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Compliance Frequently Asked Questions (FAQs) - Prevailing Wage for State Funded Construction Contracts

  1. What is the Maryland Prevailing Wage Law?
  2. What is the difference between the Davis-Bacon Act and the Maryland Prevailing Wage Law?
  3. What is public work?
  4. What is a public body?
  5. What types of projects are subject to prevailing rate?
  6. Do all public works projects, regardless of contract value, require the payment of prevailing wage rates?
  7. How does the Commissioner determine "locality" for the purposes of determining prevailing wage rates?
  8. What are wage determinations?
  9. Is there any requirement to post the wage rates for the various classifications of workers?
  10. What do I do when I am unsure of which classification to use?
  11. What responsibilities do contractors and subcontractors have while performing covered public projects?
  12. What happens if the wage rates change after I have submitted my bid or started work?
  13. What is a certified payroll record?
  14. How often are certified payroll submitted to the public entity?
  15. Do owner/operators who perform covered work have to be included on certified payrolls?
  16. As a corporate officer who performs craft type work on public construction, must I report myself on the certified payrolls?
  17. Can an unskilled or inexperienced employee working on a job subject to the Maryland Prevailing Wage Law be paid the apprentice rate while they learn the craft?
  18. Do foremen have to be paid prevailing rates of pay?
  19. What should workers do if they believe they may have not been paid properly?
  20. As a worker on a public works project what records should I keep?
  21. What happens if a contractor/subcontractor fails to pay all of its employees properly?
  22. What will the Commissioner rely upon in determining whether the contractor knew or reasonably should have known of the obligation to pay the prevailing wage rate? What does deliberate failure or refusal to pay mean?
  23. Is any further action taken against the violating contractor?
  24. What types of fringe benefits may a company take credit for, towards the Prevailing Wage fringe benefit rate?
  25. Is installation work consisting of activities such as pulling wires, installation of jacks, and termination of wires in racks subject to the Maryland Prevailing Wage Law?
  26. If my firm is on a Maryland approved vendor list as a material supplier only, am I subject to the Maryland Prevailing Wage Law?
  27. Are truckers who are hired by a material supplier to deliver materials to and from a work site covered by the Prevailing Wage Law?
  28. Are All Contractors Required To Have A License?
  29. How does a contractor or sponsor calculate "credit" for the A&T Fund?

1. What is the Maryland Prevailing Wage Law?
A.
The Law which affects prime contractors and subcontractors who perform work on any state or political subdivision construction contracts which exceed the current $500,000.00 threshold. This law protects construction workers such as carpenters, plumbers, power equipment operators, laborers, etc. Covered workers must receive the appropriate craft prevailing wage rate as determined by the Commissioner of Labor and Industry. Prevailing wage means the basic hourly rate of pay, and the bona fide fringe benefit rate.

2. What is the difference between the Davis-Bacon Act and Maryland's Prevailing Wage Law?
A.
 The Davis-Bacon Act (DBA) pertains to public construction projects awarded by a federal agency, such as work on military bases and U.S. Postal Service buildings, etc. Certified payrolls must be filed with the proper federal agency. Maryland's Prevailing Wage Law does not monitor projects which are covered exclusively by the DBA.

The Maryland Prevailing Wage Law applies to public works contracts awarded by the state, a political subdivision of the state or a regional school board. Examples of projects covered by Maryland's Prevailing Wage Law include schools, roads, water and sewer systems, airports, dams, and public buildings. Certified payrolls must be filed with the Commissioner of Labor and Industry 14 days after the end of the payroll period. In addition, certified payroll records must be submitted to the appropriate awarding public body.

3. What is public work?
A.
Maryland State Finance and Procurement Article 17-201 to 17-226, defines public work as "...a structure of work, including a bridge, building, ditch, road, alley, water plant or sewerage disposal plant, that is constructed for public use or benefit; or is paid for wholly or by public money.

4. What is a public body?
A.
Maryland State Finance and Procurement Article 17-201 to 17-226 defines a public body as "...the State of Maryland, any of its political subdivisions, any authority created by the Legislature of the State of Maryland and any instrumentality or agency of the State of Maryland or of any of its political subdivisions."

5. What projects are subject to prevailing rate?
A.
There is an agreement or contract between a public body and a contractor to perform "public work", which is defined as construction, reconstruction, demolition, alteration, custom fabrication, or repair work, or maintenance work, including painting and decorating, done under contract and paid for in whole or in part out of the funds of a public body.

