The Legal Landmines of Prevailing Wage Laws in the Construction Industry

When launching a significant construction project, each stakeholder’s senior management likely is focused on securing the highest quality contractors, labor and materials, while adhering to an ambitious schedule and budget. In many aspects of private and public works construction, ensuring compliance with complex prevailing wage laws are likely not front of mind. A look at California’s prevailing wage law and the compliance challenges it places on the contracting process suggests that carefully navigating this legal landscape is critical to prevent unanticipated labor costs, penalties, litigation, and, in some cases, criminal liability.

It’s helpful to start with an understanding of the objectives of prevailing wage laws:  To protect non-union workers employed by contractors or subcontractors on public works projects, under the belief that the public benefits through superior efficiency from workers paid at a level designed to offset the lack of job security and employment benefits they might receive in public sector employment. The Department of Industrial Relations, through the Division of Labor Standards Enforcement, aggressively enforces California’s prevailing wage laws with the help of “watch dog” groups that carefully monitor both public and private works projects.

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