Prevailing Wage Laws

This article provides a summary of various prevailing wage laws, to include the federal Davis Bacon Act (DBA), the federal Service Contract Act (SCA), and various states with prevailing wage laws. In addition to the DBA, the SCA, and state prevailing wage laws, over one hundred localities have their own prevailing wage or living ordinance requirements. Each may have their own provisions, wage determinations, overtime definitions, and penalties for non-compliance. A project’s funding authority typically determines which set of rules a contractor must follow.

The Davis Bacon Act

While certainly not the only prevailing wage law, the Davis-Bacon Act (DBA) may be the most well-known. Administered and enforced by the Wage and Hour Division of the U.S. Department of Labor, the DBA is the federal prevailing wage law that applies to contractors performing work on federal contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. Passed into law in 1931, “Davis-Bacon” is what some contractors may think of when they hear “prevailing wage”, but the two terms are not synonymous.

In addition to the DBA, approximately sixty federal laws authorize federal assistance on construction projects through grants, insurance, loans, or loan guarantees. These laws, collectively referred to as “Davis-Bacon Related Acts” (DBRA), include provisions requiring Davis-Bacon labor standards. To the contractor, DBA and DBRA are often indistinguishable, as the requirements for DBRA projects are generally the same as those for DBA projects.

The McNamara-O’Hara Service Contract Act (SCA)

Passed in 1965, the McNamara-O’Hara Service Contract Act (SCA) is a federal prevailing wage law that requires contractors who perform services on covered contracts in excess of $2,500 to pay service employees a local prevailing wage and to furnish fringe benefits. The SCA was originally intended to “close the prevailing wage gap” between federal construction projects (subject to the Davis-Bacon Act) and federal procurement projects (subject to the Walsh-Healey Public Contracts Act).

SCA projects typically have a defined Health & Welfare Fringe Benefit (H&WFB) hourly rate and stipulate the payment of certain holidays and a vacation schedule based on years served. Unless specified otherwise in an applicable Wage Determination or Collective Bargaining Agreement (WD/CBA), the following factors are taken into consideration when determining the fringe benefit eligibility of a particular employee, with “continuous service” of certain definition.

  • The total length of time spent by an employee in the continuous service of the present (successor) contractor, including both the time spent performing commercial work and the time spent performing on the Government contract(s) itself.
  • Where applicable, the total length of time spent in any capacity as an employee in the continuous service of any predecessor contractor(s) who carried out similar contract functions at the same Federal facility.

Most SCA WD/CBAs contain Health & Welfare Fringe Benefit requirements of a fixed rate per hour on behalf of each service employee, although an “average cost” WD/CBA may dictate otherwise. This Fringe Benefit may be due each service employee on the basis of all hours paid (including paid vacations, holidays and sick leave), or all hours worked, up to a maximum of 40 hours per week. The appropriate FB hourly amount is specified in each WD/CBA. Salaried employees may earn the equivalent of forty hours H&WFB for each week of employment, regardless of hours worked or paid.

SCA WD/CBAs typically specify particular holidays for which payment is required. Full Time employees who are eligible to receive payment for a named holiday receive a full day’s pay (8 hours) unless a different standard is used in the WD/CBA. Unless otherwise required in an applicable WD/CBA, holiday obligations for Part Time and Temporary employees who work an irregular schedule of hours may be met by paying such employees a proportion of the holiday benefit, based on the number of hours worked in the week prior to the week the holiday occurs.

SCA WD/CBAs also require an employer to furnish employees a specified amount of paid vacation time (or equivalent benefit) upon completion of a defined length of service. The benefit need not be provided by the employer on the date of vesting, but the required benefit must be furnished before the employee’s next anniversary date or before the current contract is completed, whichever occurs first. Vacation benefit requirements must be complied with, in full, on an annual basis.

State Prevailing Wage

There are 26 states with their own Prevailing Wage regulations. In states without specific Prevailing Wage statutes, Federal Prevailing Wage laws (DBA/DBRA, SCA) still apply. Even without a state Prevailing Wage law, all states may have certain labor laws that vary from what a contractor is used to in their home state. A sampling of certain individual states are included below.


Prevailing Wage (PW) law in Ohio is administered by the Bureau of Wage & Hour Administration within the Ohio Department of Commerce.

Ohio requires all contractors and subcontractors to furnish each employee not covered by collective bargaining agreement a written notification of the job classification to which the employee is assigned, the prevailing wage determined to be applicable to that classification (separated into hourly rate of pay and fringe payments), and the identity of the prevailing wage coordinator appointed by the public authority. The same notification shall be furnished to each affected employee every time the job classification of the employee is changed. Here is a sample of an Ohio PW Notification.

Ohio also requires that the prevailing wage rate paid for a legal day’s work shall not be less at any time during the life of a public work contract than the prevailing wage rate of wages payable to the same trade within that locality. This means that the wage/fringe requirement rates can change mid-project (and often will). If it does, an updated PW Notification will be required (see above).

Some public works are explicitly excluded from certain Ohio prevailing wage statutes, such as public improvements undertaken by the state’s board of education.


