Does prevailing wage apply to a private project that gets some public money?

Yes, it can. California treats construction work as public works when public funds pay for any part of it, unless an exclusion applies, such as the small subsidy rule. The rule is in Labor Code section 1720, and tenant improvements have a second test in section 1720.2. Statute text checked October 2026.

Last reviewed October 16, 2026 against the sources it cites

The short answer

Yes, it can. Work paid for in whole or in part out of public funds is public works unless an exclusion applies, such as the de minimis subsidy rule for an otherwise private development project in section 1720(c)(3). Other exclusions are in section 1720(a)(1), (c), and (d) and in Labor Code section 1720.4. Under section 1720(c)(3)(B), a subsidy is de minimis if it is both under $600,000 and under 2 percent of total project cost (entirely single-family projects use only the 2 percent test, and the numbers do not apply to projects advertised for bid, or contracts awarded, before July 1, 2021). For the limited purposes of Article 2 (commencing with Section 1770), a tenant improvement is also public works under section 1720.2 when more than 50 percent of the assignable square feet of the property is leased to the state or a political subdivision and the lease timing conditions are met.

Labor Code section 1720(a)(1) defines public works as construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority.
Under section 1720(c)(3)(B), a public subsidy to an otherwise private development project is de minimis if it is both less than $600,000 and less than 2 percent of total project cost. For a project of entirely single-family dwellings only the 2 percent test applies. Subparagraph (B) does not apply to a project advertised for bid, or a contract awarded, before July 1, 2021.
Section 1720(b) lists six forms of public funds, including payment of money to or on behalf of the contractor, subcontractor, or developer, transfer of an asset of value for less than fair market price, and fees, rents, or loan terms that are paid, reduced, waived, or forgiven.
Under section 1720.2, for the limited purposes of Article 2 (commencing with Section 1770), privately contracted work is also public works when more than 50 percent of the assignable square feet of the property is leased to the state or a political subdivision for its use and the lease or plan timing conditions are met.
For the limited purposes of Article 2 (commencing with Section 1770), section 1720.7 also makes private-contract work on a general acute care hospital project public works when the project is paid for in whole or in part with the proceeds of conduit revenue bonds issued on or after January 1, 2016, by a public agency, except for a rural general acute care hospital with a maximum of 76 beds. Section 1720.8 does the same for a charter school project paid for with such bond proceeds issued on or after January 1, 2021, except a charter school with an average daily attendance not exceeding 80 pupils.
Labor Code section 1720.4 says the public works chapter does not apply to work performed by a volunteer or a volunteer coordinator, or by the California Conservation Corps or a Community Conservation Corps it has certified. The section remains in effect only until January 1, 2031, unless a later statute extends it.
An interested party can file a request to determine coverage with the Director under 8 CCR 16001(a)(1). That section points to the 8 CCR 16000 definition of interested party, which includes contractors and subcontractors likely to bid on or perform a contract for the public work.

What public works means

Under section 1720(a)(1), public works is construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds. DIR's Public Works FAQ gives the same three parts and lists maintenance too. Section 1771 applies to contracts let for maintenance work, covered in our guide to maintenance and repair work. Paragraph (a)(1) itself excepts work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority.

Two phrases matter on a private job. "Under contract" excludes work a public agency does with its own forces, per section 1771. "In part" means section 1720(a)(1) sets no minimum share. For otherwise private development projects, the de minimis rule below sets a cutoff. Design, site assessment, feasibility study, inspection, land surveying, and postconstruction cleanup also count as construction under section 1720(a)(1).

What counts as public money

Section 1720(b) defines "paid for in whole or in part out of public funds" with six items. The public body is the state or a political subdivision, which section 1721 says includes any county, city, district, public housing authority, or public agency of the state, and assessment or improvement districts.

What the public body does	On the list in 1720(b)?
Pays money, or the equivalent of money, directly to or on behalf of the public works contractor, subcontractor, or developer	Yes, (b)(1)
Performs construction work in execution of the project	Yes, (b)(2)
Transfers an asset of value for less than fair market price	Yes, (b)(3)
Pays, reduces, waives, or forgives fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, or charges them at less than fair market value	Yes, (b)(4)
Lends money that is to be repaid on a contingent basis	Yes, (b)(5)
Applies credits against repayment obligations to the public body	Yes, (b)(6)
Gives a tax credit	Not named in (b). Ask DIR, as step 3 below describes.
Has a public agency issue conduit revenue bonds whose proceeds pay for a general acute care hospital or charter school project	Not named in (b). Sections 1720.7 and 1720.8 reach these projects, as the next paragraphs describe.