6. Do all public works projects, regardless of contract value, require the payment of prevailing wage rates?
A.
No. In order for a project to be subject to the Prevailing Wage Law, the total value of the project must exceed $500,000.00 and either of the following criteria must be met: (1) the contracting public body is a unit of State Government or an instrumentality of the State, and there is any State funding for the project; or (2) the contracting public body is a political subdivision, agency, person or entity (such as a county) and the State funds 50% or more of the project.

7. How does the Commissioner determine "locality" for the purposes of determining prevailing wage rates?
A.
Prevailing wage rates are established by a survey process for each of the State's twenty-three (23) counties and Baltimore City.

8. What are wage determinations?
A.
A wage determination lists the wage and fringe benefit rates for each classification of laborer and craftsman which the Commissioner of Labor and Industry has determined to be prevailing in a given locality. The public body should provide a copy of the wage determination issued for a project prior to the bidding process.

9. Is there any requirement to post wage rates for the various classifications of workers?
A.
Yes. The Prevailing Wage Determination must be posted in a prominent and easily accessible place at the site of work, and shall remain posted during the full time that any employee is employed on the contract.

10. What do I do when I am unsure of which classification to use?
A.
Contact the Division of Labor and Industry, Prevailing Wage Unit at (410) 767-2342 and speak to the investigator assigned to your project.

11. What responsibilities do contractors and subcontractors have while performing covered public works projects?
A.
Contractors and subcontractors must:
  1. pay prevailing wage rates based upon work classifications actually worked;
  2. post a wage determination in a prominent place where workers have access;
  3. submit certified payroll records to the Commissioner of Labor and Industry and to the contracting public body within 14 days after the end of the payroll period;
  4. permit on-site inspections and employee interviews by authorized representatives of the Commissioner of Labor and Industry; and
  5. produce any payroll-related records to authorized representatives of the Commissioner.

12. What happens if the wage rates change after I have submitted my bid or started work?
A.
The Prevailing Wage Rate in effect at the time the work begins shall remain in effect until the project is complete.

13. What is a certified payroll record?
A.
A "certified payroll record" is a payroll record which is certified by a principal or authorized agent of any business entity employing covered workers on a public project, to be true and accurate.

14. How often are certified payroll submitted to the public entity?
A.
Payroll records shall be submitted to the Commissioner of Labor and Industry and to the contracting public body within 14 days after the end of each payroll period.

15. Do owner/operators who perform covered work have to be included on certified payrolls?
A.
Yes. The payroll requirement for owner/operators is the same as for employees who perform work on a public work contract.

16. As a corporate officer who performs craft type work on public construction, must I report myself on the certified payrolls?
A.
Yes. You are an employee of the corporation. Therefore, you must report and pay yourself just as you would any other employee.

17. Can an unskilled or inexperienced employee working on a job subject to the Maryland's Prevailing Wage Law be paid the apprentice rate while they learn the craft?
A.
An employee may only be paid the apprentice rate if he or she is registered with the Maryland Apprenticeship and Training Council and is approved by the United States Department of Labor - Bureau of Apprenticeship and Training. Otherwise, the employee must be paid the rate of the mechanic.

18. Do foremen have to be paid prevailing rates of pay?
A.
Yes. Foremen who are performing work must be paid prevailing rates of pay in the appropriate classification for the work.

19. What should workers do if they believe they may have not been paid properly?
A.
Contact the Maryland Division of Labor and Industry, Prevailing Wage Unit at 410-767-2342 or 410- 767-2365.

20. As a worker on a public works project what records should I keep?
A.
Workers should keep a record of their hours and save their pay stubs to help verify the amount of wages received. If work is being performed in more than one classification, the worker should identify at what time of the day he was doing the various jobs, as well as the total hours worked in each classification.

21. What are the consequences for failure to pay the appropriate prevailing wage rate?
A. A contractor is liable to pay an employee restitution if the Commissioner determines that the contractor has paid an employee less than the appropriate prevailing wage rate. In addition, a contractor also may be liable for liquidated damages for failure to pay the appropriate prevailing wage rate. If liquidated damages are assessed, a contractor may be liable for $20 per laborer or employee per day. Effective October 1, 2016, if it is determined that a contractor knew or reasonably should have known of the obligation to pay the prevailing wage rate and the contractor deliberately failed or refused to pay the prevailing wage rate, the contractor may be liable for increased liquidated damages in the amount of $250 for each laborer or employee for each day.

