Prevailing Wages: Small Project Exemption Clarified

Contractors who are new to public works or who only take on public works projects infrequently may misunderstand the “small project exemption.”  The Department of Industrial Relations (DIR) recently issued a clarification notice to minimize the misunderstanding.

A contractor who fits within the small project exemption is not required to register with the DIR as a public works contractor and is not required to file certified payroll reports electronically.  The exemption applies to public works projects that do not exceed $25,000 for construction projects or $15,000 for maintenance projects.  It is important to remember that the dollar limit relates to the total contract for the entire project, not the individual contractor’s portion of the project.  So, the exemption only applies to very small public works projects.  It is also important to remember that even when the exemption does apply; it does not relieve the contractor from paying the prescribed prevailing wages or keeping certified payroll records.

Any contractor submitting a bid to work on a government project (or private projects utilizing government funds) should be careful to check for the application of both state and federal prevailing wage laws.  The small contractor exemption is just one small example of the complexities contained within the laws.