A yes means the money counts, but exclusions follow.

Two more sections reach projects financed with bond proceeds, for the limited purposes of Article 2 (commencing with Section 1770). Section 1720.7 makes construction, alteration, demolition, installation, or repair work done under private contract on a project for a general acute care hospital public works when the project is paid for, in whole or in part, with the proceeds of conduit revenue bonds, as defined in Government Code section 5870, issued on or after January 1, 2016, by a public agency. It excepts a project for a rural general acute care hospital with a maximum of 76 beds. Section 1720.8 does the same for a charter school project paid for with conduit revenue bond proceeds issued on or after January 1, 2021, by a public agency. It does not include a charter school with an average daily attendance not exceeding 80 pupils. Read each section's definitions before you rely on it.

When a small subsidy does not make the job public works

The de minimis rule

Under section 1720(c)(3), an otherwise private development project does not become public works because of a public subsidy that is de minimis in the context of the project. A subsidy is de minimis if it is both less than $600,000 and less than 2 percent of total project cost. For a project of entirely single-family dwellings, only the 2 percent test applies. Subparagraph (B), which holds those numbers, does not apply to a project advertised for bid, or a contract awarded, before July 1, 2021.

Both tests must pass, and a subsidy exactly at either line fails. Below $30 million of project cost, 2 percent is the tighter limit. Above it, $600,000 is. Arithmetic on the two limits, not real projects:

Total project cost	Public subsidy	2 percent of cost	Result
$10,000,000	$150,000	$200,000	De minimis
$10,000,000	$250,000	$200,000	Not de minimis. Over 2 percent.
$50,000,000	$700,000	$1,000,000	Not de minimis. Over $600,000.

Section 1720 does not say how to value a waived fee or discounted land, so ask the owner for the subsidy figure and total project cost in writing.

Other exclusions in section 1720 and section 1720.4

Reimbursed public costs. Reimbursing a private developer for costs that would normally be borne by the public does not make the project public works, under section 1720(c)(3)(A).
Required public improvements. If a public body requires a public improvement as a condition of regulatory approval, adds no more money than that work needs, and keeps no proprietary interest in the project, only the improvement work is covered, under section 1720(c)(2).
Private housing. Private residential projects on private property are outside the chapter unless built under an agreement with a state agency, a redevelopment agency or its successor, or a local public housing authority, under section 1720(c)(1).
Affordable and other residential projects. Section 1720(c)(4) says certain affordable housing units for low- or moderate-income persons paid for solely with Low and Moderate Income Housing Fund money, or with that fund plus private funds, are not treated as paid for out of public funds. Section 1720(c)(5) excludes several types of privately owned residential projects, such as self-help housing and downpayment assistance, unless a public funding program requires otherwise.
Subdivision (d) exclusions. Section 1720(d) says certain housing projects financed with qualified bonds or mortgage credit certificates, and low-income housing tax credit projects, are not covered solely by reason of section 1720 when the allocation came on or before December 31, 2003. Subdivision (f) turns those exclusions off if another statute, regulation, ordinance, or contract applies the chapter to the project.
Utility work ordered by a public authority. Section 1720(a)(1) excepts work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority.
Volunteers and conservation corps. Section 1720.4 says the chapter does not apply to work performed by a volunteer, a volunteer coordinator, the California Conservation Corps, or a Community Conservation Corps it has certified. A volunteer is someone who works for civic, charitable, or humanitarian reasons for a public agency or a 501(c)(3) tax-exempt corporation, without promise, expectation, or receipt of any compensation. The section remains in effect only until January 1, 2031, unless a later statute extends it.

Section 1720(c)(3)(A) and the de minimis rule apply only to an otherwise private development project. Read the full text of section 1720, including subdivisions (c) and (d), and section 1720.4 before you rely on any exclusion.

