California AB 1198 Alters Prevailing Wages on Large Public Works Projects
Contractors bidding on California’s largest public works may face shifting wage rates that could alter bid‑to‑pay ratios after submission.
California’s Assembly Bill 1198 amends prevailing‑wage rules for public‑works projects costing more than $2 million. From July 1 2027 the law replaces the overtime‑adjusted wage table with a time‑based schedule that allows a one‑to‑four‑year “change‑time” period. Contractors who calculate wages under the old schedule may find those rates no longer apply once a bid is accepted, exposing them to cost overruns or bid‑challenge litigation. The bill introduces a floating‑wage option that re‑evaluates rates based on a performance‑metric index if a contract extends beyond the initial period. Firms must update bid models, adjust reserve plans, and consider contingency clauses to manage wage‑adjustment risk. Clients should review pending contracts, file CLE updates, and monitor potential enforcement actions from the Contractors State License Board.