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

What is the Maryland Prevailing Wage Law?
The Maryland Prevailing Wage Law applies to certain contracts for public works and requires that contractors and subcontractors pay the employees performing work on the public work a prevailing wage rate that is established by the Commissioner of Labor and Industry.

What are some examples of a public work project?
A public work is a structure, including but not limited to, a bridge, building, road, water work, or sewage disposal plant that is constructed for public use and benefit and is paid for in whole or in part with public money.

When does the Prevailing Wage Law apply?
The Prevailing Wage law applies to a public work project where the total value of the project exceeds $500,000 and (1) the State or an instrumentality of the State is the contracting body and there is any State funding for the project; (2) a political subdivision is the contracting body and 50% or more of the money used for the construction is State money; or (3) a political subdivision is the contracting body for the construction of an elementary or secondary school and 25% or more of the money used is State money.

What is the Davis-Bacon Act and how does it relate to the Maryland Prevailing Wage Law?
The Davis-Bacon Act applies to contractors and subcontractors performing work on federally funded or assisted contracts in excess of $2,000. Like the Maryland Prevailing Wage law, the Davis-Bacon Act requires contractors and subcontractors to pay covered workers the locally prevailing wage and fringe benefit rates and in the case of a David-Bacon project, the locally prevailing wage and fringe benefit rates are established by the United States Department of Labor. If there is $2,000 of federal funds on a public works project as well as State money, the project will be a Davis-Bacon project and the U.S. Department of Labor will monitor prevailing wage compliance. Employers performing work on a Davis-Bacon project file their certified payroll records with the U.S. Department of Labor.

What is a “locality” for purposes of the Prevailing Wage Law?
A “locality” is the county in which the work is to be performed. If the public work is located in 2 or more counties, the locality includes all counties in which the public work is located.

How is the Prevailing Wage Rate established?
Once a year, the Commissioner determines the prevailing wage rates for certain job classifications in a locality. The determination is effective for one year from the date it is issued.
Each fall, the Commissioner solicits payroll information from contractors, contractor associations, labor organizations and other interested parties for data detailing wage rates paid in various classifications in all localities. The rates are determined by considering this information. Those interested in participating in the survey should contact the Prevailing Wage Unit at 410-767-2342 for more information.

What is a wage determination?
A wage determination lists the prevailing wage and fringe benefit rates for each classification of laborer and mechanic in a given locality. The public body should provide a copy of the wage determination to prospective bidders prior to commencement of the bid process.

Is there a requirement that prevailing wage rates be posted?
Yes. The wage determination must be posted in a prominent and easily accessible place at the work site and it must remain posted for the duration of time that any covered employee is working on the project.

What happens if the prevailing wage rates change after I have submitted my bid or started work?
The Prevailing Wage rate in effect at the time the work begins remains in effect until the project is complete.

Who needs to be included on the certified payroll form?
The certified payroll records are required to list all employees performing work on a public work project. This would include an owner/operator or foreman performing work on a contract. In addition, a corporate officer also would be included on the certified payroll since a corporate officer is an employee of the corporation.

When can the apprentice rate be paid?
An employee may only be paid the apprenticeship rate if the individual is registered with the Maryland Apprenticeship and Training Council and approved by the U.S. Department of Labor, Bureau of Apprenticeship and Training. Otherwise, the employee must be paid the rate of the mechanic.

What happens if the wage determination does not have all of the classifications of work that a contractor intends to use on a project?
If a wage determination is issued and does not contain all of the classifications of work that a contractor believes will be performed on the project, the contractor should contract the Prevailing Wage Unit prior to commencing work.

What can be included in the fringe benefit rate?
A contract may include the actual cost of health and dental insurance, pension or retirement plan, paid time off such as vacation or sick days and life insurance. In calculating the cost per hour, divide the annual cost of benefits by 2,080 hours for each employee.

Other benefits such as the use of a company vehicle, cell phones, lodging reimbursement, company owned tools may not be credited towards the fringe benefit amount.

Is a contractor who is on a Maryland approved vendor list as a material supplier only subject to the Prevailing Wage law?
No. A contractor who is strictly a supplier of materials and performs no work on the pubic work project is not subject to the Prevailing Wage law.

Is a trucker who is hired by the material supplier to deliver materials to and from a work site covered by the Prevailing Wage law?
In general, a trucker who hauls materials or supplies to and from a work site is 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.

Are contractors required to have a license?
Any person or business organization performing construction work is required to obtain a construction license from the appropriate Clerk of the Circuit Court in the county where the work will be performed or go to the Maryland Business Licenses Online website.

How will the Commissioner determine if a contractor knew or reasonably should have known of the obligation to pay the prevailing wage rate and failed to do so?
If the Commissioner determines 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.

In determining whether the contractor knew or reasonably should have known, 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 age 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 or, deliberate ignorance of or reckless disregard of the requirements of the prevailing wage law?

How does a contractor report its required payment under the State Apprenticeship and Training Fund law?
A contractor contribution under the State Apprenticeship and Training Fund law is required to be reported on the electronic certified payroll forms. Additional information can be found on the State Apprenticeship Fund requirements page.


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
Ayuda en Español: Julio Cesar Carrera, 410-767-2180