You won the bid. Somewhere in the contract documents is a line saying the project is subject to California prevailing wage. Here is what that actually changes about your payroll, and the five things that go wrong on a first public works job.
Prevailing wage is not a pay rate. It is a system.
Most contractors hear "prevailing wage" and think: pay everyone more. The rate is the easy part. The system around the rate is what generates penalties. You are now responsible for registering with DIR, paying a published rate tied to a specific craft and county, handling fringe benefits correctly, filing certified payroll every week, and meeting apprenticeship obligations. Miss any one of those and the money is still owed, plus penalties.
1. Registering after you bid
DIR contractor registration has to be active before you bid, not before you start work. Registration is annual and it lapses quietly. Subcontractors need their own registration too, and a general contractor who lets an unregistered sub on the job inherits the problem. Check every sub's registration number before they set foot on site, and check it again at renewal season.
2. Using today's wage determination
The determination that applies to your job is the one in effect on the bid advertisement date for that project, not the current one and not the one from the job you ran last month. Determinations are published by county and craft and they change twice a year. Running current rates on an older award can leave you overpaying on every check, or underpaying, which is worse.
3. Paying the base rate and forgetting the fringe
This is the expensive one. Every determination lists a base hourly rate plus employer payments: health and welfare, pension, vacation and holiday, and training. That fringe amount is owed regardless of whether you offer benefits. If you have a qualifying plan, you take credit for what you actually contribute. If you do not, the full fringe goes on the paycheck as wages.
Contractors who pay only the base rate are underpaying by several dollars an hour per worker, every hour, for the length of the job. Under Labor Code 1775, the penalty runs up to $200 per worker per day on top of the back wages.
4. Classifying by job title instead of by work performed
Classification follows the work done on site. Not what you call the position, not what the employee is used to being paid. A laborer who spends four hours operating a piece of equipment may owe an operator rate for those four hours. Workers who cross crafts during a shift need split classifications on the certified payroll, with the hours broken out.
5. Treating certified payroll as a month-end task
Certified payroll is due weekly for every week any covered work was performed, including weeks where nobody worked, which get filed as non-performance. On state jobs it is filed electronically through the DIR eCPR portal. On federally funded jobs it is the WH-347 with a signed statement of compliance. The awarding body can withhold your progress payment until the filings are current, so late certified payroll is a cash flow problem before it is a compliance problem.
What to set up before the first payroll runs
- Confirm DIR registration is active for you and every sub
- Pull the correct wage determination for the county, craft, and bid date
- Set up the job in your accounting system with prevailing wage pay items separated from your private work items
- Decide how fringe is handled per worker, plan credit or cash, and document it
- Know the apprenticeship obligation and file the DAS-140 on time
- Put weekly certified payroll on the calendar as a fixed task, not a when-I-get-to-it task
Rates, thresholds, and forms change. Verify current requirements with DIR before relying on any single figure, and check the wage determination for your specific project every time.