Ohio Prevailing Wage Laws: A Complete Guide for Contractors
Overview of Ohio's Prevailing Wage Law
Ohio's Prevailing Wage Law establishes prevailing wage requirements on state-funded construction projects, requiring contractors to pay standardized wages that match local labor agreements for similar work. This law is similar to what's expected on federal projects.
For any construction company impacted by this law, Payroll4Construction is here. As a complete payroll service, Payroll4Construction is built to keep contractors compliant with certified payroll reporting and prevailing wage rate determinations.
Keep reading to learn more about Ohio’s prevailing wage laws, how they impact public construction projects and how we as a service can help you.
What is Prevailing Wage in Ohio?
Ohio requires construction contractors to pay prevailing wages on qualifying public improvement projects. Under this law, construction workers must receive minimum hourly wages and fringe benefits based on local standards for similar work within Ohio.
Ohio's prevailing wage requirements apply ONLY when BOTH of the following conditions are met:
- The project is a public improvement project:
- Construction undertaken by public authorities, including state, county, township and municipal governments
- Includes government buildings, roads, bridges, public school projects and other public works
- The project meets or exceeds these financial thresholds:
- New construction projects costing $250,000 or more
- Reconstruction, enlargement, alteration, repair, remodeling, renovation or painting projects costing $75,000 or more
If a project is publicly funded but falls below these dollar thresholds, prevailing wage requirements do not apply. Similarly, private construction projects are not subject to these regulations regardless of project cost.
Don’t Let Prevailing Wage Compliance
Slow Down Your BusinessPrevailing Wage Rate Determination
Setting Initial Rates
Before the bidding process begins, the Ohio Department of Commerce's Division of Industrial Compliance has several crucial responsibilities related to employment compensation. These responsibilities ensure transparency and fairness throughout the contracting process.
The Department must:
- Determine appropriate employment compensation, including hourly rates and benefit rates, before the bidding process
- Include these rates in all project specifications
- Ensure rates are available to all contractors during the bidding process
- Update rates periodically to reflect current local wages
Rate Calculation Method
The Department follows a structured analytical approach to determine fair and accurate compensation rates. They establish rates by analyzing:
- Local collective bargaining agreements between employees and employers
- Wage surveys in the project locality
- Previous wage determinations for similar projects in the area
- Federal Davis-Bacon wage determinations when applicable
Prevailing Wage Requirements
Prevailing wage laws establish minimum compensation standards for workers on public projects. These requirements ensure fair labor practices and create a level playing field for all contractors bidding on government work.
- Contractor
Contractors bear significant responsibility for ensuring project compliance with prevailing wage regulations. These requirements apply from the bidding process through project completion and include:
- Understanding and adhering to Ohio's prevailing wage requirements
- Ensuring all employees are paid at or above the prevailing wage rates
- Maintaining detailed payroll records for the project
- Ensuring all subcontractors hired for the project comply with prevailing wage requirements
- Submitting certified payroll reports to the public authority
How to Submit Prevailing Wage Proof
Ohio's prevailing wage law requires contractors and subcontractors to register with the state before participating in public works projects.
These certified payroll reports must include:
- Project name and location
- Contractor or subcontractor name and address
- Time period covered
- Employee information:
- Name and address
- Work classification
- Hours worked (regular and overtime)
- Rate of pay
- Gross wages earned
- Deductions made
- Net wages paid
Certified payroll reports must be submitted to the public authority within two weeks after each pay period. These reports must be signed by the contractor or subcontractor, certifying that the information is correct and complete.
Compliance, Enforcement and Consequences
The prevailing wage system relies on robust compliance mechanisms and meaningful penalties to ensure all parties adhere to established standards. These measures protect workers' rights, ensuring compliance with wage standards while maintaining the integrity of public projects.
Wage Payment Rules
Prevailing wage laws establish minimum compensation requirements that cannot be circumvented. This ensures workers receive fair pay for their labor on public projects.
The rules surrounding wage payment include:
- Workers must receive local prevailing rates for their work classification
- Rates include both actual wages and fringe benefits
- Rates are based on local collective bargaining agreements
- Employers cannot pay below these rates, even with worker consent
Violation Consequences
Significant operational and financial repercussions await contractors who fail to comply with prevailing wage requirements, potentially jeopardizing their entire business.
Construction businesses are at risk of penalties, including:
- Payment of back wages to affected employees
- Potential debarment from future public contracts for up to three years
- Financial penalties for each violation
- Potential termination of current contracts
- Legal action by the Ohio Department of Commerce
Prevailing Wage Whistleblower Protections
Ohio's prevailing wage law includes anti-retaliation provisions specifically designed to protect workers who report violations of prevailing wage requirements or certified payroll discrepancies.
In essence, the law protects workers who submit complaints for violations
Employees are protected from retaliation when reporting prevailing wage violations:
- Protection from termination
- Protection from disciplinary action
- Protection from discrimination
- Protection from threats
These protections apply specifically to matters involving prevailing wage compliance. They allow workers to safely report underpayment, misclassification or certified payroll record falsification without fear of employer retaliation.
Penalties
The legal framework includes substantial financial penalties and establishes clear liability structures to encourage compliance.
Financial consequences include:
- Payment of back wages and fringe benefits
- Penalties of 25% of the underpaid wages
- Potential debarment from future public contracts
- Joint liability between contractors and subcontractors
- Full penalty payment responsibility
How Payroll4Construction Helps You Stay Compliant
Payroll4Construction is a construction payroll service that specializes in helping contractors and construction companies navigate the complex wage regulations of the Davis-Bacon Act.
These time-saving services reduce administrative hours spent on complex wage calculations and paperwork. In turn, this gives the team peace of mind knowing that prevailing wage obligations are being handled correctly.
Prevailing Wage Exceptions
Most public improvement projects in Ohio must adhere to prevailing wage laws. However, certain exemptions exist under specific circumstances.
These exemptions include:
Projects below the threshold amounts:
- New construction under $250,000
- Reconstruction, renovation or repair under $75,000
Specific project types:
- Public improvements undertaken by boards of education
- Construction of economically disadvantaged citizens' residences
- Certain hospital projects
Projects subject to federal Davis-Bacon prevailing wage requirements:
- The Davis-Bacon Act establishes its own prevailing wage determination system
- Contractors must still maintain detailed, accurate records for payroll
- Federal wage classifications may differ from state calculations but maintain worker protections
- Compliance with federal standards requires the same rigorous documentation and enforcement
In all cases, contractors remain responsible for fair wage compliance, whether following Ohio's prevailing wage law or an alternative set of standards that provide equivalent worker protections.