Public work is all work, construction, alteration, repair or improvement that is executed at the cost of the state or any other local public agency. This includes, but is not limited to, demolition, remodeling, renovation, road construction, building construction, ferry construction and utilities construction.
Prevailing Wage is defined as the hourly wage, usual benefits and overtime, paid in the largest city in each county, to the majority of workers, laborers, and mechanics. Prevailing wages are established, by the Department of Labor & Industries, for each trade and occupation employed in the performance of public work. They are established separately for each county, and are reflective of local wage conditions.
Trades are generally surveyed every three years to determine the prevailing wage rates.
• Contractors and unions are surveyed to determine the wages and benefits that are being paid for each job classification. This list is established using industrial insurance, Intent and Affidavit filing, and licensing data.
• Prevailing wage rates are calculated for each job classification based on the survey data such as carpenters, electricians, laborers, etc.
• Largest City in County – Majority Wage: If more than one-half of all hours reported in the largest city in a county are worked at one wage rate, then that majority wage rate becomes the prevailing wage for the whole county.
• Largest City in County – Average Wage: If there is no majority wage rate, then a weighted average wage is computed using data from the largest city in a county. The weight attached to each wage is the total number of hours reported to be worked at that wage.
• County Average: If no hours are reported in a county’s largest city, then a weighted average wage is computed using countywide data.
Existing Wage Rate – Remains in Place: If no data is reported for the entire county, then the county’s old prevailing wage is retained as the new prevailing wage. The prevailing wage is the average or standard level of pay for different occupations in different areas.
They are determined by the Department of Labor. Let’s look at why prevailing wage rates are important and how they are calculated. The prevailing wage differs by occupation of course. The prevailing wage for surgeons in hospitals is much higher than it is for convenience store clerks. The prevailing wage also differs depending on where you live. It’s much higher some locations than it is in others. The minimum wage laws apply to all workers but some types of workers must be paid according to the prevailing wage as well in order to be in compliance with Department of Labor regulations. The list that follows shows which employers and jobs are affected:
• Federal Contracts – Under the Utah Act, contractors bidding for federal contracts must pay the prevailing wage as provided by the DOL to the workers on that job. The idea is to create a level playing field for those bidding and not allow someone to put in a low ball bid by low balling the workers on pay.
• Employers hiring skilled foreign workers under visa programs like the H1-B. These skilled immigrants are typically hired in STEM fields. Paying them the prevailing wage protects workers who could be replaced by the foreign workers if employers could pay them less.
• Employers may pay a sub-minimum wage to disabled workers. They must first survey local employers to determine a prevailing wage and pay the disabled worker a percentage of it based on productivity.
• State and local governments may also mandate a prevailing wage on their contracts. It’s important for an employer to get the requirements before bidding on these contracts.
How the Prevailing Wage is calculated
For Utah public works projects, all work over eight hours per day and or 40 hours per week is considered overtime. Hours over 8 in a day should be paid at 1.5 times the rate of regular hours. Double time is required and due for work beyond 12 hours in a workday or eight hours on the seventh day of a work week. For Prevailing Wage jobs or Public Work projects employers must pay the prevailing wage overtime rate as specified by the Department of Industrial Relations (DIR) in the appropriate prevailing wage determination for each job classification. In some cases, work in excess of seven hours is considered overtime. Employers are responsible for understanding and paying the appropriate rate at all times. Prevailing wage law requires that workers be paid overtime rates on weekends, regardless of the total hours worked for the week. These rates vary by classification and can be found in the DIR wage determinations.
Often the DIR specifies that Saturdays are 1.5 times regular pay (time and a half) and Sunday hours are double time regardless of other time worked during the week. Workers also may be entitled to overtime pay on recognized legal holidays. Not all holidays are recognized by all crafts. For a complete list of holidays recognized by the DIR check their web site. When there are multiple shifts or odd working hours, employers may be required to pay shift differentials. The rules are based on the craft. Generally, shift work is paid a higher rate and overtime begins after 7 or 7.5 hours. Sometimes workers perform multiple duties that may be in different classifications. For example, a worker may perform six hours of work in the Insider Wireman’s classification and then two hours of work as a painter. The worker must be paid six hours at the Inside Wireman rate and two hours as a painter. If the same worker puts in ten hours in one day, with five in the Insider Wireman’s classification and then five as a painter, the worker is due overtime pay. This pay must be calculated based on the rate for five hours of work as an Inside Wireman plus three hours at the standard painter rate and two hours at the painter overtime rate. Employers are required to pay overtime according to the prevailing wage determinations. Failure to comply can result in penalties, damages, accrued interest, legal fees and court costs. Having a prevailing wage takes how much you pay workers (and, since benefits are often included, how well you treat them) out of the equation. Contractors have to compete on the quality of their work, how quickly they can get the job done and how efficient their workers are, rather than on pricing alone.
