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Construction wage selection: 3 checks for a bid rate

CostDay Editorial Team · Posted · 9 min read

To select wage inputs for a construction bid, locate the applicable wage floor first. Maine Legislature

Key takeaways

  • Find the jurisdictional minimum wage that governs your project before you select other hourly inputs.
  • Keep annual inflation adjustments and worker exceptions, such as the California learner rule, separate from the weekly overtime trigger.
  • Convert non-cash benefits to hourly amounts using the hours actually worked, and flag any unresolved equivalents.

Identify the applicable wage floor first

According to Maine Legislature, Title 26, §664: Minimum wage; overtime rate states that an employer may not employ any employee at a rate less than the rates required by the section. This provision sets the baseline against which all other labor costs are measured. You must verify if the quoted rate remains current for your bid date. Do not assume a minimum wage alone represents a fully burdened construction labor cost, as it excludes benefits and other adjustments discussed later. Your primary task here is simply to identify the correct starting number before moving on to inflation adjustments or overtime calculations. If you cannot confirm the current applicability of the cited rate, flag it as unresolved in your estimate notes. This prevents using an outdated figure as the foundation for your pricing structure. Focus on locating the specific statutory reference that governs your project type and location. Once identified, record the exact title and section number so you can trace the source back to the original document during review. This initial identification step ensures your subsequent calculations rest on a verified legal requirement rather than an assumption.

First identify the jurisdiction and worker coverage

Before selecting hourly inputs, separate ordinary minimum wage provisions from public works wage-and-benefit floors. The Maine Legislature defines a floor for laborers employed in the construction of public works, including state highways, tied to the fair minimum rate determined in accordance with section 1308. This is distinct from general employment standards. For pricing detail, see public works bid pricing.

For standard employment contexts, the Maryland Department of Labor states that most employees must be paid at least the Maryland State Minimum Wage Rate of $15 per hour, though some exemptions exist. The same source specifies that employees under 18 years of age must earn at least 85% of the State Minimum Wage Rate. Confirm that these figures apply to your bid date. Apply each rule only within its stated jurisdiction.

Publisher Wage Provision Type Stated Limit or Exception Source Page Title
Maine Legislature Public works floor Section 1308 determination Title 26, §1303: Public works; minimum wage and benefits; assisted projects
Maryland Department of Labor General minimum wage $15 per hour Maryland Minimum Wage and Overtime Law - Employment Standards Service (ESS) - Division of Labor and Industry
Maryland Department of Labor Age exception Under 18 earns 85% Maryland Minimum Wage and Overtime Law - Employment Standards Service (ESS) - Division of Labor and Industry

Next separate adjustment dates from overtime inputs

Adjustment mechanisms and overtime triggers operate on different schedules. The Maine Legislature specifies that the minimum hourly wage increases on January 1, 2021, and each subsequent January 1st by the increase in the cost of living. This annual date is distinct from the overtime rule, which requires 1 1/2 times the regular hourly rate for all hours actually worked in excess of 40 hours in a week according to the same source. Do not conflate the calendar date of an inflation update with the weekly threshold that triggers premium pay. For the premium-pay side, see overtime cost inputs.

In California, the Department of Industrial Relations describes an annual inflation adjustment based on the national consumer price index for urban wage earners and clerical workers (CPI-W) after the state minimum wage reached $15 an hour. The rate cannot be lowered even if there is a negative CPI, and the highest raise allowed in any one year is 3.5 percent. A separate learner exception allows payment of not less than 85 percent of the minimum wage rounded to the nearest nickel during the first 160 hours of employment in occupations where the worker has no previous similar or related experience.

Jurisdiction Adjustment Mechanism Key detail
Maine Annual cost-of-living increase starting January 1, 2021 Hours over 40 per week at 1 1/2 times regular rate ( Maine Legislature)
California Annual CPI-W adjustment after reaching $15/hour Max 3.5% annual raise; no lowering on negative CPI
California (Learner) Standard wage floor with percentage reduction 85% of minimum wage for first 160 hours; rounded to nearest nickel

Record the specific jurisdictional trigger for your project’s overtime basis before finalizing the hourly bid rate.

Then convert benefits and flag unresolved equivalents

Fringe benefit payments required by a wage determination may include items not stated as exact cash amounts, so you must identify which benefits need conversion before finalizing your hourly bid cost. Acquisition.gov provides the calculation methods for these conversions. The following table summarizes the quoted examples and the dispute route for unresolved equivalents.