In Illinois, the state’s prevailing wage laws are administered and enforced by the Conciliation and Mediation Division of the Illinois Department of Labor. Prevailing wage rates are defined in two separate laws: The Illinois Prevailing Wage Act, and in the Illinois Procurement Code.

Illinois Procurement Code requires the payment of prevailing wage to service employees working on state contracts. “Services” includes janitorial cleaning services, window cleaning services, food services, security services, and printers. Wage determinations are published no less than annually, and may include minimum requirements for base wage rate, health & welfare, pension, and vacation fringe benefits.

The Prevailing Wage Act applies to laborers, workers, and mechanics employed by or on behalf of any public bodies engaged in public works, which includes any equipment maintenance, repair, assembly, or disassembly. Wage determinations stipulate the payment of wage premiums for hours worked over eight (8) in one day, hours worked on Saturdays, and hours worked on certain predefined holidays.

Similar to Ohio, Illinois also requires that the prevailing wage rate paid for a legal day’s work be at least equal to the locality’s latest wage determination. This means that wage and fringe requirement rates can change mid-project. Also, the time involved for a worker to transport materials or equipment to and from a public works job site is subject to prevailing wage, while the same such transportation by suppliers or sellers would not be covered.

Contractors, especially those from out of state, should be aware of the Employment of Illinois Workers on Public Works Act. This Act essentially requires that during periods of excessive state unemployment, at least 90% of an entity’s employees on a state public works project be Illinois residents, with certain exceptions based on expertise or skill level.

Illinois also passed an amendment to the Illinois Prevailing Wage Act in January 2014, redefining “prevailing rate of wages” to be “the hourly cash wages plus annualized fringe benefits…” Annualization of all fringe benefits is a major shift in fringe benefit calculation. It is imperative for any contractor working in Illinois to understand the significance of benefits annualization before working on a state prevailing wage project.


Missouri’s prevailing wage statutes and regulations are administered and enforced by the Division of Labor Standards of the Missouri Department of Labor & Industrial Relations.

Prevailing wage rates for State Highway and Transportation Commission projects are published in a General Wage Order. Also published are Annual Wage Orders, which provides rates on other public construction projects. In each of these wage determinations are specific schedules, by county and worker class, for the payment of Overtime and the payment of Holidays.

While prevailing wage laws are generally consistent in requiring the payment of prevailing wage rates at the “site of the project”, Missouri also requires the payment of prevailing wage rates for the transportation of materials and supplies to or from the site of construction by the employees of the construction contractor or subcontractor.

Additionally, Missouri is one of a few states requiring employees to complete a ten-hour OSHA construction safety program (“OSHA 10”) course no later than 60 days from beginning work at a public works construction project site.


Tennessee’s prevailing wage law is administered by the state’s Department of Labor and Workforce Development. While the prevailing wage law applies to state-funded highways, bridges, and roads projects, it does not apply to non-highway construction.

States without prevailing wage laws

A sampling of certain individual states that do not their own prevailing wage laws are included below.


In 2015, Indiana repealed its state prevailing wage law (called the “Common Construction Wage”). Prior to repeal the “Common Construction Wage” was administered and enforced by the Wage and Hour Division of the Indiana Department of Labor.

On Indiana wage determinations, worker classifications were often subdivided by class as “Skilled”, “Semi-skilled”, and “Unskilled”. The defining class factor may have been determined by the employee’s registration in a bona fide apprenticeship program and/or the employee’s total amount of cumulative experience in the construction trades, but classes were not always explicitly defined in the project bid documents.


Kentucky repealed its state prevailing wage law in 2017. Even with the law’s repeal, contractors should still be aware of Kentucky’s Overtime rules and how they vary from the traditional “40 hours a week”. Kentucky is one of a few states to have a “seven consecutive day” law, where an employee who works all seven days of a workweek, who then exceeds forty total work hours on the seventh day, shall have all hours worked on the seventh day classified as overtime.

Kentucky also calculates (and enforces) the overtime premium due in a manner differently than the traditional “time and a half”. Like the Fair Labor Standards Act, for employees working at two or more rates in a week, the overtime premium is based on the weighted average of the hourly rates paid. In other words, divide the total straight time wages by the total number of hours worked. This “blended rate” or “regular rate” is then multiplied by one-half (1/2) to calculate the correct overtime premium, which is then added to the base hourly straight time rate for the specific hours identified as overtime to yield the correct hourly rate. For federal Prevailing Wage contractors this is especially important, since Certified Payrolls must show the overtime premium has been applied to the correct hour.


Virginia does not have a state prevailing wage law, but its proximity to Washington D.C. leads to the generation of numerous projects subject to Federal (Davis Bacon Act / Davis Bacon Related Acts (DBA/DBRA), Service Contract Act (SCA)) prevailing wage requirements.

West Virginia

In 2016, West Virginia repealed its state prevailing wage law. Prior to repeal, the law was administered by the Wage and Hour Section of the West Virginia Division of Labor. Even with the law’s repeal, contractors from out of state should still be aware of the West Virginia Jobs Act, which can require a certain percentage of a company’s employees on public improvement projects to be residents of the “local labor market”.

Although requirements can differ state to state and project to project, it is of course the contractor’s responsibility to know the requirements on each respective project.