Pennsylvania. However, despite the noise and opposition, prevailing wages have had a net positive effect on Pennsylvania’s economy and construction industry. The main reasons for these wages include:

Determining Prevailing Wages in Pennsylvania

Prevailing wages set a standard for construction work compensation, but how exactly do they arrive at these rates? Well, prevailing wage rate determinations are a culmination of concerted efforts between Pennsylvania’s Department of Labor and stakeholders in the construction industry.

Pennsylvania law authorizes the Pennsylvania Department of Labor and Industry to determine prevailing wage rates for different crafts and occupations. Under prevailing wage law, the Secretary of the Department of Labor and Industry determines the prevailing wages.

The Secretary first considers the wages and benefits established by bonafide collective bargaining agreements for different job classifications. The Secretary will use the most recently established expired collective bargaining agreements. Aside from information from collective bargaining agreements, the Secretary can also use information from:

Interested parties who feel the wage determinations don’t accurately reflect the actual market wages may request a review by following the procedures outlined in Section 8 (43 P. S. § 165-8) of Act 442. The Secretary will review the request and make a final determination. In the event of any adjustments, the awarding body will extend the date for bid submission to 5 days after the Secretary publishes the final determination. Interested parties have 10 days to appeal the revised wage rate with the Appeals Board before it becomes final.

Who Enforces Prevailing Wage Laws in Pennsylvania?

Under Pennsylvania law, The Pennsylvania Department of Labor and Industry is responsible for determining and enforcing prevailing wage laws. The Secretary of the Department of Labor and Industry enforces these requirements by:

The laws also authorize the Secretary of the Department of Labor and Industry to investigate and resolve disputes between conflicting parties. This may include conflicts between contractors and workers, labor unions and contractors, labor organizations, and the state.

Compliance with Pennsylvania Prevailing Wage Laws

Under Pennsylvania law, contractors and subcontractors must observe all of Pennsylvania’s Prevailing Wage Act provisions or face legal ramifications. Contractors are thus responsible for ensuring maximum compliance with these requirements. Their responsibilities include:

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What Are the Penalties for Non-Compliance?

Pennsylvania is stringent about its labor laws, including prevailing wage requirements. Contractors and subcontractors may face legal liability if found guilty of violating any aspect of Pennsylvania’s Prevailing Wage Act. The penalties for non-compliance include:

The intricacies of prevailing wage law are too broad to be covered in a single article. However, contractors should explore other tools and resources to stay on top of all the ins and outs of Pennsylvania’s prevailing wage requirements and remain fully compliant.

Navigating Prevailing Wage Laws

Running a public works project and ensuring compliance with labor laws can be challenging, especially for new contractors. While Pennsylvania is a tad lenient on first-time unintentional violations, repeated violations may have severe legal ramifications.

 Workers also have a role to play by ensuring contractors don’t infringe upon their rights. They can protect their rights by:

Contractors have a bigger role in prevailing wages than workers since contractors are responsible for paying the wages. Contractors often have to deal with the following:

Challenges aren’t unique to contractors. Construction workers also struggle to meet prevailing wage requirements or get their fair share. Some of the biggest challenges for workers with prevailing wages include:

What Is the Role of Certified Payroll Reports in Prevailing Wage Projects?

Certified payroll reporting is a fundamental aspect of ensuring compliance with prevailing wage laws on public construction projects in Pennsylvania. These reports serve as detailed documentation of the wages paid to workers, including both base wage rates and any fringe benefits provided. Contractors are required to submit certified payroll reports (CPRs) to attest to their compliance with prevailing wage requirements, promoting transparency and accountability in wage payments.

By requiring contractors to submit CPRs, prevailing wage laws aim to verify that workers are being paid the appropriate wage rates as mandated by law. Government agencies, such as the Pennsylvania Department of Labor and Industry, utilize CPRs for enforcement and auditing purposes. These agencies review CPRs to identify potential violations or discrepancies in wage payments and take appropriate enforcement actions to ensure compliance.

Moreover, CPRs serve as legal documentation of wage payments and can be used as evidence in disputes, investigations, or legal proceedings related to prevailing wage compliance. Contractors must maintain accurate CPRs for a specified period and make them available for inspection upon request. 

Ultimately, certified payroll reporting plays a crucial role in upholding the integrity of prevailing wage laws, protecting the rights of workers, and promoting fair labor practices on public construction projects in Pennsylvania.

Conclusion on Prevailing Wages in Pennsylvania

Pennsylvania’s prevailing wage laws present both challenges and opportunities for contractors and workers alike. For employers, the compliance burden includes managing subcontractors, maintaining accurate records, and navigating apprenticeship programs. Conversely, workers may face misclassification, lack of awareness of their rights, and fear of retaliation when reporting violations.

To ensure compliance, contractors must post applicable wage rates, pay current prevailing wages, submit certified payroll reports, maintain proper records, and cooperate with enforcement agencies. Workers, on the other hand, must understand their projects, prevailing wage rates, classifications, and rights and be prepared to report violations.

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