The DOL prevailing wage is the minimum hourly pay, plus any required fringe benefits, that the U.S. Department of Labor sets for workers on covered federal contracts and for foreign workers sponsored through certain visa programs. For construction, the rate reflects what people in the same trade already earn in the county where the job sits. For immigration cases, it comes from federal occupational wage surveys and is assigned to one of four skill levels. In every case, the employer has to meet or exceed that number before work starts.
Who Has to Pay a Prevailing Wage
Three separate federal statutes drive the requirement, and each covers a different slice of the workforce.
The Davis-Bacon Act applies to laborers and mechanics on federally funded construction, alteration, or repair contracts worth more than $2,000. Contractors and subcontractors must pay the wage rates and fringe benefits the Department has determined are prevailing in the county where the work takes place.1U.S. Department of Labor. The Davis-Bacon Act, as Amended A 2023 rulemaking also made those requirements effective by operation of law, so contractors owe the prevailing wage even if the contracting agency forgets to write the clause into the contract.
The McNamara-O’Hara Service Contract Act covers workers on federal service contracts over $2,500. It reaches janitorial, security, food service, IT support, and similar work the government contracts out, and it requires both the prevailing wage rate and the prevailing fringe benefit rate for the locality.2U.S. Department of Labor. McNamara-O’Hara Service Contract Act
The Immigration and Nationality Act reaches employers sponsoring foreign workers through the H-1B, H-1B1, E-3, and PERM programs. On H-1B cases, the employer must pay whichever is higher: the prevailing wage or the actual wage the company already pays its own workers in the same role.3U.S. Department of Labor. Fact Sheet 62G – Must an H-1B Worker Be Paid a Guaranteed Wage The point of the rule across all three visa programs is to keep sponsored workers from being used to undercut domestic pay scales.4U.S. Department of Labor. H-1B Labor Condition Application
How the Rate Is Calculated for Construction
Davis-Bacon wages are set by county and by skilled trade. An electrician in one county has a different rate from an electrician in the next, and the Department publishes those rates in wage determinations that contracting agencies attach to solicitations.
The Department also splits construction into four project types, because the same trade often earns different rates depending on what is being built:
- Building: sheltered structures with walk-in access, such as offices, hospitals, and schools.
- Residential: single-family homes, townhouses, and apartment buildings of four stories or fewer.
- Highway: roads, runways, parking lots, and most paving work.
- Heavy: everything else, including dams, bridges, sewer lines, and solar farms.
An electrician wiring a four-story apartment falls under the residential schedule. The same electrician running conduit for a highway interchange falls under the highway schedule. Those rates can differ by several dollars an hour in the same county.5U.S. Department of Labor. Davis-Bacon Wage Determinations
To decide what the “prevailing” rate actually is, the 2023 rule lowered the threshold from a simple majority of workers earning the same rate to 30 percent. When no single rate hits that mark, the Department uses a weighted average of local wages instead.5U.S. Department of Labor. Davis-Bacon Wage Determinations
How the Rate Is Calculated for Immigration Cases
For H-1B, PERM, and similar programs, the Department relies on the Occupational Employment and Wage Statistics program and the Standard Occupational Classification system to match a sponsored position to wage data for the geographic area where the work will be performed.6U.S. Department of Labor. Prevailing Wage Information and Resources If no collective bargaining agreement covers the job, the prevailing wage defaults to the arithmetic mean of wages for workers in the same occupation and area.7eCFR. 20 CFR 656.40 – Determination of Prevailing Wage for Labor Certification Purposes
From there, the National Prevailing Wage Center places the position on one of four skill levels:
- Level 1: entry-level roles that require only basic knowledge of the occupation.
- Level 2: qualified workers who can handle moderately complex tasks.
- Level 3: experienced workers with specialized skills.
- Level 4: fully competent professionals who exercise independent judgment and often supervise others.
Moving from Level 1 to Level 4 can raise the required wage by tens of thousands of dollars a year for the same job title in the same city. The way the employer describes the position’s duties, education requirements, and years of experience on the application directly controls where it lands.
Private Wage Surveys
An employer who believes the government’s occupational data misses the mark for a specific role can submit a private wage survey instead. The Department will accept one only if it meets all of the following:
- The data was collected, and if published, published within the prior 24 months.
- The survey covers the area where the sponsored worker will be employed.
- The survey’s job description aligns with the employer’s position.
- It samples employers across industries, not just the employer’s own sector.
- The wage figure is an arithmetic mean, not a median or mode.
- It uses a documented, statistically sound collection method with a representative sample.
There is no minimum sample size, and the survey does not have to mirror the government’s geographic regions exactly. Only one private survey can be evaluated per application.8U.S. Department of Labor. Prevailing Wage Policy Qs and As
Fringe Benefits Are Part of the Wage
Davis-Bacon and Service Contract Act determinations both list a required fringe benefit rate alongside the base hourly wage. Employers can satisfy that obligation through a benefits package, cash payments to the worker, or a mix. To count a benefit toward the fringe number, it must be part of a documented plan, contributions must be irrevocable and solely for the employee’s benefit, and the employer has to keep records of actual costs and participation.