Tenant improvements: the lease rule

A tenant improvement has a second route into public works that does not depend on who pays. Section 1720.2 makes construction under a private contract public works, for the limited purposes of Article 2 (commencing with Section 1770), when all of these are true:

The construction contract is between private persons.
The property is privately owned, but on completion more than 50 percent of the assignable square feet of the property is leased to the state or a political subdivision for its use.
Either the lease came before the construction contract, or the work follows plans, specifications, or criteria the public body furnished and the lease is signed during or at completion of the work.

Section 1720.2 does not require the public body to pay anything toward the work.

DIR applied both tests in a 2020 coverage determination on tenant improvements for the County of Los Angeles in Alhambra. The County reported a total cost of $4,778,778 and a share of $1,342,450. DIR found that the additional payments were not merely rent, because the allowance was tied to the cost of the tenant improvement work and had no relation to the County's rent payments. It treated the payment as public funds under section 1720(b)(1). It also found section 1720.2 met.

The Director denied the owner's appeal on February 3, 2022, under 8 CCR 16002.5. The decision gave two grounds for the public funds finding. First, the lease committed the County to pay part of the tenant improvement costs, and the decision held that was enough even if the committed funds turned out to be more than necessary and did not actually pay for the construction. Second, the County's actual payments went to modular office systems and, to the extent they included covered preconstruction work, architectural and engineering services. The decision said "property" in section 1720.2 can reasonably be read more than one way. It read "property" as Building A-9 on those facts, and it left open that two or more structures in close proximity can together form the "property" in another case. The affirmance covers only the specific factual circumstances described, so do not treat it as a rule that "property" always means one building.

What to do before you bid

Ask in writing. Ask the general contractor or owner whether any public money, loan, fee waiver, land deal, or public lease is involved. Read your subcontract for prevailing wage terms, such as a flow-down clause.
Look for a DIR Project ID. DIR's FAQ says an awarding body can be a private entity using public funds, citing section 1722, and must register the project for any work subject to prevailing wage requirements, except projects within the small project exemption. The FAQ also says the awarding body must submit the notice of contract award through DIR's website services to get the DIR Project ID, except on projects within the small project exemption, and that you should contact the awarding body to confirm the project was registered. See how to find a DIR Project ID.
Request a coverage determination if the answer is still open. 8 CCR 16001(a)(1) lets an interested party file a request with the Director to determine coverage. It points to the 8 CCR 16000 definition of interested party, which includes contractors and subcontractors likely to bid on or perform a contract for the public work. DIR's FAQ gives pwcoverage@dir.ca.gov, and DIR lists past determinations by year. DIR describes them as the Director's interpretation, current only as of the date each was issued, and says the statute, regulation, or court decision is controlling if they conflict.
Price it as public works until you know. Section 1771 requires at least the prevailing rate for all workers on public works over $1,000.

Federal money is a separate question

DIR's FAQ says federally funded or assisted projects controlled or carried out by awarding bodies in California are subject to state prevailing wage law, and that California's prevailing wage rates apply if they exceed the corresponding Davis-Bacon rates. 8 CCR 16001(b) likewise requires state rates when higher on those projects. See federal vs state certified payroll for the federal paperwork.

If the answer is yes

Per DIR's FAQ, on projects over $1,000 you must pay prevailing wages and maintain or furnish payroll records when the Division of Labor Standards Enforcement asks for them. Electronic certified payroll filing to the Labor Commissioner applies to public works projects other than those the Labor Commissioner has exempted. One exemption is the small project exemption, which covers projects that do not exceed $25,000 for new construction, alteration, installation, demolition or repair, or $15,000 for maintenance. The FAQ says those amounts are for the entire contract between the awarding body and the prime contractor. See who is exempt and the thresholds guide.

If the job turns out to be public works, send us your own payroll export. WellStanding prepares the eCPR for DIR's certified payroll reporting system, which takes the information through an online form or an XML upload, from the payroll export you already run. If a federal contract is also involved, we prepare the WH-347, the Weekly Certified Payroll Form. DOL says use of the WH-347 itself is optional, but the payroll information is required. A person reviews every filing. You review the finished filing and sign the certification in one step, and nothing is filed until you have signed. The certification is always yours; we never sign for you, because Labor Code 1776(a) requires each payroll record to contain or be verified by a declaration under penalty of perjury, and 8 CCR 16401 sets certification words signed by a person with authority to act for the contractor. First filing free.

