Please Explain Prevailing Wage

orson

A carpenter called me about doing a bunch of kitchen installations. The job would last over a year and I got pretty psyched since this would have allowed me to hire my first employee and expand my business.

After talking to the guy that's bidding on the project I find out that it's a prevailing wage job which I know very little about.

He is telling me that the job pays $42 an hour but I could not have an employee doing the installs, everyone must be subbed directly to him.

Can someone please explain how prevailing wage works?

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JonM

http://www.dol.gov/compliance/guide/dbra.htm

orson

Now it's clear as mud.

If the prevailing wage is $42 for wages and benefits then why is it ok for him to sub guys at 42 an hour when they still have to provide truck, tools and probably miscellaneous small materials?

Not to mention the fact that the subs will be in clear violation of IRS subcontracting rules since they'll be working full time on the same project for over a year with no opportunity to supply their own materials and make a profit on the job.

Just thinking out loud here.

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Anti-wingnut

I started reading that, and it sure didn't make sense to me. But what I know:

1) Prevailing wage is an attempt to "even out the playing field" for the unions, against non union contractors on Federal, State, and local government jobs. This is done by forcing non-union contractors to pay a wage comparable to union contractors. Because union fringe benefits are extremely high, the hourly wage of a prevailing wage construction worker will seem even higher. For example, a union carpenter may get $37/hour, while a prevailing wage carpenter may command $45. This is usually determined by the/a governmental agency, and not the contractor(s).

2) Bacon-Davis is the Federal act, most states and local governments have laws which enact similar restrictions

3) Your work under him as a sub-contractor seems like it is probably a separate issue, and not covered by prevailing wage requirements. Is he forcing you to be a sub to him, with a 1099 at the end of the year, or are you going to be a employee, who receives a W-2?

orson

He is saying that everyone must be subbed to him. I was hoping to hire a legitimate employee and provide him with a truck and benefits etc.

If I have to pay the employee 42/hr in wages and bennies and can only bill out 42 an hour for him obviously this doesn't work since I still have WC, truck and some other expenses on top of that.

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Anti-wingnut

I think he has a misunderstanding of the applicable laws. You should be able to have an employee and provide him with a benefit package as you deem fit. If for instance, the powers that be define a prevailing wage carpenter package as $42/hour, the you could pay your employee $38/hour as long as your benefit package equaled $4/hour. As a owner of the subcontracting firm, how these laws pertain to you is a little murkier (to me).

What the law(s) is attempting to do is prevent small sub contractors from circumventing to intent of the law, and in effect get paid less than prevailing wage. But this is the intent of limiting small subcontractors in all cases. Too many times, employees are classified (wrongly) as a sub, thereby removing the improperly classified employee the protection of UI, WC, and forcing them to pay more SS than they would as an W2 employee

KennMacMoragh

My own personal opinion, prevailing wage is a way for the government to be lazy and over spend our tax money. Who cares, it's tax money right? they didn't earn it. Last summer working on a school, I was paid $350 a day to basically show up and do nothing. I started actually working, but then I was told to slow down. So I said o.k, and I paced around the school for a few days. I would never get away with that working for a builder, or a home owner.

Aggie67

It sounds like he's trying to skirt the tax and insurance requirements. He's basically saying "I'll hire you as a 1099 sub, pay $42 an hour for the services, and you're responsible for paying your taxes and w/c, and I don't wanna know nuthin about overhead and markup, and as a sub you have sign off on the PW payroll certificates, not me." That's BS. He's skirting the rules and trying to pull a fast one.

Either that or he has no idea what he's doing.

I ran into a character who offered a similar PW "deal" about 3 years ago. I gave him my rate with my overhead and markup included, and he said "that's only a smidge lower than a union contractor, I want to only pay the rate and benefits." I explained overhead, taxes, and markup to him, we have our own trucks and equipment, blah, blah, blah. But I knew he was playing dumb and just trying to set the hook to get me to agree to just the PW wage and benie rate. "So I'm better off pulling a guy out of the hall as an employee." Yep, thanks for wasting my morning.

That guy got let go a year later, after that job went totally south on him. (He also estimated the job wrong, and missed all of the 6 and 8 inch vic piping in the boiler room.) I still do business with the company, though. Very fair owners.

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RenaissanceR

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Anti-wingnut

Probably both. I bet he (the contractor, not the OP) thinks he can duck UI, WC, and SS, and conform to PW. Problem is, PW jobs are often audited for compliance to PW, and they are likely to pick up other problems at that point. What the contractor should do, is hire the OP and his employee as W-2 employees for all the finish work

Anti-wingnut

That I find doubtful. Federal jobs are covered by the Bacon-Davis act, and I am not aware of the states being able to pass laws which would supersede Fedral laws. By definition, Prevailing Wage is open shop work with a pay scale equal to Union workers.

Framer53

In NY we have a lot of prevailing wage work. All it means is that you the contractor must pay the "prevailing wage". As to who you contract with, that is up to you. Union or not, same wage rate.

Anti-wingnut

Exactly, and often work goes union because there is
1) No financial incentive to go non-union
2) Smaller companies are not ready with their paperwork to go PW
3) Auditing is simpler if a entity goes union, because in essence, there is no need for PW auditing.

Around here, the PW companies often only do PW work.

RenaissanceR

I recall there was a new courthouse built in Worcester a while back, that used 100% union labor, from the articles in the local paper. And a new parking garage that went way over budget, that "had" to use union labor.

Anyhow, regarding prevailing wage laws in MA:

http://www.boston.com/bostonglobe/ed...ling_wage_law/