Federal programs & compliance
Prevailing wage
Government-set minimum wage-and-benefit rates by trade and locality for covered construction — federal Davis-Bacon determinations or state schedules.
Definition
A prevailing wage is a government-published wage-plus-fringe floor, set trade by trade and locality by locality, that covered construction work must pay. On federally assisted projects the floor comes from Department of Labor wage determinations under the Davis-Bacon Act; California operates a parallel state system under Labor Code § 1720 et seq., with rates set by the Department of Industrial Relations and coverage keyed to "public works" — construction paid for in whole or in part out of public funds.
California housing statutes also use prevailing wages as an entitlement price: larger projects using SB 35/SB 423 or AB 2011 streamlining must commit to prevailing wages (and in some cases skilled-and-trained-workforce requirements) regardless of funding source.
Why it matters in an underwrite
The spread between open-shop and prevailing-wage labor is one of the biggest single swings in a California multifamily pro forma, and it arrives from two directions at once — federal dollars (HOME at 12-plus assisted units, CDBG, PBV construction, FHA 221(d)(4)) and state law (public funding or a streamlining statute's labor conditions). Fix the wage regime before locking the GC bid; enforcement exposure, including back wages, flows to the owner through the funding or approval documents.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.