Prevailing Wage for the Sole Proprietor
Posted: July 14, 2015
Question
I have a question concerning this issue. In my situation, I'm the President, Secretary, and Treasurer and 100% owner of my corporation. I service and install 100% of all the pre‐engineered kitchen fire suppression systems that we supply for public schools and municipalities. I receive a bi‐weekly salary and not hourly. How does the DIR know how many hours or minutes that I work on those jobs and who and how is it to be documented or kept track of? How do you prove that the system worker is being paid prevailing wage? This doesn't make sense to me! Any answers would be greatly appreciated.
Answer
It is our understanding that even a sole proprietor with zero employees who is performing public work is still required to pay prevailing wage rates. The owner/contractor needs to be registered as a public works contractor with the Department of Industrial Relations (DIR). Review the alert on the CALSFE website for more information regarding that registration.
When bidding an installation or maintenance job that will be over $ 1,000 for a public work such as schools, it must be bid at the prevailing wage rate set at the time of the request for bids.
The sole proprietor must then pay him/herself in a separate check for all the hours/minutes worked on the public works job according to certified payroll requirements. This includes listing the hours of work, the prevailing wage rate used, any training contribution or other payments that are required by the DIR wage determination. This has to be done and accounted for correctly and reported to both the awarding body (the school district, state or city facility etc.) as well as the DIR on a certified payroll report. You have to do this even if you or whoever you have perform the work is paid a salary for all other work.
NOTE: While CALSAFE is comfortable with these interpretations we urge you to follow‐up with your Attorney or Advisors prior do making any decisions based on these opinions.
There are large penalties on the contractor if this is not done or if the records are not accurate.