How to Navigate State vs. Federal Prevailing Wage Requirements

Written By Adelaida Rivas

Navigating the intricacies of prevailing wage requirements can feel like walking a tightrope—especially when both state and federal laws are involved. Whether you're a contractor, project manager, or compliance officer, understanding the nuances between these two systems is crucial for staying compliant, avoiding penalties, and ensuring your projects run smoothly.

In this post, we’ll break down the key differences between state and federal prevailing wage laws, how to determine which one applies, how different states like California, Texas, and New York handle them, and what steps you can take to manage both effectively on your public works projects.

What Is Prevailing Wage?

Prevailing wage refers to the minimum hourly wage, usual benefits, and overtime pay for the majority of workers, laborers, and mechanics in a particular area for a specific type of work. These wages are established to protect workers and ensure fair compensation on government-funded projects.

Federal Prevailing Wage: Davis-Bacon Act Overview

At the federal level, the Davis-Bacon Act (DBA) requires contractors and subcontractors on federally funded or assisted construction projects exceeding $2,000 to pay laborers and mechanics no less than the locally prevailing wages and fringe benefits.

Key features include:

  • Administered by the U.S. Department of Labor (DOL)

  • Applies to the construction, alteration, or repair of public buildings or public works

  • Requires certified payroll submissions using Form WH-347

  • Enforced through site inspections, audits, and wage restitution if violations occur

For full details, visit the U.S. Department of Labor’s Davis-Bacon page.

State Prevailing Wage Laws: California, Texas, and New York

California

California’s prevailing wage laws are some of the strictest in the country. Governed by Labor Code Section 1720, these laws apply to a wide range of publicly funded construction projects and include:

  • Electronic certified payroll reporting via the DIR eCPR portal

  • Registration with the DIR for public works contractors

  • Compliance with apprenticeship standards and local hiring ordinances (e.g., Measure JJJ in Los Angeles)

Texas

Texas, by contrast, has less stringent statewide prevailing wage laws. However, many municipalities and counties, especially those receiving federal funds, adopt federal Davis-Bacon wage rates for local public works projects. It's important to:

  • Review local ordinances (e.g., Austin, Dallas, and Houston may have their own standards)

  • Determine whether federal funding is involved

  • Document compliance, even if state enforcement is minimal

Contractors in Texas should not assume there are no obligations—city-level rules and federally funded projects still require diligence.

New York

New York has a comprehensive and robust prevailing wage system administered by the New York State Department of Labor (NYSDOL). It applies to:

  • All public works projects (not just construction)

  • Projects with state, municipal, or local government funding

  • Both wages and supplemental benefits (e.g., health insurance, pensions)

NY requires:

  • Public posting of wage schedules on job sites

  • Regular certified payroll submissions

  • Payment of workers’ weekly

The state also enforces harsh penalties for violations, including interest on underpayments and possible debarment.

How to Determine Which Law Applies

Here’s how to quickly identify which rules may apply:

  • Federal funding only? The Davis-Bacon Act applies.

  • State or local funding only? Follow your state’s prevailing wage law (if it has one).

  • Mixed funding (state + federal)? Comply with both and pay the higher wage rate.

When both apply, it’s safest to follow the standard with the higher hourly rate or stricter rules to ensure compliance.

Managing Dual Compliance

For projects that fall under both federal and state requirements:

  • Use software that tracks and reports payroll data to both DIR and DOL

  • Maintain up-to-date wage determination records

  • Conduct internal audits before submitting certified payroll

  • Educate your team on differences in fringe benefit calculations and job classifications

Don’t Forget Local Hiring Requirements

Some states and cities also add local hiring rules. In Los Angeles, for example, Measure JJJ requires a percentage of workers on certain public works projects to be Transitional Workers, such as those who are homeless, previously incarcerated, or veterans.

Failing to meet these local ordinances can jeopardize contracts or trigger enforcement actions.

Need Help Staying in Compliance? Contact Us.

Understanding the nuances of federal versus state prevailing wage laws is complicated, and missteps can be costly. That’s why our team is here to help.

We specialize in prevailing wage compliance across California, Texas, New York, and beyond. Whether you need help with certified payroll, Davis-Bacon compliance, state-specific reporting, or local hiring ordinances like Measure JJJ, we’ve got you covered.

Contact us today for a compliance consultation and eliminate the guesswork from your next public works project.

Adelaida Rivas
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