Prevailing wage refers to the rate of pay that outside contractors and suppliers must offer their employees when doing business with a government agency, often typical of union-represented construction or construction-related trades.  

Many university contracts with outside parties are subject to prevailing wage requirements.

The University of California (UC) requires all private construction contractors to follow public works law and pay their workers prevailing wages for applicable projects.  This page provides guidance on identifying when prevailing wage applies and how to process a purchasing request when it is a requirement.

• When Does Prevailing Wage Apply?
• When Does Prevailing Wage Not Apply?
• Department Responsibilities
• Procurement & Contracting Services Responsibilities
• Consequences of Not Following Process
• Additional Resources

When Does Prevailing Wage Apply?

Prevailing wages are generally required to be paid when each of the following is true:

• Funding: State (public) funds are being used. If there are any public funds in a public works project, the entire project is subject to prevailing wage requirements.  Other policies and procedures may also be applicable based on the other funding sources being used.
• Location: Work is being performed at a UC owned or leased location.
• Cost: Project cost will be more than $1,000.
• Specific Activity Type: Work involves one of the activity types listed below.  

Activity Types

Each of these types of work generally includes the installation of equipment that requires specialized trade skills, such as electrician, plumber, and/or carpenter.

• Construction (includes preconstruction and post construction)
• Alteration
• Demolition
• Installation (this includes equipment installs where the equipment is being electrically hard wired, plumbed for water or gas, or seismically bolted to the floor or wall)
• Maintenance and Repairs, including, but not limited to:
  • Tree Trimming
  • Landscaping Maintenance
  • Equipment Repairs
  • Elevator Maintenance
  • Roofing/Patch Work
  • Drop Ceiling Repair
  • Carpet Replacement
  • Installation of Modular Furniture
  • Painting/Touch-Up Painting

When Does Prevailing Wage NOT Apply?

• Work is being done on endowment or investment property where the purpose is to generate income from the general public, except to the extent such property is used by the University in furtherance of its mission of teaching, research, public service, or patient care.
• Work is being done by a public utility company (example: PG&E).
• Work is being done by university employees and/or university department/organization.  Before contracting out for a service, ensure that it's not something that is subject to the UC Covered Services policy and can be done in-house. 

Department Responsibilities

 When processing a purchasing request subject to prevailing wage, the following steps are to be completed by the department making the request on a non-catalog Requisition document in Aggie Enterprise.

• In the Business Purpose field, identify that prevailing wage applies to the transaction.
• Confirm that the identified supplier is registered with the California Department of Industrial Relations (DIR) as a Public Works Contractor (PWC). 
  • Add this information, as well as the California Contractor's Number to the Notes and Attachments section of the Requisition.
• Ensure the supplier has a current and active Certificate of Insurance (COI) on file with UC Davis. (Note: The Regents of the University of California are to be listed as additionally insured). 
  • If needed, upload the COI in the Notes and Attachments section.
• Attach the supplier price quote to the Notes and Attachments section. 
  • On the supplier quote, there should be a notation that the indicated labor rate reflects the prevailing wage rate.
• The Deliver-To Location is to indicate where the work will take place.  
  • The prevailing wage rate is determined by the address/county in which the work takes place, with the appropriate tax rate calculated from the zip code. 
  • NOTE: For locations on the main Davis campus, the default zip code is 95616-5270, with a tax rate of 7.25%. 
• If there are any tangible goods on the Requisition, they should be entered as separate line items from the labor/service line item(s) on the document.

Procurement & Contracting Services Buyer Responsibilities

• The buyer in Procurement & Contracting Services will review the completed Requisition, to ensure that all required information and attachments have been completed and attached.
• The buyer will negotiate the contract with the supplier.
• The buyer will add a note to the associated Purchase Order (PO) identifying the work as a prevailing wage project and subject to prevailing wage requirements.
• The university must report prevailing wage projects with the State of California, Department of Industrial Relations (DIR) and obtain a project number before commencing work for Construction, Alteration, Demolition, Installation and/or Repairs at $25K or more and Maintenance over $15K.  The buyer will secure this project number when required. NOTE: The total dollar value of a PO or Agreement (contract) is the total value for the term issued. DIR considers the value of a 3 year PO or Agreement (contract) the total value, not the annual spend. 

Consequences of Not Following Procedure

• University can be fined
• Contract subject to cancellation: Delays to work completion due to need for new contract
• Supplier can sue university for increased labor costs not properly identified at time of contract establishment 
• Reputation risk to university

Additional Resources

Additional information on prevailing wage is available on the:

• University of California Office of the President website (UCOP website)
• State of California Department of Industrial Relations website