22. What will the Commissioner rely upon in determining whether the contractor knew or reasonably should have known of the obligation to pay the prevailing wage rate? What does deliberate failure or refusal to pay mean?
A. In determining whether a contractor knew or reasonably should have known of the obligation to pay the prevailing wage rate, the Commissioner will consider the following:
  (1) Does the contractor have any previous violations of the Prevailing Wage Law?
  (2) Has the contractor refused or failed to produce certified payroll records?
  (3) Has the contractor refused or failed to cooperate with an investigation by the Commissioner?
  (4) Is there evidence that the contractor is properly paying certain laborers or employees the appropriate prevailing wage rate while not paying other laborers or employees the proper prevailing wage rate? and
  (5) Is there any other evidence of the contractor's actual knowledge of, deliberate ignorance of, or reckless disregard of the requirements of the prevailing wage law?

The Commissioner will consider a contractor to have deliberately failed or refused to pay where the Commissioner, upon completion of an investigation, has informed the contractor in writing of the failure to pay the prevailing wage rate and the contractor informs the Commissioner of the contractor's unwillingness to pay or the contractor fails to respond to the Commissioner's request within a reasonable amount of time

The Commissioner will impose the $250 liquidated damage amount only where it is determined that the contractor knew or reasonably should have known of the obligation to pay the prevailing wage amount and that the contractor deliberately fails or refuses to pay.

23. Is any further action taken against the violating contractor?
A.
Contractors who violate the provisions of the Prevailing Wage Law are subject to administrative fees and penalties, and may be prohibited from engaging in future public works projects.

24. What types of fringe benefits may a company take credit for, towards the Prevailing Wage fringe benefit rate?
A.
 A company may take credit for the actual cost of providing their employees certain fringe benefits, such as: Medical/Hospitalization coverage, Dental coverage, Pension or Retirement plan, Paid Time Off (vacation, holidays, sick days), or Life Insurance. To calculate the cost per hour, divide the annual cost of the benefits by 2,080 hours, for each employee.

Items such as use of company vehicles or cell phones, lodging reimbursement, or company-provided tools may not be credited towards the Prevailing Wage. Under no circumstances should statutory deductions (Unemployment Insurance, Income Tax, etc.), Workers' Compensation Insurance, or the portion of any fringe benefit that is deducted from the employee's pay, be credited towards the Prevailing Wage.

25. Is installation work consisting of activities such as pulling wires, installation of jacks, and termination of wires in racks subject to the Maryland's Prevailing Wage Law?
A.
Yes, such activities would be subject to the Prevailing Wage Law.

26. If my firm is on a Maryland approved vendor list as a material supplier only, am I subject to the Maryland Prevailing Wage Law?
A.
No, if your firm is strictly a supplier of materials performing no covered work, you would not be subject to Maryland Prevailing Wage Law.

27. Are truckers who are hired by a material supplier to deliver materials to and from a work site covered by the Prevailing Wage Law?
A.
Generally, truckers who haul materials or supplies to and from a work site are not subject to the Prevailing Wage Law. However, a laborer or mechanic who hauls materials within a work site is covered by the Prevailing Wage Law. In situations where a significant portion of a project is completed at more than one location, the Prevailing Wage Law may apply.

28. Are All Contractors Required to have a license?
A.
Any person or business organization must obtain a construction license from the appropriate Clerk of the Circuit Court on an annual basis. For more information on obtaining a construction license, please contact the appropriate Clerk of the Circuit Court in the county where the work will be performed or the Maryland Business Licenses Online website.

29. How does a contractor or sponsor calculate "credit" for the A&T Fund?
The law requires that contractors on a prevailing wage project and subcontractors performing work valued at $100,000 or more must pay $.25 cents per hour for each employee to a registered apprenticeship program, an organization that has registered apprenticeship program or to the State Fund. If an employer pays an annual or semi-annual tuition to a registered program on behalf of an apprentice, that employer may use that tuition payment to satisfy its obligation on behalf of that particular employee. The tuition payment must correspond to the time when the work is performed and any accounting issues must be handled between the contractor and the apprenticeship program. For example, if a contractor makes an annual tuition payment in September 2015, the employer and the apprenticeship program will need to determine how the payment is allocated and ensure that the tuition amount is equal to at least $0.25 per hour for that employee in his/her covered craft. If it is determined to be an annual payment, the employer and the program can then allocate a portion per month from September 2015 through August 2016 as long as it fulfills the statutorily required amount. An employer cannot carry liability forward for work performed prior to the period for which the tuition payment is made. Likewise, if a tuition payment covers September 2015 through August 2016, the employer cannot use that as credit for a job to be performed in 2017. The tuition credit would only apply to the employee(s) on behalf of whom the tuition was paid.


For additional information, contact:
Division of Labor and Industry
Prevailing Wage for State Funded Construction Unit

1100 N. Eutaw Street - Room 606
Baltimore, MD 21201
410-767-2342
Fax: 410-767-2986
e-mail: dldliprevailingwage-dllr@maryland.gov