Prevailing Wage (for Housing Projects)

Definition

Prevailing wage is defined under Labor Code § 1771 as the general prevailing rate of per diem wages and employer payments for health and welfare, pension, vacation, and travel time, as determined by the Director of Industrial Relations for each craft, classification, or type of worker employed on public works. For housing projects, prevailing wage requirements are imposed by statute when specific triggers are met — and the obligation runs to the applicant and the contractor, not to the local government processing the application.

The Department of Industrial Relations (DIR) publishes prevailing wage determinations for each county and craft type. These rates are updated periodically and vary by locality and trade.

When Prevailing Wage Is Triggered for Housing Projects

Prevailing wage requirements attach to private housing projects under several California statutes, each with its own trigger rules:

SB 423 / SB 35 (Government Code § 65913.4)

Projects seeking ministerial approval under SB 423 (or its predecessor SB 35) must comply with prevailing wage requirements if the project has 50 or more units. Projects with 50 or more units and 75 or more units were subject to additional skilled and trained workforce requirements. SB 423 revised some of these thresholds — check current statutory text for the exact unit counts applicable to your project.

AB 2011 (Government Code § 65912.100 et seq.)

Projects using the AB 2011 streamlined approval pathway for housing on commercial sites must comply with prevailing wage requirements for all workers. AB 2011 does not have a minimum unit threshold for prevailing wage — it applies to all qualifying projects using that pathway.

SB 684 (Government Code § 66499.40 et seq.)

SB 684 ministerial subdivision projects involving 10 or more units are subject to prevailing wage requirements.

Public Funding Triggers

Prevailing wage is also triggered on private housing projects that receive public funds above applicable thresholds under Labor Code § 1720 — including tax credit financing (in certain configurations), public loan proceeds, and other government assistance. The public funding analysis is project-specific and should be reviewed by counsel.

Prevailing Wage vs. Skilled and Trained Workforce

Prevailing wage and the "skilled and trained workforce" requirement are related but distinct obligations:

• Prevailing wage requires that workers be paid at the rates determined by the DIR for their craft and locality. It is a pay standard.
• Skilled and trained workforce (Labor Code § 3075 et seq.) requires that a specified percentage of workers in each apprenticeable craft be graduates of a Joint Apprenticeship Training Committee (JATC) program. It is a workforce composition standard — more demanding than prevailing wage alone.

Under SB 423, projects above specified unit thresholds must meet both prevailing wage and skilled and trained workforce requirements. Smaller projects may be subject to prevailing wage alone. The specific thresholds depend on the statute and the project's location.

Whose Obligation Is It?

Prevailing wage compliance is the obligation of the project applicant and the construction contractors — not the local government. Cities are not responsible for monitoring or enforcing prevailing wage compliance on private housing projects that receive ministerial approval. The city's obligation is limited to:

• Confirming that the applicant has included the required prevailing wage certification in the project application (where the applicable statute requires this as an application component).
• Retaining a copy of the certification in the project file.
• Not conditioning approval on prevailing wage compliance beyond what the statute requires.

DIR enforces prevailing wage compliance through investigations, audits, and civil penalty proceedings. Cities are not DIR enforcement agents.

What the City Retains

For applications under statutes that require prevailing wage certification as an eligibility condition (such as SB 423), the applicant must provide a signed certification or compliance commitment. The city retains this documentation in the project file. Failure by the applicant to comply with prevailing wage after the project is approved is a matter between the contractor, the workers, and DIR — not grounds for the city to retroactively revoke approval.

Prevailing wage requirements in California housing law are triggered by project size, funding source, and approval pathway — not by any affirmative city action. Legislaide helps planning departments understand which labor standards apply to incoming ministerial housing applications and what documentation cities must retain in the project file.

Frequently Asked Questions

Published April 6, 2026 by Legal Team at Legislaide.