Benefit Item Calculation Method Quoted Example Figure Dispute Route
Monthly health insurance premium Divide monthly premium by hours worked that month $112 / 125 hours = $0.90 per hour ( Acquisition.gov) Contracting officer submits to Department of Labor ( Acquisition.gov)
Nine paid holidays Multiply rate by 72 (9 days at 8 hours), divide by annual hours worked $5.00 × 72 = $360 / annual hours ( Acquisition.gov) Contracting officer submits to Department of Labor ( Acquisition.gov)

When converting a monthly premium, divide the total payment by the actual hours worked during that period. For instance, if a contractor pays a monthly health insurance premium of $112 for an employee who worked 125 hours, the hourly cash equivalent is $0.90. Acquisition.gov illustrates this specific division method. For holiday pay, multiply the hourly rate by the total holiday hours (nine days at eight hours each equals 72 hours) and then divide that sum by the number of hours the employee works during the year. An example using a $5.00 hourly rate results in $360 divided by annual hours worked. These show arithmetic only, not recommended allowances for every project.

If the contractor, contracting officer, and employees or their representative cannot agree on the cash equivalent, the contracting officer shall submit the question for final determination to the Department of Labor as prescribed by agency procedures. Mark any benefit line where the cash equivalent remains disputed with an explicit note that it follows this determination route. Do not treat the historical example figures as current market rates; they serve only to demonstrate the arithmetic required when a wage determination includes non-cash items. Annotate your bid labor line with the specific calculation method used for each benefit and flag any unresolved equivalents clearly.

Wage input reference table by publisher

The following rows list the specific wage inputs and rules from each publisher to support your bid annotation. Each row cites the source directly.

Publisher Fact ID Specific Wage Input or Rule URL
Maine Legislature 0 Maine Legislature sets a general rate floor. Maine Legislature
Maine Legislature 1 Public works rates follow section 1308 determinations. Maine Legislature
Maryland Department of Labor 2 The stated $15 floor applies to most employees. Maryland Department of Labor
Maryland Department of Labor 3 Employees under 18 earn at least 85% of the state rate. Maryland Department of Labor
California Department of Industrial Relations 4 Learners may receive 85 percent for their first 160 hours. California Department of Industrial Relations

Keep source dates and calculation inputs with the estimate

Annotate one bid labor line with its jurisdiction, wage source, stated date, overtime basis and benefit calculation, marking any unresolved applicability explicitly. RCW 49.46.130: Washington State Legislature sets a workweek longer than forty hours at a rate not less than one and one-half times the regular rate. The same section lists exemptions pursuant to RCW 49.46.010(3). Maine Legislature defines the regular hourly rate as including all earnings, bonuses, commissions and other compensation paid or due based on actual work performed. That definition excludes sums excluded from the Fair Labor Standards Act, 29 United States Code, Section 207(e). Record these specific components alongside your chosen rate.

Next step: Today, open the statute or wage determination that governs your project and copy its title and section number onto your bid’s labor line.

Related guides: Construction estimate audit: 5 inputs before a bid · Construction bonding checklist: 5 checks for bid pricing.

FAQ: selecting wages before pricing construction labor

How do I select a construction wage rate for my bid?

Identify the applicable wage floor first. According to Maine Legislature, an employer may not employ any employee at a rate less than the rates required by that section. This step establishes the baseline before you select other hourly inputs for your estimate.

Does Maine's public works wage floor include benefits?

Yes, the statute specifies that the hourly wage and benefit rate paid to laborers employed in the construction of public works may not be less than the fair minimum rate as determined in accordance with section 1308. Maine Legislature defines this requirement within Title 26, §1303. You must treat this combined rate as the floor for those specific projects.

What compensation does Maine include in the regular hourly rate?

The regular hourly rate includes all earnings, bonuses, commissions and other compensation that is paid or due based on actual work performed. Maine Legislature states that this definition excludes sums excluded from the definition of "regular rate" under the Fair Labor Standards Act, 29 United States Code, Section 207(e). Use this scope when calculating your base labor cost.

How does the published monthly insurance example become an hourly amount?

Divide the monthly health insurance premium of $112 by the 125 hours worked during the month to determine the $0.90 per hour cash equivalent. Acquisition.gov provides this calculation as an example for converting fringe benefits into hourly costs. Apply this division method to your own stated premiums and hours.

Who determines a cash equivalent when the interested parties cannot agree?

If the contractor, contracting officer, and employees cannot agree on the cash equivalent, the contracting officer submits the question for final determination to the Department of Labor. Acquisition.gov prescribes this route for resolving disputes over benefit conversions. Flag any unresolved equivalents in your bid line to track this potential dependency.

Sources