Prevailing Wage

How To Determine The Prevailing Wage For Your Employees?

Published On
September 28, 2023
Read Time
3 Minutes

DOL has recovered $304,914,114 as back wages for violating prevailing wage norms in FY 2018. The present Fiscal Year is sure to witness an increase in this amount. Shocking, isn't it?

Paying the right prevailing wage for an employee may seem like a trivial thing unless you get to pay millions of dollars as a penalty for violating the same. With the tightened wage laws and an increase in the audits, the importance of prevailing wage is also on the rise.

What exactly is a Prevailing Wage?

Prevailing wage is the hourly wage, usual benefits and overtime, paid to the workers, laborers and mechanics within a particular area. These ensure that all the workers are paid correctly and that no foreign worker is employed for a wage lower than the US workers. As this will indirectly impact the work and wages of US employees working under similar working conditions.

How To Determine it?

The Department of Labor and the government agencies have established a prevailing wage for each occupation. The basic requirements for determining this wage are SOC (Standard Occupational Classification) code and work location. As the SOC codes vary based on the responsibilities rather than on the title of the job. An employer should define the responsibilities of the job, for selecting the right SOC code . Choosing a wrong SOC Code leads to assigning an incorrect wage for that job.Once these key parameters are intact, the employer should assimilate the data from authentic sources like O*NET and FLC Data Center to determine the actual wage. This assimilation of data is never an easy task resulting in improper wage selection.

Complications in Not Assigning the Appropriate Prevailing Wage

Recently, DOL has conducted an investigation on the company Kingfisher Systems Inc., and recovered $342,334 for violating FLSA requirements. The company has classified some of its employees incorrectly and hence paid less than the prevailing wage. This resulted in lower overtime pay and fringe benefits, which are calculated based on these incorrect wages.The Department of Wage and Hour Division has made it clear that any incorrect classification of the employees will lead to many violations. These violations result in huge penalties along with paying the back wages for all those affected employees.

Back pay or Back wage:

A common remedy for wage violations is an order that the employer makes up the difference between what the employee was paid and the amount he or she should have been paid. The amount of this sum paid by the employer is often referred to as "back pay."

So, its high time to make sure your organization doesn't end up violating the norms and pay back wages. Hence, determining the prevailing wages accurately is one of the key factors for a successful business.

OnBlick is Here to Guide You!

OnBlick is your immigration and compliance partner, designed to make the immigration process easier and effective. OnBlick's SOC predictor algorithm along with AI understands your specialty occupation requirements and recommends the appropriate SOC codes. It also provides insights into wage levels with this SOC code and the work location mentioned.

OnBlick assimilates the data from authentic sources like O*NET, FLC Data Center and to suggest you the appropriate prevailing wage. Thus, it will help you in paying the employees correctly and avoid the violations followed by penalties.

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