Texas Government Agencies’ Responsibility to Ensure Compliance with Prevailing Wage Rates on Public Works Construction Projects

One of the benefits of using contractors to construct public works projects is extremely broad liability protection from the acts of the contractor. Generally, when working under a thorough and comprehensive construction contract, the owner enjoys extremely limited liability. A major exception to this, however, is a Texas government entity’s responsibility to ensure the contractor, and all subcontractors, pay their employees consistent with the prevailing wage rates under both federal and state law. This article focuses only on Texas’ prevailing wage rate requirements.

Texas’ prevailing wage rate statute is found in Chapter 2258 of the Texas Government Code.  This statute applies to all “public works” projects constructed by public entities in Texas including paving, grading, drainage, domestic water supply, wastewater transmission, and building construction.  As part of the federal government’s compliance with the 1931 Davis-Bacon Act, the Department of Labor conducts extensive wage surveys and provides the statistical data to the public. Texas’ statute permits government entities to rely upon the federal government’s data when requiring contractors to comply with its statute.

In order to avoid contract disputes later, it is critical that entities notify prospective bidders of the requirement to comply with prevailing wage rates in the initial Request for Proposals as well as in the contract itself once a successful bidder has been selected.

During construction, the contractor is required to maintain a log of each employee, their occupation, and their wage.  The log must be open to employees of the government entity at all reasonable hours for inspection to ensure compliance. Further, the government entity must investigate any claims by the contractor’s employees that they are not being paid the prevailing wage rates and, potentially, withhold certain monies from the contractor accordingly.

While often overlooked as a formality, compliance with Texas’ prevailing wage rate statute is of critical importance. Aside from the benefit that competent labor provides to the project, Texas assigns criminal penalties to both the contractor and officers, agents, or employees of the governmental entity who fail to comply with the requirements. Accordingly, government employees should take heed of the statute and ensure diligent record keeping regarding contracted and actual wages paid.