Wednesday, August 31, 2011

Is a Sole Proprietor Exempt from Prevailing Wage Requirements?

Under Washington state regulations (WAC 296-127-026), a sole proprietor who performs work on a public works project, or a project subject to prevailing wage requirements, is not required to pay themselves the prevailing wage rate.

Prevailing Wage Forms Still Required:  However, according to the Department of  Labor and Industries, they must nevertheless submit a "Statement of Intent to Pay Prevailing Wages" form (prior to the first payment being made by the public agency), and an "Affidavit of Wages Paid" form (prior to the public agency releasing retainage).

Are Other Owners Exempt?  In addition to a sole proprietor (and their spouse), the following other owners are exempt from paying themselves prevailing wages on a public works project.  They must, however, fill out the "Intent" and "Affidavit."
  • Any partner who owns at least 30% of a partnership
  • The president, vice-president, and treasurer of a corporation if each one owns at least 30% of the corporation
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC


Fred said...

Thank you for that information Mike. I never really gave the exception much thought as I always had worked with larger firms and their staff. I am now representing several small businesses who have only themselves or, an equal partner in the business. This is especially true of many of the consultants I now work with. I will check my state rules here in Arizona. This was an eye opener for me today. Thank you.
Fred Siegel

Anonymous said...

Do sole proprietors have to submit weekly certified payrolls? I have received varying answers to this question from state agencies depending on who I talk to.

Mike Purdy said...

In Washington State, for a public works project without federal funding, there are no state requirements for sole proprietors to submit weekly certified payrolls, unless you have a particular state funding source that may require it, perhaps due to the fact that their money originally was federal money. Please contact me directly if you'd like to discuss this issue further. I'm interested in what state agencies have told you.