We prepare the DAS 140 and DAS 142 apprenticeship forms for your public works projects from the same payroll export and project details you already send us, and a person reviews them before they go out. The DAS 140 (Public Works Contract Award Information) and the DAS 142 (Request for Dispatch of an Apprentice) go to the apprenticeship committee, under 8 CCR 230 and 8 CCR 230.1. Section 230(a) says contract award information is due within ten days of executing the prime contract or subcontract, but no later than the first day the contractor has workers employed on the public work, and it may be a DAS 140. Section 230.1(a) says requests for dispatch of apprentices must be in writing, and it calls the DAS 142 an optional form. Our DAS 140 and DAS 142 guide explains how, and DIR lists both form titles on its public works forms page.

Questions

Does prevailing wage apply if only part of a private project is paid for with public money?

It can. Section 1720(a)(1) sets no minimum share. One exception is a de minimis subsidy to an otherwise private development project. A subsidy is de minimis if it is both under $600,000 and under 2 percent of total project cost, and entirely single-family projects use only the 2 percent test. Other exclusions are in section 1720(a)(1), (c), and (d) and in Labor Code section 1720.4.

What is the de minimis public funds rule?

Under section 1720(c)(3)(B), a subsidy is de minimis if it is both less than $600,000 and less than 2 percent of total project cost. Entirely single-family projects use only the 2 percent test. The numbers do not apply to projects advertised for bid, or contracts awarded, before July 1, 2021.

Does a tenant improvement for a government tenant need prevailing wage?

It can, by two routes. A public tenant's payment toward the work brings in section 1720, as in DIR's 2020 County of Los Angeles determination. A lease to the state or a political subdivision of more than 50 percent of the assignable square feet of the property brings in section 1720.2, for the limited purposes of Article 2 (commencing with Section 1770), when its timing conditions are met, even without a public payment.

Do grants, loans, fee waivers, and tax credits count as public funds?

A grant paid by a state or local body to or on behalf of the developer is a payment of money, which section 1720(b)(1) lists. Waived fees, loans or interest rates charged at less than fair market value or forgiven, and money loaned that is repaid on a contingent basis are also listed in (b). Tax credits are not named in (b). Section 1720(d)(3) excludes low-income housing tax credit projects allocated on or before December 31, 2003, unless subdivision (f) applies. Proceeds of conduit revenue bonds are also not named in (b), but section 1720.7 and section 1720.8 make certain general acute care hospital and charter school projects paid for with them public works for the limited purposes of Article 2.

How do I get an official answer on whether my project is public works?

You can ask the Director of Industrial Relations for a coverage determination under 8 CCR 16001(a)(1). In the Alhambra matter, DLSE, the Division of Labor Standards Enforcement, had already issued a civil wage and penalty assessment against the contractors, and the matter was referred for a coverage determination after coverage of the work was disputed. If you are not the awarding body, you must serve the awarding body a copy of your request.

Sources

Every figure on this page links to its source where it first appears. The full list, in order:

Labor Code section 1720 leginfo.legislature.ca.gov
section 1720.2 leginfo.legislature.ca.gov
Labor Code section 1720.4 leginfo.legislature.ca.gov
section 1720.7 leginfo.legislature.ca.gov
Section 1720.8 leginfo.legislature.ca.gov
8 CCR 16001(a)(1) dir.ca.gov
8 CCR 16000 dir.ca.gov
Public Works FAQ dir.ca.gov
Section 1771 leginfo.legislature.ca.gov
section 1721 leginfo.legislature.ca.gov
Government Code section 5870 leginfo.legislature.ca.gov
2020 coverage determination dir.ca.gov
denied the owner's appeal on February 3, 2022 dir.ca.gov
8 CCR 16002.5 dir.ca.gov
section 1722 leginfo.legislature.ca.gov
past determinations dir.ca.gov
DIR's certified payroll reporting system dir.ca.gov
WH-347 dol.gov
Labor Code 1776(a) leginfo.legislature.ca.gov
8 CCR 16401 dir.ca.gov
8 CCR 230 dir.ca.gov
8 CCR 230.1 dir.ca.gov
public works forms page dir.ca.gov