Legally mandated contributions like Social Security and unemployment insurance do not count. If the hourly value of the benefits the employer provides falls short of the required fringe rate, the employer has to pay the difference in cash.
For Service Contract Act contracts, the Department issues a national health and welfare fringe rate through periodic All Agency Memorandums. Under the current memorandum (AAM 250), the rate is $5.55 per hour for contracts without paid sick leave under Executive Order 13706, and $5.09 per hour for contracts that provide such leave.9SAM.gov. All Agency Memorandums
Overtime
The Contract Work Hours and Safety Standards Act requires time-and-a-half for every hour beyond 40 in a workweek on covered federal contracts. For contracts subject to the Federal Acquisition Regulation, that applies when the contract exceeds $150,000. For contracts not subject to the FAR and those assisted under a related act, the threshold is $100,000.10U.S. Department of Labor. Overtime Pay on Government Contracts
Overtime uses the base hourly rate listed in the wage determination, not the fringe amount. Paid holidays and leave don’t count toward the 40-hour threshold. If the wage determination sets a $30 base and $8.50 in fringes, overtime pay is $45 per hour base ($30 × 1.5) plus the same $8.50 in fringes on top.10U.S. Department of Labor. Overtime Pay on Government Contracts
Getting or Looking Up a Determination
For construction and service contracts, wage determinations are published by the Department and attached to the contract solicitation by the contracting agency. On Davis-Bacon jobs, the determination has to be posted at the worksite in a spot accessible to covered workers.
For immigration cases, the employer files Form ETA-9141, the Application for Prevailing Wage Determination, through the Foreign Labor Application Gateway at flag.dol.gov.11U.S. Department of Labor. Form ETA-9141 – Application for Prevailing Wage Determination12Foreign Labor Application Gateway. Foreign Labor Application Gateway The form asks for the employer’s Federal Employer Identification Number and the exact worksite address, since the National Prevailing Wage Center pulls regional data by ZIP code and county. Standard H-1B and PERM turnaround was running roughly three months in early 2026; H-2B was faster, and redetermination requests were about four months behind.13Foreign Labor Application Gateway. Processing Times
Once issued, an immigration determination is valid for 90 days to one year from issuance, depending on the wage data source. If it expires before the employer files the underlying labor certification or petition, a new determination is required.14U.S. Department of Labor. Permanent Labor Certification Program FAQs Payroll records and timecards have to be kept for at least three years and produced for federal inspection on request.15Acquisition.GOV. 48 CFR 52.222-8 – Payrolls and Basic Records
Disputing the Rate
For immigration cases, an employer who thinks the assigned wage level or occupational classification is wrong first requests a redetermination from the National Prevailing Wage Center. If that doesn’t fix the problem, the next step is a Center Director Review of the same record. PERM denials tied to a wage dispute can be appealed to the Board of Alien Labor Certification Appeals, but the Board’s review is limited to what was already in the record when the certifying officer decided the case.16U.S. Department of Labor. USDOL BALCA PERM Digest
For Davis-Bacon, interested parties (contractors, unions, and contracting agencies) can ask the Wage and Hour Division to reconsider a published wage determination before a contract is awarded. Once work has started, the rate baked into the contract generally governs for the life of that contract.
What Happens if the Wage Isn’t Paid
The Department’s Wage and Hour Division investigates complaints on construction and service contracts, and the consequences of an underpayment run past just paying the shortfall.
The Department can supervise direct payment of owed back wages. If a contractor refuses, the Secretary of Labor can sue for back wages plus an equal amount in liquidated damages, roughly doubling the bill. A two-year statute of limitations applies to most back-wage recovery, stretching to three years for willful violations.17U.S. Department of Labor. Back Pay
The contracting agency can also freeze accrued payments owed to the contractor and use those funds to pay workers directly. Workers cannot be forced to accept less than the required rate, even if they signed something agreeing to a lower one.18Office of the Law Revision Counsel. 40 USC 3144 – Authority to Pay Wages and List Contractors Violating Contracts On Davis-Bacon jobs, a prime contractor is on the hook for its subcontractors’ shortfalls, and the withholding power reaches across all of the prime’s federal contracts, not just the one where the violation happened.19U.S. Department of Labor. Investigative Procedures and Remedies on Davis-Bacon Contracts
Contractors and subcontractors who disregard the wage rules face a three-year ban from all federal and federally assisted contracts. The ban extends to responsible officers and to any firm in which the violating parties hold an interest, and the names are published on SAM.gov’s exclusion list.20eCFR. 29 CFR 5.12 – Debarment Proceedings Civil monetary penalties per violation are adjusted for inflation and republished each January in the Federal Register.21U.S. Department of Labor. Civil Money Penalty Inflation Adjustments For immigration cases, the Department can also revoke approved labor condition applications and refer matters to other federal agencies.