Prevailing wage laws stand to preserve (often explicitly) the work unions have done in negotiating higher wages for employees. Since collective bargaining agreements are often taken into account when determining the prevailing wage, it’s usually comparable to what union workers make. That means union shops can usually compete on government projects, rather than losing out to contractors who pay their workers less than the union rate. Most types of employment that could be considered construction are bound by prevailing wage rates, at least when it comes to public works projects. Repair work is covered, too, as is demolition, remodeling, renovation and utilities work. Like many legal arguments, the dispute over prevailing wage laws doesn’t seem well-rooted in fact. Numerous studies have looked into this question, of whether prevailing wages drastically increase the cost of public projects, and by and large the answer has been clear: no, they don’t. But before we get to any studies, note that labor doesn’t account for most of a construction project’s cost. Even if prevailing wage laws do force wages to rise, that increase doesn’t have much effect on the total cost of a project. On average, 25% of a project’s cost will go to laborers, including payroll taxes (which necessarily increase the more you pay your workers) and benefits.
Increasing those wages by as much as 10%, according to the Economic Policy Institute‘s, would only increase the total of a contract by around 2.5%, basically negligible in mind. From the outset, then, it looks like controlling wages up or down won’t affect the cost of public work to governments by all that much. Now let’s get into the research. Comparing the costs of school construction in all 50 states, researchers from the State University system and the University of Utah found that prevailing wage laws didn’t affect construction costs in a meaningful way. Their results, published in a 2003 edition of Industrial Relations, flew in the face of then-wide spread arguments that repealing the laws would decrease the burden of building new schools for taxpayers. Importantly, the researchers controlled for the business cycle, since construction is a “boom and bust” industry, cycling through periods of more or less activity. Instead of prevailing wage laws, decreases in cost were linked to economies of scale. For example, doubling the size of a construction project increased the job’s total cost by only 93%, rather than the 100% one would expect all else being equal. Public schools cost over 15% more than private schools to build, but that was true independent of whether prevailing wage laws were present in the state under consideration. State tax revenues get hit hard, too, so hard that any savings in cost associated with lower construction bids are overshadowed by the losses in revenue. Occupational injuries increase, leading to higher workers comp insurance costs. States without prevailing wage laws tend to rely heavily on low-skill workers, since their cheaper, increasing maintenance costs over the long-term.
Steps For Determining Your Rate
• Find your craft & location: First, head over to this link and follow the steps listed in one through six in the information table until you find your classification/craft and the location of the work you performed.
• Determine your prevailing rate: Second, it is important to note that the determinations provide two important numbers, the first being the “basic hourly rate”, and the second being the “total hourly rate.”Employers in Utah are required to provide their employees the basic hourly rate as a minimum wage for work performed. This is the minimum amount of hourly monetary compensation that an employee must be paid. The total hourly rate is the minimum rate an employee must receive but also factors in fringe benefits including but not limited to health insurance, paid vacation time, or pension. When a company provides its employee a fringe benefit it is in effect providing it non-cash compensation, the total hourly rate allows the employer to offset the amount of actual cost of the fringe benefit. If the employer does not provide fringe benefits or chooses not to offset the fringe benefits, it must provide the total hourly rate to the employee as monetary compensation.
There can be serious ramifications for employers who engage in wage theft. Public works contractors/subcontractors that pay less than the prevailing rate in Utah may be assessed penalties, can be suspended from bidding or working on public works projects, and can also be subject in some circumstances to criminal prosecution if they failed to maintain code compliant payroll records. Claimants can file a complaint with the DIR, or hire an employment lawyer to handle their claim for them. Often times workers will be surprised to learn that their employer may have also violated Utah overtime law, or that waiting time penalties may have accrued for their benefit because their employer failed to pay them a final paycheck of all the wages they were due on their termination or resignation.
As previously mentioned, claimants who believe they have not been paid appropriately can file a public works complaint with the Division of Labor Standards Enforcement (Public Works—Initial Report (DLSE-PW Form 1). Filing of the complaint initiates an investigation of the contractor/subcontractor. If violations are found, the Labor Commissioner will issue a citation and assessment notifying the public agency that awarded the public works project to the contract. The DLSE will instruct the agency to withhold funds due from the contractor to payout wages and penalties. The assessment is in writing, describes the basis of the violations and the amount of wages, forfeitures, and penalties due. The public agency then serves the contractor with a copy of the assessment and citation. If appropriate payments are not made within sixty days the contractor, subcontractor, and bonding company which secured the payment of wages will become liable for liquidated damages for an amount equal to the amount of unpaid wages.
Prevailing wage laws help motivate more aggressive collective bargaining. In conjunction with a heightened emphasis on apprenticeship programs, generally a priority for unions, the level playing field prevailing wage laws create for union contractors radically increases worker productivity, and thus cost savings for local and state governments.
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